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Root Insurance Closes $51 Million Investment to Expand Customized Auto Insurance

In View Summary

Root Insurance announced its closing of $51mn Series C funding round led by RedPoint Ventures. The company is known for incorporating individual driving behavior in every quote. Root plans to use the new funding to expand into additional states and continue its technology investment to improve customer experience.

The company specializes in full-stack automobile insurance offering based on the principle fundamental of fairness and transparency. Its USP is the use of its proprietary mobile app to give drivers customized quotes based on drivers actual driving behavior.

Root uses smartphone technology and data science to understand actual driving behavior, the primary factor in determining personal automobile insurance rates.

Since its launch in Ohio in 2016, Root’s offering is now available in 11 states and is poised to be available across whole America in 2019. In 2017, Root became the first insurance company in the nation to offer a discount for the use of Tesla’s AutoPilot technology.

“As Root reinvents car insurance, we are excited to have Redpoint and ScaleVP add to the experience and expertise provided by our current investors…Our technology allows us to give drivers rates based primarily on factors they can actually control, bringing fairness to a broken and antiquated industry. We are leveraging mobile technology and artificial intelligence to reimagine the way insurance works.”, said Alex Timm, CEO and Co-Founder of Root.

Reported Benefits

Benefits to Customers:

  • Affordable products and services
  • Automation
  • Quick processing time
  • Innovative products and services
  • Less errors
  • Greater coverage
  • Dynamic

Benefits to the Insurer:

  • Low operational costs
  • Increased customer reach
  • Improved consumer engagement
  • Innovation

The Digital Insurer's View

Auto insurance is currently afflicted by two opposing forces. On the one hand, a business line with decades of accepted norms and distribution channels provides a stable business model for insurers. On the other, location-based data, consumer expectations of on-demand usage, and the gradual development of autonomous driving capabilities is threatening to erode the profitability of auto-insurance. Although many insurers facing this ‘innovators dilemma’ are partnering with several insurtechs simultaneously, property insurers will need to be more decisive about which startups to align with larger investment rounds brings more complexity that insurers will need to navigate in order to capitalize on emerging consumer trends such as the pay as you drive model being pioneered by Root.

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