Hippo has nailed down $25 million in new Series B funding, a cash infusion the provider of super-quick homeowners insurance will use to fuel a hiring and geographical expansion.
Comcast Ventures and Fifth Wall led the round, along with a number of undisclosed FinTech investors. Previously, the InsurTech startup raised a $14 million Series A round at the end of 2016, led by Horizons Ventures and joined by RPM ventures, Propel Venture Partners, GCV Capital and Pipeline Capital. FinTech investors and entrepreneurs participated in this round, too.
Hippo’s Head of Insurance Rick McCathron told Carrier Management via email that the money will help expand its geographical reach and operations.
“We have two primary uses for the new investment – first, to increase our geographical footprint to some 60 percent of the U.S. population,” McCathron said. “Second, we are in the process of opening up a new customer and operations service center in Austin, Texas. This facility will house our growing team of talented insurance professionals, focusing on sales, service and underwriting.”
The Austin facility will also house Hippo’s “claims advocate concierges,” the company said.
Currently, Hippo employs 40 people in its Mountain View, Calif. Office, and McCathron said growth plans are in full swing, with plans to “build out a significant team in Austin in the coming months.”
Hippo made its formal insurance marketplace debut in April 2017, and it is considered a managing general agency. The startup is licensed to operate in California, Arizona and Texas, and expansion will continue into other states over the coming months, the company has said previously.
Hippo asserts it can provide online homeowners insurance quotes in 60 seconds and a full policy in about three minutes. Its online portal lets consumers type in their address, after which Hippo’s software searches a number of data providers to bring back most of the information traditionally needed when applying for homeowners insurance. Swiss Re is the reinsurer, and TOPA Insurance in California acts as the carrier to back policies, the company has said.
Hippo said its smart home insurance policies offer more comprehensive coverage by cutting premium costs, specifically through ending process inefficiencies and outdated policy provisions.
“Homeowners insurance is an antiquated industry that has lost its way,” Hippo co-founder and CEO Assaf Wand said in prepared remarks. “Up to 65 percent of all homeowners claims result from catastrophic events. Whether it’s damage from a hurricane or wildfire, the last thing homeowners should have to deal with is a complicated battle with their insurance carrier. We get our customers what they need immediately, so the claims process doesn’t become another crisis they have to deal with.”
An Ideal Time
McCathron explained that Hippo wants to expand across the country, and he sees right now as an ideal time for its approach to the insurance business.
“The paradigm has shifted,” McCathron said. “Over the next five years I predict everything will change – from customer expectations, use of data, and IoT devices in underwriting and risk mitigation, to technological advancements, reinsurance capacity, and where that capital comes from, everything.”
McCathron asserted Hippo is “at the forefront of these changes” and he sees the startup as “leading the modernization of our industry.”
That said, McCathron offered words of caution to InsurTech peers who may focus a little too much on the “tech” side of what they do.
“We have a strong team of insurance and technology professionals who believe in the value and opportunities of blending insurance and technology in this InsurTech renaissance,” he said. “At times, it feels like InsurTech companies focus too much on technology and too little on core fundamentals of underwriting and claims handling. It truly is an integration of the two that will create a modern company with a sustainable underwriting result.”