San Francisco-based Federato is raising $40 million in its latest funding round to expand its AI-enabled underwriting solution RiskOps. The $80 million round, spearheaded by StepStone Group and supported by Emergence Capital, Caffeinated Capital and Pear VC, brings Federato’s funding total to $80 million. The company wants to revolutionize the insurance industry’s response to risk through artificial intelligence.’
RiskOps: Revolutionizing Underwriting with AI
Federato’s flagship solution RiskOps automated underwriting through the use of AI to digest big data and deliver meaningful insights. Designed to support more efficient operations and decisions, RiskOps enables insurers to solve some of their most challenging issues:
- Streamlined Submission Triage: Automatically sort submissions according to underwriting rules and portfolio goals so that underwriters are focusing on high value opportunities.
- Real-Time Insights: Provides real-time insights on how each submission reflects the insurer’s needs to minimize waiting times and increase accuracy.
- Unified Workflow: Unites the underwriting workflow across a single system, eliminating the need for multiple systems and tools.
They are designed to streamline the underwriting process while ensuring accuracy, which allows insurers to better control risk and spend effectively.
Impressive Results for Insurers
Federato reports transformative outcomes for its clients, including:
- 90% Reduction in Systems Usage: Underwriters rely on fewer tools, improving workflow efficiency.
- 3x Increase in High-Appetite Quotes: By aligning submissions with insurer priorities, RiskOps boosts the volume of desirable quotes.
- 89% Reduction in Time to Quote: Faster quote generation helps insurers secure more business and enhance customer satisfaction.
These metrics highlight the tangible benefits of integrating AI into traditional underwriting workflows.
The Vision Behind Federato
Federato was founded in 2020 by CEO Will Ross and CTO William Steenbergen out of a desire to address inefficiencies in insurance risk management. Ross (an IBM Watson employee) and Steenbergen (a computational engineer) had worked together in the early days on wildfire modeling. They illuminated the broader problems of the insurance industry, and that was the impetus behind RiskOps.
“What we wanted was not just to automate repetitive work but to simplify decision-making in a way that human beings couldn’t,” Ross said. It is this ideal that underpins Federato’s drive to apply AI to augment, rather than supersede, human knowledge.
Why Investors Are Backing Federato
StepStone Group, in collaboration with existing investors Emergence Capital and Caffeinated Capital, believe that Federato’s model holds great promise. The trillion-dollar insurance industry around the world is a prime target for AI innovation. Federato’s decision-driven, and not task-based, approach differentiates it from the rest of the pack.
Emergence Capital’s Lotti Siniscalco praised the firm’s cautious risk management: “Federato knows that in insurance it’s all about speed, but also accuracy.
What’s Next for Federato?
With the additional funding, Federato will be able to ramp up RiskOps’s functionality and expand into new markets. The company is focusing on creating novel uses for its technology and reestablishing itself in key markets.
In a world of increasing data volumes and changing risk environments, Federato’s AI-powered platform could become a future foundation of modern underwriting. Combining advanced technology and a solid understanding of the market, Federato is redefining the future of insurance risk management.