There was a moment in first-quarter 2021 when InsurTech Root met a long-desired loss ratio target, sending a promising signal that the cash-burning startup was squarely on the road to personal auto insurance underwriting profits.

Executive Summary

A few days after Root's first-ever quarterly operating profit and first-quarter combined ratio under 100, CTO Matt Bonakdarpour and CFO Megan Binkley reflected on how the company arrived that point and what's next in an interview with Carrier Management.

“We’ve got it. We figured it out,” said Matt Bonakdarpour, president and chief technology officer, recalling the collective sentiments of the team during its first quarter as a public company.

According to company financial statements, Root delivered a calendar-quarter gross loss and loss adjustment ratio of 80.7 in that three-month period, some 40 points better than a corresponding loss and LAE ratio of 120.5—a measure that looked more like a combined ratio—for the same quarter in 2019. (Editor’s Note: Results were better across the auto insurance industry in 2020 when COVID shutdowns kept drivers off the roads.)

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