Name: Balancing the Ledger: Hippo Wants to Bring Insurance Into the 21st Century
Uploaded: 2019-09-10
Duration: 11 min 30 s
Description: The insurance tech unicorn aims to take a proactive approach with coverage.

[ MUSIC ] Welcome to The Balancing letter where tech and finance intersect. I'm Robert Hackett. And I'm calling in America. And today we're here with a soft one, the CEO and co founder of Hippo, a billion dollar insurance startup. Welcome to the show. Thanks for having me. excellent. So let's talk about insurance. This is an industry that is not viewed in the greatest way by a lot of customers. You know we've got a colleague around the office who comes around and says, hey, hey, I'm not trying to sell you insurance or anything. So what are you doing to fix this problem in insurance? So our approach is, we view our mission and what we're doing is modernizing homeowner insurance, and it has different components. The first component is, we're enabling you to basically buy your policy however you want. You can buy it on your phone in three, four minutes. You can call a call center, you can do it as a chat. Whatever you wanna, however you wanna purchase it, that's one. The second thing is that will focus on the claim experience. And we realized that in home insurance, the claim experience should be very humane and very empathetic because the issues and the challenges are so significant. You had a flood in the basement you had a fire a total loss of your home and stuff of that sort. So we have a 24 seven Available consider that about taking care of your stress. They're going to you know, they're going to ask you are you safe? Are you okay? Do you need me to put you in a hotel for tonight? Did anything was broken? Do you need the clinical stuff of that? So, but the main thing that I'm most excited about is actually the time frame between you on boarding and having claimed this nine year gap. Which I think the industry completely forgot that there is a customer at the end of this funnel and basically, any industry doesn't even call your customer, call you a policyholder. And we want to bring you value because at that point of time, or both, you're my customer, what value can we bring you? So we focus on a lot of stuff, which is basically shifting insurance for being a active Company to being proactive. We give you IOT device. Every customer of us gets Smart Sensor kit for free. And it's something that you know, is water monitored in motion sensors and smoke sensors. We send someone to your home once a year to clean gutters, check air filters and things of that sort. We keep on monitoring using the Big Data your home to basically identify the risks patterns before they actually happen. So if we see a discoloration on the roof, from our satellite imagery, then we would let you know we see a problem like that Arlene and we're going to send. Basically it will fail to fix it. So that's what for us modernizing home insurances. So you just raised 100 million dollars at a $ 1 billion valuation. What do you plan to do with the capital? We this was a very interesting funding round for us. We wanted to align with investors that understand growth and can help build build a really, really big companies. Hence why we worked with Bond, which is [ UNKNOWN ] new fund, which we view as probably the leaders in building really, really big companies and understand both Wall Street, as well as growth and all of that world. And this is their second investment since they spun out of [ UNKNOWN ] Perkins. Yes. And we're really fortunate in that. I think the first US one. They did I think the previous one was an Australian company. It will it was about several components basically doing a lot more in all forms that we have. We're seeing significant growth on a lot of the, basically, a lot of the initiatives that we're having, we just want to double down we want to double down on the team, we want to double down on We're live in 18 states, we wanna go to 15, to 50 states by the end of 2021. We are considering what kind of other lines in insurance or within the realm of on increasing some of the active basically benefits of the world giving customers. All of these things we see so much growth initiatives and things that are actually working we just want to double down have elevate the level of team members that we have. And really really pursue a lot more initiatives before that it was more of a choices we had it's this or that. Now we can actually this and that which is something which is Is very appealing for us. In one of your closest competitors is another insurance tech company called lemonade, and they're backed by SoftBank. So how do you feel about being up against a competitor who has a backer with seemingly unlimited capital? I don't think its capital is is the differentiated aspect. Why not? Either they focus on very, very different thing. Lemonade is a brand for millennials focused on renters insurance. We are focused on the, for most of us, the biggest financial asset. It's a lot more complex understanding what's the building cost of your house, what's the risk around your house And it's built in a very different way. We are obsessed and you know from morning till going to sleep that's all we think out to best ensure we are home. I think many times it's not the people with the biggest pockets that are actually winning. It's the people with the most passion and the people that are the most driven and the people that are executing. We have enough money. It's not that, you know, we're a small change compared to that. I haven't seen self mag as an added bonus to basically win in a category so far. What would you say is the biggest problem that the industry faces now the insurance industry what is most outdated Of their practices. When we tried to build a product. We analyzed 10s of thousands of claims of individuals against the insurance companies. These are people that was so annoyed that they felt compelled to actually go and file a complaint, which is a way higher threshold. And what you see that the biggest problem is that people it's not that they're not getting paid for what they were