Californian home insurer Hippo has received $100m of funding. The start-up home insurer is looking to challenge Lemonade and Neos with its modern, digital approach to insurance.
Hippo capitalises on two key themes seen in digital household insurance in recent years: automating the sign up process to provide almost instant quotes and the inclusion of smart tech in the home.
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In that sense, Hippo combines the two defining features of high-profile insurance start-ups Neos and Lemonade, which specialise in smart tech and a quick digital service respectively. The $100m Hippo received in July 2019 brings its overall funding to $209m – a clear sign that it has established itself as one of the most valued home insurance start-ups in the world.
One of the reasons smart tech has yet to fully take off in the home sector is that traditional policies are quite cheap and smart home equipment is expensive, meaning insurers cannot afford to give devices away for free while still making profit.
Premiums in motor insurance can reach the £1,000 mark in the UK, meaning there is more space to include a telematics kit. And a black box is just one bit of equipment, while a wide range of smart tech products exist in the home sector. Hippo’s commitment to providing complimentary equipment to customers while also promising lower premiums make it stand out in the market.
Hippo has said it will use the funds to increase its geographical footprint and improve its direct-to-consumer route. The latter point is aimed at targeting uninsured homes, which remain high in the US. Indeed, this is an increasing issue globally with younger generations having to rent for longer periods of time. Renters only require contents cover and are also far less likely to purchase insurance than homeowners. GlobalData’s 2018 UK Insurance Consumer Survey found that only 44.6% of renters bought home insurance, compared to 72.2% overall. The situation is likely to be similar in the US.
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By GlobalDataUninsured homeowners are more likely to be convinced to buy insurance if they have access to a quick sign-up process and complimentary smart tech. As underinsurance among this group becomes a bigger story, Generation Rent will be increasingly targeted. Companies such as Hippo, Neos, and Lemonade will be at the forefront of these efforts in the coming years.
