Toronto-based insurtech startup PolicyMe has been busy since 2022: raising more funding, launching new products, and seeing success helping other insurance firms sell policies online more efficiently.
During this time, PolicyMe has closed $30 million CAD in previously unannounced equity and debt financing from strategic partners across three tranches since 2023. The company has also moved into health and dental insurance, built out its business-to-business-to-consumer (B2B2C) operations, and expanded Canada-wide, nearly tripling its headcount to 100 employees and attaining profitability along the way.
“We really do believe that AI is the future of this industry.”
Andrew Ostro,
PolicyMe
In an interview with BetaKit, PolicyMe co-founder and CEO Andrew Ostro unpacked what the startup has been working on and where it plans to go from here—including exploring launching other in-house insurance products like disability, investing in artificial intelligence (AI), continuing to grow its B2B2C business, and staying focused on Canada.
“We still look at Canada as a major opportunity,” Ostro said. “We’re nowhere close to the penetration levels where we feel like we’re out of growth, or growth will be slower.”
PolicyMe aims to give Canadians access to more affordable and convenient insurance products in two ways: via its own in-house policies, which it claims are cheaper than many traditional ones thanks to its increased conversion rates, underwriting efficiencies, and reduced distribution costs; and by helping insurers and other financial brands deliver their own offerings to consumers faster and more cost effectively using its tech platform.
Since its $18-million CAD Series A in September 2022, the company has secured $30 million. That figure includes $9 million in equity from early to mid-2023, $12 million in equity and $5 million in debt from late 2024, and another $4 million in equity that just closed in February.
Two strategic partners from the insurance industry, existing Toronto-based backer Securian Canada and new Moncton, NB-based investor Blue Cross Life, provided nearly all of this capital. This financing brings PolicyMe’s total funding to $51 million. The equity component was all primary, and Securian Canada supplied the debt. Ostro claimed each tranche was an up round, but declined to disclose PolicyMe’s valuation.
PolicyMe raised its Series A round in a similar fashion, doing so via multiple tranches. Ostro said PolicyMe labels this $30 million collectively as the startup’s Series B round, based on the amount raised and how much the company is generating in revenue.
Ostro founded PolicyMe in 2018 alongside COO Laura McKay, and her brother, CTO Jeff McKay, a trio with past experience working in insurance and tech. The startup got its start as a life insurance broker, tackling the issue of distribution with the initial launch of its coverage calculator and price comparison platform. In March 2021, PolicyMe launched its own fully-underwritten digital term life insurance product in partnership with Canadian Premier Life Insurance, which now operates under the Securian Canada brand.
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For its first four years, PolicyMe focused primarily on life insurance and selling policies on a direct-to-consumer (D2C) basis. With its Series A in 2022, PolicyMe outlined plans to roll out more insurance products and help other insurance firms sell policies online using its platform.
Since then, PolicyMe has expanded to serve all Canadian provinces and territories, and moved into health and dental insurance, something Ostro said has been a “huge growth channel” for the startup, which now serves more than 18,000 Canadians. Today, PolicyMe’s product suite includes term life insurance, critical illness insurance, and health and dental insurance.
The startup is also starting to see success with white-labelling its tech for other insurance companies, integrating quoting, underwriting, and policy issuance to help carriers launch products in just three to six months. Investors Securian Canada and Blue Cross Life have been two beneficiaries of this: Blue Cross Life has leveraged PolicyMe’s tech to launch D2C term life and critical illness products, while Securian Canada has used its platform to roll out digital life and health and dental offerings in partnership with the Canadian Automobile Association (CAA).
“By leveraging PolicyMe’s end-to-end digital platform, we’ve simplified what can be a complex process into something Canadians can complete in just minutes,” Blue Cross Life president and CEO Tim Mawhinney said in a statement.
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PolicyMe, which the company claims has now sold over $10 billion in insurance coverage to date—up from $5 billion in 2022—saw its sales quadruple year-over-year in 2024. Ostro declined to disclose PolicyMe’s revenue, but claimed that the company reached profitability in mid-2024. Ostro said that PolicyMe’s focus has always been on building a profitable company with strong unit economics, and noted the market downturn, during which capital has become harder to obtain, validated this approach.
Since its $3.3-million seed round in 2020, PolicyMe has taken a “partner-first” approach to building and raising capital—a strategy that it intends to stick with going forward. Ostro claimed that PolicyMe remains “very well-capitalized” following its recent financings and is not actively fundraising at this point.
Ostro said he has seen lots of insurtech companies raise funding from insurance companies worried about disruption and afraid of getting left behind, but never actually figure out how to turn those investments into effective partnerships. He claimed PolicyMe has focused its efforts on partnering first, proving out that concept, and then seeking funding, which he said aligns incentives and ensures trust between the startup and its larger corporate partners.
On the startup front, PolicyMe’s Canadian competitors include companies like PolicyAdvisor and Emma, which also offers its own digital life insurance products, while Breathe Life operates in the digital life insurance space as well, but is not a direct competitor. Like PolicyMe, these companies are part of a growing group of startups looking to disrupt the insurance industry that also includes Goose, ProNavigator, Samos, Walnut Insurance, and YouSet.
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In addition to focusing on growing its B2B2C business and exploring new products, PolicyMe is investing heavily in data, analytics, and AI infrastructure it hopes will enhance its underwriting capabilities and improve its customer journey. “We really do believe that AI is the future of this industry,” Ostro said.
But the CEO noted that applying AI to insurance can be “very tricky.” Use-cases are largely customer-facing or underwriting risk-based, and Ostro estimated it will take another year or two for the tech to be ready to move into production. He said it would be impermissible for a chatbot or AI agent to say the wrong thing to a customer or make a claims process mistake.
“We’re in a highly-regulated industry where the risk of hallucinations or getting something wrong is unacceptable.”
Andrew Ostro,
PolicyMe
“We think the technology is not quite there yet from a customer-facing standpoint,” Ostro said. “We’re in a highly-regulated industry where the risk of hallucinations or getting something wrong is unacceptable.”
Regulators also want to know how companies are underwriting and ensure they are not being biased—but evaluating the effectiveness of these models over a short period of time can be difficult in life insurance, where there are so few claims and such long-tail risks, he said.
At the moment, PolicyMe is exploring how to embed AI within the company and its operations, and making “foundational investments” in AI that Ostro does not expect will pay meaningful dividends immediately, but will prove fundamental to the company’s success over the long run.
“We should be the company best positioned to win at this, and we’re doing everything we can to make sure that that holds true when the time comes,” Ostro said.
Feature image courtesy PolicyMe.