Local insurance technology startup has grown quickly

  • Law
  • 02/11/2017
Since he took Root in central Ohio, Alex Timm's insurance technology startup company has grown over the past year, expanding beyond the Ohio borders.

The co-founder and chief executive officer of Root Insurance launched the firm a year ago as the nation's first entirely mobile-based insurance company.

"Growth has been phenomenal," Timm said. "Since we launched in Ohio, we've expanded to five additional markets, including Oklahoma, Arizona, Illinois, Indiana and Utah, with plans to expand to six more states (Pennsylvania, Delaware, Texas, Louisiana, Mississippi and North Dakota) in the coming months."

Motorists download the company's app onto their mobile phone and drive for two to three weeks.

During that time, the company used the phone's sensors and proprietary algorithm to identify good drivers based on more than 200 factors, such as such as braking patterns, acceleration and mileage.

The company has added downloads at nearly 50 percent month-over-month with direct premiums written increasing by 331 percent in the second quarter from the previous, Timm said.

"Since we don't give a quote to bad drivers - the 30 percent of drivers who are responsible for 50 percent of claims - we are able to give good drivers a discount of up to 52 percent off their current rates," he said. "Drivers can get a quote, customize their coverage and cancel their old insurance plan all through the app."

Located on West Gay Street, Root has grown to nearly 60 employees from the three-person team when Timm started the company.

"There's a reason we decided to make Root's home in Columbus. Columbus has a fast growing startup community with a supportive entrepreneurial culture," Timm said. "It also boasts strong talent coming from The Ohio State University, one of the most innovative universities in the country. I am excited for the future of Columbus as a burgeoning area for talent and innovative ventures, and for Root Insurance to help lead that growth."

Timm has worked across a variety of departments in the insurance industry since he was 14 years old, he said.

In corporate strategy, he was responsible for identifying market and industry trends and making recommendations on how the business model should evolve.

"But I soon came to two realizations: Consumers were embracing mobile technology at an unprecedented rate, but we were still stuck in the age of the internet; and while big data opened up a whole world of possibilities to fix what was broken, we didn't have the ability to capitalize on that opportunity," Timm said. "The result - technology was moving forward and leaving insurance increasingly behind."

He saw an opportunity for the auto insurance industry to reinvent itself by using the available technology to improve the customer experience.

In 2014, Ohio's average auto insurance expenditure ranked as the 12th lowest in the nation at $683 compared with the U.S. average at $866, according to National Association of Insurance Commissioners.

"Technology presents an opportunity to reimagine insurance, accurately predicting risk and offering more personalized and fairer rates to drivers. It also introduces new innovations that improve road safety, such as the rise of driverless technology," Timm said. "The challenge here is navigating an environment that isn't supportive of new technologies disrupting the industry."

He added that Root is the first insurance company to offer a discount for self-driving cars, beginning with Tesla."

"Cars with semi-autonomous technology have proven to be much safer on the road," he said. "Our app is able to gauge when a driver is likely using the Auto Pilot technology and reward them with a discount for those miles."

Other local insurance companies have started to adopt mobile technology.

Last week Grange Insurance launched its new app, Grange Mobile, which allows customers to have 24-hour access to its services.

The app is an extension of Grange's self-service, online customer portal where customers can view proof of insurance, make a payment, contact their agent and view policy information.

"It's all about giving customers the best experience possible, whether they're on their computer at home or on their smartphone while they're in line at the grocery store," said Linda Roubinek, Grange Insurance Chief Customer Interactions Officer. "Our mission is to provide peace of mind and protection for our customers."

And Nationwide Insurance, which debut its own mobile insurance app in 2009, announced in January a partnership with insurance company Sure to pilot an app that allows consumers to get renters insurance quote, purchase a policy and pay their insurance premiums. The app is available in California and Washington states.

"As consumers value more options to purchase our insurance products, we continue to explore new ways to meet their emerging needs," stated Mark Pizzi, president and chief operating officer for Nationwide's direct and member solutions business.

Timm said he plans to have the Root app available in all 50 states by the end of 2019.

"Further down the road, I'd like to offer multiple insurance products in addition to car insurance, continuing to revolutionize the insurance industry with simpler and more affordable products," he said.
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