Root Insurance

Part
01
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Part
01

Root Insurance Expansion Timeline

Within the past three years, Root Insurance has rapidly expanded from its home base in Ohio to almost 30 states as of September 2019.

2016

  • Root Insurance was founded in 2015 but launched in October 2016 at Columbus, Ohio with the aim of entirely selling insurance via smartphone.
  • At the time it launched, Root Insurance only catered to Ohio alone and mentioned that it would expand to Illinois next.
  • A few months after it launched, it already had about 20 employees, raised up to $7 million and expressed its plans to expand nationwide the following year.

2017

2018

  • In March 2018, Root Insurance raised $51 million in a Series C funding and announced its expansion to Louisiana.
  • The company launched in Missouri and New Mexico by April 2018.
  • In June 2018, Root Insurance launched in Iowa.
  • Root Insurance was accepted for coverage in a total of 19 states by July 2018. They include Montana, North Dakota, Utah, Arizona, New Mexico, Oklahoma, Texas, Iowa, Missouri, Arkansas, Louisiana, Mississippi, Illinois, Indiana, Ohio, Kentucky, Pennsylvania, Delaware, and Maryland.
  • The company reported that it would be expanding to Oregon, Alaska, Nebraska, Connecticut, and North Carolina next.
  • By August 2018, Root Insurance expanded to Oregon, raised a total of $100 million in a Series D funding and had a $1 billion valuation.
  • The company expanded to South Carolina by the end of 2018. In total, Root Insurance was accepted for coverage in 21 states. It mentioned that it would expand to all 50 states by the end of 2019.

2019

  • By July 2019, Root Insurance started offering its services to three more states in the US - Georgia, Nebraska, and Connecticut making 25 states in total.
  • In September 2019, the company raised $350 million in a Series E funding led by Coatue and DST Global. It had a $3 billion valuation at the time.
  • Currently, Root insurance is accepted for coverage in roughly 29 states; Montana, California, Nevada, North Dakota, Utah, Arizona, New Mexico, Colorado, Oklahoma, Texas, Iowa, Missouri, Arkansas, Louisiana, Mississippi, Illinois, Indiana, Ohio, Kentucky, Oregon, Alaska, Nebraska, Georgia, Tennessee, Virginia, Connecticut, Pennsylvania, Delaware, and Maryland.
  • Within the next few months, Root Insurance plans to expand to Washington, Alaska, Hawaii, Alabama, North Carolina, DC, New Hampshire, Massachusetts, and West Virginia.
Part
02
of three
Part
02

Root Insurance Perceptions

Customers are overall satisfied with Root’s car insurance, claims, and services. However, the major complaint from reviews by Root Insurance customers is that it takes a while to receive a quote. Other things people have been saying about Root Insurance over the past two years are discussed below.

POSITIVE PERCEPTIONS

NEGATIVE PERCEPTIONS

RESEARCH STRATEGY

To find out what have people been saying about Root Insurance over the past two years, we leveraged a compilation of company review websites such as WaysToWealth, financial sites such as ValuePenguin, insurance comparison sites such as TheZebra, Clearsurance, market journals such as BetterBusinessBureau and reputable insurance blogs such as InsurancePanda. Although we were able to find publicly available pre-compiled data on this subject, we had to dig deeper into the sources to distinguish positive and negative perceptions in order to identify them separately. Additionally, we used sources that are no older than two years to get relevant and accurate information on what have people been saying about Root Insurance over the past two years which we listed in the findings section above.
Part
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Part
03

Root Insurance Overview

Root Insurance is a car insurance company that leverages innovative technologies like big data, telematics, and artificial intelligence. It offers up to eight coverages and claims its users only need a mobile app to fully utilize its services.

Offerings

  • Root Insurance was founded as a car insurance company with the idea that people who "drive well are less likely to get into accidents, and that those people should pay less for insurance."
  • The company also several coverages depending on the state, whether the car was leased or purchased right out, and several other factors.
  • Root's coverages include bodily injury and property damage (required nationwide by law).
  • It also offers personal injury protection, medical payments, and uninsured motorist property damage.
  • Other coverages include roadside assistance (included with every policy), rental, uninsured and underinsured motorist bodily injury, comprehensive, and collision.
  • The company makes it clear that coverages depend on several factors and work on a "case-by-case basis."

How It Works

  • The first step in using Root Insurance is downloading the app.
  • Next, customers use of the app to scan their driver's license. These customers will then wait for a few weeks for the company to assemble as much data as possible on their demographics and driving history.
  • Within those weeks, customers will drive around in their car, as normal, with the Root app on.
  • The Root app makes the user's phone a telematics device and gathers data on how the customer drives measured by driving patterns, braking, turns, acceleration, and several other driving activities. All this information is analyzed and factored in to determine a quote best suited for the customer.
  • Root's main aim is to only insure good drivers - roughly 70%, and inform other drivers who are not as good about other carriers and options.
  • Root Insurance does not consider this discriminatory. According to the company, "all carriers typically have target markets and underwriting guidelines."
  • Users can file insurance claims in three minutes using the Root app.

How Root is Disrupting the Insurance Market

  • Root Insurance is an insurtech company that is disrupting the auto insurance market.
  • It appears the company was formed with the primary purpose of disrupting the insurance industry. Its CEO mentioned working in insurance companies for decades and offering revolutionary ideas to these companies. The companies were, however, too scared to implement his ideas. Root's founder then decided to launch his own company that would redefine the insurance industry through software and analytics.
  • The company leverages an external tech disruption and "sensor data from devices both in-car and on-person" that has not been fully used in the insurance market.
  • Its cleverness lies in its ability to know the difference between trips that the customer has done as a driver as opposed to trips they have done as passengers.
  • Root Insurance makes good use of the three layer stack that the insurance industry has while most companies in the industry only use one or two layers. It "sells direct using online tools, collects premiums and then manages the claims process." The company is fully able to do all thus via the third layer, reinsurance.
  • When Root Insurance launched in 2016, other insurers were strictly online or in person. Root entered and disrupted the insurance market by making sure its users can handle everything via an app on their smartphones.
  • The company quickly gained traction in the insurance industry. It was included in a list of "startups providing mobile-centric insurance tech" in 2016.
  • On average, Root Insurance saves up to 20% when compared to the normal insurance policy. The company has issued low premiums of up to $12 monthly.
  • Root's policies are also reinsured by Odyssey Re, Munich Re, and Maiden Re.
  • Root used both artificial intelligence and data science, technologies that are not used by a lot of companies in the insurance industry.

How Root Differs by State

  • Root works the same way in all the states it offers its services to.
  • The only thing that differs by state is the coverage it offers. Bodily injury and property damage are the only coverages offered in all the US states Root Insurance caters to.
  • Personal injury protection is offered and required by law in 17 states.
  • Medical payments and uninsured motorist property damage are offered and required by law in eight states.
  • The other coverages, including comprehensive and collision, vary by state.

Sources
Sources