Karn Saroya raises $14 million for insurance protocol Re as insurtech platform Cover is wound down

Quick Take

  • Decentralized insurance protocol Re has raised $14 million from investors such as Morgan Creek Capital and Framework Ventures. 
  • Karn Saroya, founder of Re, previously co-founded insurtech platform Cover, which is in the process of transitioning policy holders to other insurance companies.

Serial entrepreneur Karn Saroya has raised $14 million in a seed round for his new decentralized reinsurance protocol called Re.

Saroya previously co-founded insurtech provider Cover and fashion app Stylekick, which was acquired by Shopify.

Cover launched in 2016 with the goal of using data to underwrite customers in a better way. The startup raised a total of $27 million from backers like Exor, Tribe Capital and Sand Hill Angels, according to data from Crunchbase. In June of this year,  the company terminated “all but a handful” of employees as funding and acquisition efforts were unsuccessful, Coverage reported. 

“We were underwriting profitably, we distributed through 5000 independent agencies, but ultimately decided to wind the business down and transition all our policyholders to another insurer,” said Saroya in an interview with The Block. “So born out of us building Cover really came Re and Re is a licensed reinsurer.” 

Cover is in the process of transitioning policyholders to other insurance companies and Saroya is assisting with this process.

Investors in Re’s seed round include Tribe Capital, Framework Ventures, Morgan Creek Digital and SiriusPoint, said Re in a release.  The startup is valued at a $100 million post-money valuation, said Saroya in an interview with The Block. 

“The opportunity set for a decentralized approach to reinsurance is immense - there’s nearly a trillion of existing insurance surplus to be tokenized, and a huge amount of capital on the sidelines that will start to earn reinsurance premiums in the near future,” said Arjun Sethi, co-founder and partner at Tribe Capital, in a statement. Tribe Capital incubated Re under its crypto labs umbrella. 

A 'decentralized Lloyds of London'

Reinsurance transfers the risk from one insurance company to another to reduce the likelihood of a large payout. The reinsurer will receive a cut of the insurance premiums but will also bear a portion of the losses when a claim is made. 

THE SCOOP

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