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(Reuters) - Fabric, a web-based insurance agency that promises new parents accidental death coverage in two minutes, opened for business in New York on Tuesday following the state's approval of its key product, the company said.
The New York launch pushes the Brooklyn-based Fabric Insurance Agency, LLC, which also sells term-life coverage, into the life insurance industry's second-largest U.S. market.
Life insurers, which often sell health insurance and annuities as well, collected $48 billion in premiums in New York during 2015, second only to California, where they collected $64 billion, according to the American Council of Life Insurers, a Washington-based trade group.
Fabric, whose policies are issued by Vantis Life Insurance Company, a Pennsylvania-based unit of Penn Mutual Life Insurance Co [PMLIC.UL], is among a wave of tech-driven insurance startups that are trying to upend the often lengthy, traditional process for buying insurance policies.
"It's a big problem in a massive industry that hasn't seen any innovation in decades," said Fabric Chief Executive Officer and co-founder Adam Erlebacher.
The startups, known as "fintech" or "insurtech" ventures, typically leverage technology, such as cloud data storage or smartphones, to provide cheap and easy-to-access services such as loans, insurance, payments, money transfers and stock trading.
Lemonade Inc, another fintech company that promises renters and homeowners insurance in as little as 90 seconds and payment of claims in 3 minutes, on May 9 won approval from California regulators to sell policies in the state.
Fabric, now operating in 38 states and Washington, D.C., promises parents two-minute approval for accidental death coverage, which it says is the biggest risk for individuals between ages 25 to 44. Premiums start at $6 per month for a $100,000 policy.
Customers can then upgrade to a 20-year term life insurance policy, which they apply for online and schedule medical testing.
Fabric's investors include Bessemer Venture Partners, Box Group and Maveron, according to its website.
The idea for Fabric as Erlebacher bought his first life insurance policy when his son was two, after procrastinating, as many parents do, he said. Erlebacher, a former executive for Simple, a digital bank and BBVA unit, filled in an online form and completed paperwork with an agent, who pushed additional products, he said.
The coverage became valid ten weeks later, Erlebacher said.
Reporting by Suzanne Barlyn, editing by G Crosse