Insurtech unicorn Hippo navigates next steps

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By most measures, there are very few insurtech “unicorns,” or startups with a valuation of $1 billion or more. If there is a company that checks all the boxes, though, one would be hard-pressed to find a better example than Hippo. Not only does it meet the financial requirement, but it was founded to be an insurance provider from the get-go, offering home insurance, digitally distributed and managed, in 15 states.

“We’ve always tried to focus on building a business, not a venture. that makes decisions for the next valuation,” says Rick McCathron, Hippo’s chief insurance officer. “We have always focused on what’s in the best interest of the customer, and growing and scaling our operation.”

Hippo recently announced a new reinsurance panel, including Arch, Markel, RenaissanceRe, and TransRe, and a captive to support its further expansion. Those business moves represent its entrenchment on the “insur” side, with the “tech” growth including the acquisition of Sheltr, a home-inspection startup, and an effort to distribute smart devices among its customer base.

“The main focus for us getting more data points, how can we keep improving the underwriting, reduce our loss ratio, and have a better customer experience,” says founder Assaf Wand. “We want to keep fine-tuning our offering.”

For reinsurers, seeing a company focus on effectively integrating technology and digital into the insurance process represents a strong opportunity, says Ken Brandt, president of the Americas for TransRe.

“We see a lot of insurtech opportunities, we probably vet close to a hundred of them every year,” he says. “Often when we see an opportunity they are either long on ‘insur’ or ‘tech’ and not the other. In our vetting of hippo is that they have a strong balance of both, and a lot of credible insurance experience.”

Brandt adds that Hippo’s focus on leveraging tech as a way to reduce loss is where the insurance industry has to head as exposures change rapidly.

“We have an attraction to building books of business where it makes the customer a more active participant in loss management,” he says. “They will definitely attract a different kind of insurance customer than some of our other insurance companies. Philosophically it requires a customer who’s going to be more active in preventing loss.”

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