Having achieved unicorn status with a $1 billion valuation less than two years after its official October 2016 debut, InsurTech carrier Root Insurance Company may seem like an overnight success.
Executive SummaryWhen actuary Alex Timm decided to launch a telematics-based auto insurance company, traditional insurers had already been experimenting with the idea—and failing to gain traction. Here, Timm tells Carrier Management that focusing on the best drivers has been one key to success, but he admits that nothing is really easy when starting to build an insurance company based on a reimagined pricing and delivery system. Persisting through startup challenges, Root leaders have created a company that generates premium revenues today and houses software products that could be a bigger portion of future revenue, he notes.
The growth trajectory is hard to miss, whether measured by VC funding dollars, premiums, employee counts, app downloads or ZIP codes served (see “Root by the Numbers”). Most recently valued at nearly $3.7 billion, the company that set out to reinvent how auto insurance is priced and delivered to customers even announced an expansion into the renters insurance market in November 2019.
But the early days were slow going, recalls Chief Executive Officer Alex Timm.
“We didn’t even know if we were going to sell a single policy. When you first start, you don’t know really what the market response is going to be and, quite frankly, when we launched the app originally, we got almost no traction at all,” he told Carrier Management.