The tedious, time-consuming process of settling insurance claims is practically begging for disruption. A startup called ClaimSorted is answering the call with an AI-enabled service that investors are backing to redefine the industry.
On Monday, ClaimSorted will announce a $13.3 million seed round led by Atomico, the venture capital firm that has backed fintech giants Stripe and Klarna, with participation from Eurazeo, Y Combinator, Firstminute Capital, Start Ventures and a network of seasoned insurance veterans.
The fresh capital will help fund the expansion of ClaimSorted’s 50-person team, particularly in its engineering and claims operations. But don’t expect any victory laps.
“We don’t celebrate a fundraise once we close,” said Pavel Gertsberg, ClaimSorted’s cofounder and CEO, in an exclusive interview. “We didn’t have any company drinks, didn’t do anything. It’s not the goal. The goal is the customer and what we deliver.”
Aiming for 100 Million Policyholders
At just over a year old, ClaimSorted says it already works with more than 20 insurance companies across the U.S., U.K., and EU, serving tens of thousands of policyholders. The founders’ long-term goal is to reach 100 million policyholders worldwide.
Progress has come quickly. Last October, the company raised a $3 million pre-seed round backed by Firstminute Capital, Y Combinator, Precursor Ventures and Transpose Platform. But when asked about the startup’s valuation, Gertsberg demurs.
“We think it’s the wrong metric,” he said. “Some founders optimized for it and got burned very badly.”
Born from Frustration
Both Gertsberg and his cofounder German Mikulski moved to Britain as teenagers—Gertsberg from Russia, Mikulski from Belarus—and eventually became British citizens. Gertsberg had tried his hand at a few startups; Mikulski had spent years at Deutsche Bank.
Initially, the longtime friends started out running a pet-insurance startup, but they were repeatedly exasperated by the slow, error-prone claims process that drained profits and infuriated their customers. So they did what many frustrated entrepreneurs so often do: they shut down the company and built the solution themselves.
“Many companies are born out of different reasons. Ours was born from frustration, borderline anger,” Gertsberg said. “This company we know is solving one of the largest pain points in insurance, which is super exciting.”
The Pain Point and the Promise
That “pain point” is the third-party administrators (TPAs) who process claims on behalf of insurance companies. The system all but guarantees delays, errors and unnecessary costs, a problem that seemed intractable to outsiders.
“Everyone told me no one will buy from you because you’re a startup. Everyone. It’s impossible. Insurance will not change,” Gertsberg recalled.
Undaunted by the skepticism, they pressed on. The day after selling their business, the pair were on a Zoom call pitching their idea to Y Combinator’s Tom Blomfield, the British fintech entrepreneur who cofounded GoCardless and Monzo. He eventually was sold on the idea.
“It was inspiring to see Pavel and German grow ClaimSorted during their time at Y Combinator,” Blomfield said. “They seemed to genuinely care about their customers and quickly became real experts in the insurance industry. I’m excited to see what they build at ClaimSorted.”
Three months in the prestigious startup accelerator that launched Airbnb and Stripe, surrounded by some of the world’s most ambitious founders, proved transformational for the duo.
“If you love competition, there’s nothing better,” Gertsberg said. “It’s like training with the best athletes in the world.” Dinners and other events carried the electric hum of people convinced they could remake the world around them: the person on your right was launching rockets, the one on your left was curing cancer.
“It’s a place where people talk about their ambitions, but no one thinks you’re crazy,” he said. “Instead, they tell you to be even more ambitious.”
Faster, Smarter, Cheaper
That ambition now fuels ClaimSorted’s mission to become the go-to AI infrastructure for insurance claims. The company has assembled a team of industry veterans from Hiscox, Lemonade, AXA, Hartford, and Liberty Mutual, blending operational experience with the latest in machine learning.
Its proprietary AI system handles repetitive, rules-based tasks, such as verifying documents, flagging anomalies and identifying fraud, while leaving nuanced cases and customer interactions to human experts. The result, ClaimSorted says, is claims processed three times faster than rivals, at lower costs and with higher customer satisfaction.
From U.K. to the U.S.
ClaimSorted is headquartered in both New York and London, a reflection of how crucial the U.S. market is to its growth, even as the U.K. remains home for its cofounders.
“I moved to this country. I love this country to bits,” Gertsberg said. “And I want to show that you can build a great company here.”
With new funding and an AI engine that promises to fix one of the world’s most frustrating processes, ClaimSorted’s founders are betting they can do just that.