insured for Is the fact that Polina thought she's insured for something and she wasn't insured for it. And you know about it only nine years down the line when you have the claim. So you had a tree in the backyard that lifted the sewage. And you thought you're covered for that and you're calling your agent I have a $ 7, 000 damage and they're saying, Yeah, I'm sorry Polina, you never bought service line. And what is that? That's what connects the municipality to your home and it's not covered under your policy. And then you had a surge of water coming from the sewage. That's what a backup and you have an explosion of your age fact that's Equipment Breakdown. And you bought a house from 1983. But the damage happened in 2021. And the city of New York passed civil laws. So you can't even do impelled to the spec that's happening. Does So many of these things that you never knew about, and you assumed that the safety net is gonna capture you. But now, the safety net is a smaller and b has this gaping holes and that was a really, really big problem. So that's one. The second thing is the entire coverage is obsolete. If you look and open your policy, you'll realize that you've covered for stuffs like four coats, $ 6, 000 Beautiful China and silver $ 5, 000 Muslims and crypts $ 500 I can give you a list, gold bullion stamp collection. Physical bonds in the list keeps on going and I'm willing to bet everything that none of you guys have any of these things in the house. However your electronics at captain $ 2, 000 office is not covered or stolen camping equipment bicycle all of these things are below basically where the deductible is and i think that's a really big problem those are we live our life in 2019 is very different than our we lived our life in 1960 but everything state is 1960. And we're trying to modernizing covering that stuff, which is what we're doing, as well as close this gaping holes that I was telling you about. A lot of people are predicting that there is a looming recession on the horizon. How would an economic downturn affect your business? Probably in a positive way. So the insurance industry is recession proof. It's base, home insurance is, you're obligated by your mortgage provider to actually have your insurance policy on your home. I think there's like 110, 120 million households in the U. S ., out of which new homes it's 4 1 / 2 million to 6 1 / 2 million homes So in today's session, there's gonna be 4 million in a really like, big deal. It's 6 million the delta is is tiny, it's less than, you know, less than 1 %, or one and a half percent on, on basically the entire volume. But people are actually going to be more price conscientious. They're going to try and save money people is saving them up to 25 % on the fees, it's very, very difficult to even get a quote. Now it's available so it takes you a minute to actually get a quote. So, if anything, I think if there's gonna be a recession, more people are gonna be more price conscientious. Gonna start getting more quotes. Gonna start going to people that actually take care of them better. And it's not gonna be that material for us because you're obligated to have it. Hurricane Dorian is causing significant destruction. How are storms like these affecting your customers, also your business and the insurance business? It's a very unfortunate event, but insurance is there for castastrophes as well. The biggest component of The price of your policy is actually derived by your chances and likelihood to be under a catastrophe event. That's why the policies in Florida are more expensive than the policies in Arizona. What we're doing with our customers is trying to pre- empt and prevent and help them know about it up front. So when the files and [ UNKNOWN ] we contacted every customer that we have in the areas where the files are at We told them, just you know, there's a file that's coming in. By the way, this is my personal number. I'm the CEO of your insurance company. If you need something, you give your personal phone to people. And as a 24 seven, this is a super stressful event. And I think the minimum we can do is empathy. And then we send several trucks to people's home to basically Clear their belongings if they needed to. There were people that were asthmatic and will relatively fall but couldn't breathe. We put them in hotels. We didn't expect that for instance when they're going to come they would need a renovation in the house or a deep cleaning at least. There was a surge of prices because everybody needs that. We hired a company just dedicated to us and we bought it to all of our customers. Our aim was how fast was actually how fast can we get the homeowners back into their homes. Nobody wants to stay away from their home. And I think, just thinking back on the customer and what do you need and being proactive about it. The opportunity, it's very said of whats going on with Orion, but I think that's what insurance companies should do. Be empathetic, try to help customers and understand. This is super stressful time. And that's why the contract that we sign with our customer is that if, God forbid something happened, we're there for them. And also my email is on their website. So if you go to my website Tight, if someone- [ UNKNOWN ] [ COUGH ] People can contact me, and I actually love that because people are usually either very happy or very annoyed. And I wanna know about both of these things. If someone has a really big problem, we're trying to get all of you guys on the phone 35 minutes, I wanna know about that. And how can I act otherwise? This is an unmitigated kind of communication. And same goes if someone just, and I was talking to this and this person. The customer supporting was amazing. I also want to know about that. Excellent, well thank you so much for coming on the show, Seth. Thanks for having me. Thank you. I'm Robert Hackett. And I'm Paul Minerva. For more Balancing the Ledger, go to fortune. com. See you next time. [ SOUND ]

Balancing the Ledger: Hippo Wants to Bring Insurance Into the 21st Century

Finance

The insurance tech unicorn aims to take a proactive approach with coverage.