Next year, Chubb (tracing its roots back to the birth of the Insurance Company of North America) will turn 230 years old, an extraordinary feat of longevity that partly explains why it’s the world’s largest publicly traded property/casualty insurance company. By contrast, startup Root Insurance made its debut as a public company on Oct. 28, 2020. Fewer than five months later, its stock trading at less than half the IPO price, the automobile insurer was named in a shareholder class action complaint.

Executive Summary

Stock drops and lawsuits tell the tale of some disappointed investors in publicly traded InsurTechs. But it may well be that investors were looking at the wrong metrics in assessing prospects before making their bets on the InsurTech class of 2020.

Perhaps these growing pains should have been expected. Like other InsurTech insurer startups, Root Insurance was billed by its founders as a disruptive force in the insurance industry. Following its billion-dollar valuation in 2019, a newspaper headline stated that “Insurance Will Never Be the Same.”

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