(This August 3 story fixes sixth paragraph to indicate Hippo does not offer renters insurance)
NEW YORK (Reuters) – Hippo Holdings Inc wants to change homeowners’ insurance by using customer data to make it faster and easier to get coverage, Hippo’s chief executive said in an interview.
The company, which has a $5 billion valuation and went public through a blank-check company on Tuesday, is among a slew of “insurtech” listings that are trying to pry business from established insurers.
“I want to double down on tech, data and more engineering and more capabilities,” CEO Assaf Wand said of the $638 million Hippo will receive in proceeds from the listing.
Hippo’s sales aspirations mirror companies like Geico Corp and Progressive Corp, which have made the auto insurance market more competitive.
To get there, Hippo plans to develop algorithms that speed up policy quotes and create new products, Wand said.
Hippo is backed by Silicon Valley entrepreneurs Reid Hoffman and Mark Pincus. Founded in 2015, it does not offer renter’s insurance, but does provide products aimed at other homeowner headaches that insurers traditionally do not cover, such as upkeep, security, repairs and eventually selling the place.
For example, Hippo provides sensors that chirp when water leaks under a kitchen sink, so a plumber can be called to prevent serious damage. That helps the homeowner, but also reduces the amount Hippo would have to pay out in claims. Similarly, outside motion detectors can help prevent burglaries.
Hippo went public through Reinvent Technology Partners, its special purpose acquisition company, and started trading on Tuesday.
In mid-morning trading on Tuesday, Hippo shares were up 2.4% at $10.025, according to the New York Stock Exchange.
Hippo’s total written premiums grew from $142 million in 2018 to $405 million in 2020, the company said. It forecasts $544 million this year and $2.28 billion by 2025.
“Hippo’s grown extraordinarily fast,” said Tom Mason, senior analyst at S&P Global Market Intelligence. “The real estate market is so hot, that’s a big part of their growth.”
Other recently listed insurtechs like Lemonade Inc and Porch Group Inc have gone up since their listings.
But there are risks from a housing market down-shift, Mason said. And insurtechs broadly need to show steady profitability to win over investors, said Robert Le, analyst at PitchBook.
“High-growth insurtech companies with high loss ratios are risky,” Le said.
Hippo bought property and casualty insurer Spinnaker Insurance Co last year, gaining licenses in all 50 U.S. states. It currently sells in 37 states, reaching about 80% of U.S. homeowners and expects to expand to 90% this year. Among large population states, it offers coverage in California but not in New York.
(Reporting by Alwyn Scott in New York; Editing by Lauren Tara LaCapra, Matthew Lewis and Steve Orlofsky)