Caribou: Yet Another Entity Challenged with Insurance Profitability

Previously known as MotoRefi, Caribou—a fintech startup founded in 2016—recently removed insurance-related services from its website. Since its establishment, the company has raised a total of $189.1M and primarily provides refinancing solutions to consumers securing auto loans from dealerships during new vehicle purchases. At one point, Caribou also facilitated comparison shopping for insurance policies on its platform.

As reported by Coverager, Caribou established pilot partnerships with Progressive, Chime, and other players in February 2020. Shortly thereafter, they launched an online platform where potential customers could retrieve auto insurance quotes, aiming to boost the revenue per customer they engaged.

However, following notable layoffs at the startup in Q4 2022 and Q1 2023, Caribou's website now no longer showcases insurance offerings. Given the insurance industry's current challenges, like soaring rates, mandatory down payments for new accounts, and some carriers even halting new policy offerings in specific states, it raises questions about Caribou's efficacy in offering competitive insurance rates to its clientele.

Caribou's exit from the insurance sector highlights that integrated insurance solutions might not be the revenue generators they were once thought to be. For instance, with firms like Salty ceasing operations, it appears consumers may not wish to consider insurance while focusing on financing a vehicle.

Contrastingly, Gather offers a unique approach to insurance, standing apart from the conventional embedded insurance model. Instead of urging consumers to switch carriers, Gather streamlines the process for users to retain their current provider when purchasing a vehicle, using an automated system. Recognizing that often existing policies are more cost-effective than acquiring new ones—especially with rising insurance costs—Gather simplifies the process of updating current policies with new vehicle details.

The trajectories of companies like Caribou, Root, and Polly amidst the current insurance challenges will be intriguing to observe. One thing is evident: the insurance industry landscape is undergoing significant transformation, and only innovative companies prepared for these shifts will thrive.