Spanish-language insurtech Sigo Seguros raises $10.5M
AXIOS, September 9, 2024 - Sigo Seguros, an auto insurance brand serving Hispanic and Latino communities that often struggle to obtain standard policies, raised $10.5 million in Series A funding, it tells Axios exclusively.
Why it matters: Traditional carriers shy away from non-standard policies, which may account for 30% to 40% of the auto insurance market.
As a result, drivers seeking insurance in this market are pushed to broker-run brick-and-mortar agencies that frequently charge opaque and onerous fees.
How it works: Sigo is a managing general agent (MGA) that provides a fully bilingual digital platform for Spanish-language drivers to acquire insurance.
The Austin-based company underwrites policies without requiring a credit score, education or employment history.
By providing transparent pricing, Sigo says it can save customers hundreds of dollars annually while still generating profitable loss ratios.
The big picture: "Immigrant and working-class communities struggle to buy auto insurance, whether it's because of a lack of a credit score, a language barrier or being undocumented," Sigo CEO Néstor Hugo Solari says.
However, those high barriers to purchase usually don't correlate to insurance companies' profitability or losses in serving those communities.
"The loss ratio — your claims paid out over the premiums you receive — are consistently lower for this traditionally non-standard market than the broader auto insurance market," he says.
Between the lines: Solari believes most carriers shy away from the Spanish-speaking market due to the higher operating expenses associated with underwriting, servicing and processing claims for those customers.
Rather than relying on agents, it automates customer data collection and uses its own risk-scoring engine to underwrite policies.
"We're investing in technology to automate all of that process, lower the cost, and pass those savings on to the customer," he says.
Zoom in: Varco Capital and Listen led the round and were joined by Angeles Ventures, Flintlock Capital, Zeal Capital, Rise of the Rest, and Fiat Ventures.
Varco Capital is the family office of Rafael and Carlos Varela, the founders of Pronto Insurance, a non-standard auto insurance provider.
Along with the funding, Rafael Varela joined Sigo's board of directors.
What's next: Sigo is only available in Texas today, but it is looking to expand into other states, like Florida and California, which also have sizeable Spanish-speaking immigrant communities.
Author: Ryan Lawler - AXIOS
