Fairmatic raises $46M to bring AI to commercial auto insurance

With inflation sparking an increase in the cost of repairs, labor and claims, fees for insurance are similarly spiking across the board. Car insurance premiums rose 13.7% nationally over the past year, according to a study from Bankrate.com. Home insurance, meanwhile, climbed 12.1% year-on-year, Policygenius found.

But Jonathan Matus argues that it doesn't have to be that way. He's the founder of Fairmatic, a company that's applying AI to -- at least according to him -- reduce risk in the car insurance industry.

Matus previously founded Zendrive, a platform that provides insights to enterprises for car insurance underwriting and claims as well as roadside assistance. While Zendrive is focused on insurance for individuals and families, Fairmatic has a more commercial bent -- a customer base made up primarily of businesses.

"Having spent about a decade of my career at Google and Facebook, I quickly noticed the negative externalities of the technology I actively helped become widespread," Matus told TechCrunch in an email interview. "The path to Fairmatic’s inception was created out of a need to de-risk one of the worst externalities of this powerful technology: the increase in distracted phone use while driving and subsequent loss of lives on the road."

Matus might speak in grandiose terms, but Fairmatic's business proposition is simple: analyzing and pricing a vehicle fleet's risk profile. The company uses AI models trained on driving data to attempt to mitigate risk and assist with various policy management and claims processes.

Customers get access to an app that they can use to monitor "driving events" -- e.g. erratic driving -- and "identify actionable improvement opportunities." The app also offers what Fairmatic calls a "fully digital mobile claims experience" that can automatically detect crashes (hopefully better than Apple) and analyze incident data.

Here's Matus: "With Fairmatic, small, medium and large enterprise fleets are empowered with actionable insights that improve safety and have a direct impact on insurance savings."

But there's reasons to be skeptical. Fairmatic isn't the first to bring AI to car insurance decisioning -- Jerry, Just, Root and Tractable offer similar technologies, albeit targeted at consumers -- and AI has a spotty track record in the insurance industry.

Last year, the Casualty Actuarial Society (CAS), the professional society of actuaries specializing in property and casualty insurance, acknowledged the prejudicial effects AI might have when used by financial institutions in determining insurance and mortgage lending. In a series of papers, the CAS concluded that biased data -- data on which insurers train their algorithms -- could perpetuate the discrimination that already exists in the insurance industry. (See: Allstate's pricing algorithm that disproportionately negatively impacted nonwhite customers.)