Edmonton-based insurtech startup PainWorth has secured $2.1 million CAD ($1.7 million USD) in seed financing to simplify the personal injury insurance claims process through its app.
The idea for PainWorth struck co-founder Mike Zouhri after he was “smoked” by a drunk driver. The experience forced Zouhri to settle his own personal injury claim, an adversarial process he soon learned was costly, manual labour-intensive, and time-consuming.
“This is an industry that has been sort of forgotten by its peers, and it’s stuck in the 1970s.”
“I built this thing, really, to just save myself from the dysfunction,” Zouhri told BetaKit in an interview. “Once I built it, I learned that, actually, the situation is even worse than I could have imagined. I only saw what I could see, which was the claimant side. But what I learned shortly thereafter was that the insurance side is just as broken, if not more broken.”
After seeing “substantial growth” in 2021 by focusing its efforts on claimants, PainWorth is ready to expand into new jurisdictions and build out a new, two-sided portal designed to serve insurance companies and claimants alike – two groups Zouhri claims stand to benefit from a faster, cheaper personal injury claims process.
Founded in 2019 by Zouhri and Chris Trudel, PainWorth’s patent-pending software helps claimants and insurance companies reach settlements in personal injury cases more quickly and cost-effectively by analyzing relevant legislation and past cases using data science and machine learning.
The startup’s all-equity seed round, PainWorth’s first venture financing to date, was led by New York-based 2048 Ventures, with participation from Montréal’s Panache Ventures and Ottawa’s Mistral Venture Partners. Combined with a prior friends and family raise, the round brings PainWorth’s total funding to $2.2 million CAD.
A few years ago, Zouhri was struck at a red light by a speeding drunk driver who fled the scene of the accident. “The good news is that we did eventually catch the guy,” he said. “The bad news is that it left me with some injuries that will last me the rest of my life.”
Zouhri soon found himself stuck in a system he described as “really broken and dysfunctional,” and overlooked by most people until they are forced to confront it because something terrible has happened to them.
“This is an industry that has been sort of forgotten by its peers, and it’s stuck in the 1970s,” he said. “It’s still very, very manual. It’s still very, very slow, and it’s incredibly adversarial.”
During the quest to settle his case, Zouhri taught himself personal injury law when lawyers wouldn’t take him on, learning firsthand how much time and money it took to resolve a personal injury claim.
Nera Khera, partner at 2048 Ventures, told BetaKit that the VC firm was inspired by Zouhri’s personal story and “immediately recognized the issues plaguing the enormous $300 [billion] personal injury market.”
According to Zouhri, during the personal injury claims process, claimants and insurance companies typically both hire lawyers, which can lead to expensive cases for both parties.
“We invested because Painworth was building something that would fix problems that shouldn’t exist: claimants getting ignored by lawyers when their claim is too small, and settlements being unnecessarily slow and expensive because of a lack of transparency,” Panache Ventures Managing Partner Patrick Lor told BetaKit. “With Painworth, the process can be settled in 30 days, with more money going to claimants and less cost for insurance companies.”
The early version of PainWorth’s app served claimants looking to evaluate the fairness of settlement offers. But Zouhri said the startup sees an opportunity to expand its platform to insurance companies.
PainWorth plans to use some of its seed funding to do just that by connecting claimants with insurance companies and allowing both parties to collaborate through its app.
Through PainWorth, these negotiations will focus on the severity of the injury, rather than the dollar amount, which the startup’s software determines. “We take a lot of the argument right off the table by doing that,” said Zouhri.
According to the co-founder, both sides stand to benefit from a faster and less adversarial process. “We can create financial wins for both sides,” said Zouhri.
Nera Khera of 2048 Ventures told BetaKit the firm was inspired by Zouhri’s story and “immediately recognized the issues plaguing the enormous $300 [billion] personal injury market.”
PainWorth’s investors agree with this idea. Khera said she believes PainWorth has “the potential to become the standard platform for claimants and insurers to research, manage and negotiate a claim.”
The startup’s solution is not for every case—rather, it’s designed for 80 percent of personal injury cases: the simple, low-complexity claims.
According to PainWorth, the majority of personal injury cases involve car accidents. But the startup’s app also works for other cases, including product liability, assault, and medical malpractice. Zouhri said many of these types of cases end up taking years to settle and clogging up the court system.
The early version of PainWorth’s app supported all of Canada, excluding Quebec. Since then, Zouhri said the startup has amassed a lot of users in new territories, and hopes to use some of its fresh funding to better serve them and start providing more localized assessments for non-Canadian users as well.
In 2021, PainWorth acquired California-based legaltech company ProSe Claims, which is tackling similar problems in the United States (US). Now, the startup’s looking to expand its presence in US states like California, Florida, Illinois, Utah, and Washington, and has already begun doing some experimentation in Ohio and Connecticut.
Feature image courtesy of PainWorth