Although three strategic pillars guide investments in technology and data science at InsurTech Root, the second pillar—one focused on “meeting customers where they are”—is likely to be a near-term priority, an executive said recently.

Speaking to Carrier Management a few days after Root reported its first-ever quarterly operating profit (in first-quarter of 2024) President and Chief Technology Officer Matt Bonakdarpour reviewed the three strategic pillars that guide leadership decision-making: pricing and automation, differentiated access to customers, and being a brand customers know and love.

Related article: Inflation a Blessing for Root

Bonakdarpour explained that Root has been creating what it refers to as its “carrier platform” in order to diversify distribution beyond direct business that comes through the Root app over the last two years, at the same time as the company has continued to invest in the underwriting and pricing pillar. On the carrier platform, partners that don’t normally sell insurance “can access our APIs to deliver an embedded binding experience in their own customer flow.”

“The Carvana experience is a great example of this,” Bonakdarpour said, referring to the first such partnership dating back to 2021. “There’s a YouTube video that you can show when you’re buying a car on Carvana; you don’t have to leave Carvana’s real estate, their website, in order to attach Root Insurance. We were able to iterate on that product over the years [and] drive the attach rate up,” he said.

During the first quarter of 2024, partnership business represented 12 percent of new writings.

Increasing attachments, Bonakdarpour said, support a hypothesis that Root leaders hold: “Meeting customers where they are in their moment of need is far more efficient and delightful for the customer than having them come to an insurance website to get a quote and a bind.”

Not all partners opt for a fully embedded experience on Day 1. “We’re focusing on increasing our partnership channel to allow partners to use our platform in any way that’s right for the partner…It could be an experience where we provide an estimated quote to a customer on someone else’s platform and then seamlessly transition to Root real estate. That could be like a crawl phase, whereas running would be the Carvana experience.”

In order to succeed, he said, “you have to be very focused on the developer experience…It’s not just the customers who are buying policies that we consider our customers, it’s also the software engineers and the developers of our partners who are integrating against our platform. We’re very focused on that so that can be done efficiently, it’s ergonomic, there aren’t a lot of questions that need to be asked of us.”

While Root publicly identified Carvana as a partner, the InsurTech has not revealed its other partners. Bonakdarpour confirmed that they are not only auto dealerships. “They’re across a host of different categories. Our focus has really been on the platform and not on any specific partners. We’re really invested in the platform, and we want to scale to many, many partners over time. But we don’t share the partner’s name. We leave it up to the partner, however they want to handle the communications. We want to be a good partner to them in that way,” he said.

Root Chief Financial Officer Megan Binkley noted that the Carvana partnership was unique in that Carvana also made an investment in Root. Root and Carvana announced a $126 million investment agreement in August 2021 when the embedded insurance partnership was first announced.

Unlike direct business placements, the Carvana partnership doesn’t involve the use of telematics.

“We are very, very interested in bringing our telematics product to the partnership space,” Bonakdarpour said, noting that there are some partnerships in the pipeline for which Root anticipates introducing telematics sooner than it has in the past. Explaining why the early stages of most partnerships have avoided telematics, he said, “We are approaching partnerships the same way we approach our direct product, which is ship quickly and iterate the product over time to meet the customer needs. And the fastest way to ship is with a very simplified product without telematics. Telematics requires some education for the customer, and so we want to be very deliberate about the way we educate so that people are buying the product that they think they’re buying.”

“We’re also investing in capabilities to allow us to obtain consent, in an appropriate way, and obtain telematics, say, from connected car data. Recent events have made us double down on how deliberate we are in the way we [obtain] consent and review the way we do it, review the way our partners obtain consent. We think we are doing it in a way that’s serving the customer well,” he said.

(Editor’s Note: Bonakdarpour confirmed that the recent events he referred to involved an exposé in the New York Times about GM customers who were unaware that data collected through its OnStar Smart Driver program was being shared with LexisNexis, Verisk and insurance companies, leading to lawsuits and a decision by GM to end the Smart Driver program.)

Connected car data “is another great path” to the accurate pricing goal of Root’s first strategic pillar, Bonakdarpour said. “As long as the customer understands what’s going on, [and] we’ve obtained the consent that we need to obtain, we can obtain telematics at the moment of purchase without tracking telematics on the mobile phone like we do in our direct product.”

The executive also confirmed that independent agents are still part of the Root partnership story.

“We’re very interested in the independent agent channel…In fact, the carrier platform I was alluding to before is of interest in that space as well because it can create a differentiated agent experience that doesn’t require necessarily to hop into a Root-specific application,” he said. “Many times, the agent [has] five or six different applications on your computer. You go and quote on each one independently and then decide which one you bind,” he said, noting that the embedded platform “allows the agent, depending on their needs and sophistication, to embed our quote-and-bind experience in their own tool.”

“Suppose you’re an agency and your agents all use some in-house software to sell policies—like a comp rater, for example. That comp rater could integrate directly against our carrier platform and surface not just estimated quotes but bindable quotes, and then allow the agent to bind within that platform without bridging over to a Root-specific application. This creates efficiencies for the agent. They’re very focused on volume and any type of efficiency for them is a great experience,” he said.

“We are seeing some early traction there, but [we’re] not really ready to unveil any [agent] partners specifically,” he said.