Homeowners insurance is often sold on relationships. Hippo is betting that property owners would like to buy based on big data too.
The Palo Alto-based company announced on Tuesday it raised $150 million in new funding, bringing valuation of the insurtech startup to $1.5 billion. Hippo plans to spend the Series E round on building a new, 310-person campus in Austin, developing its tech and going on a hiring spree.
The 300-person company aims to add 100 new people to its Austin and Palo Alto offices over the next year, according to Rick McCathron, the company’s chief insurance officer. It is currently recruiting for engineers, product managers, sales reps and more.
“Insurance is an industry that has a lot of legacy processes, user experience, technology,” McCathron told Built In. “Anytime you have a massive industry that has a legacy mindset, it’s ripe for modernization.”
Founded in 2015, Hippo scrapes data from public records, thermal readings, satellite images and more to offer users an insurance quote in under 60 seconds. Its machine learning system also relies on the data to provide customers updated liability and preventative maintenance tips, like mentioning that it’s time for a roof inspection, or that their recently installed pool merits additional coverage.
If a customer takes Hippo up on its quick tip, McCathron said the company’s Home Care program can suggest roofers and other service professionals to call, and that the startup may offer the policyholder a discount.
“Our goal is to help them avoid the claim entirely, as opposed to having a claim and then, of course, us paying that claim,” McCathron said.
As many industries continue to work from home during the COVID-19 pandemic, McCathron said there’s been an uptick in the number of claims Hippo has issued. That's because people are home more than they were before, though the company noted that the severity of those claims is lower than before the pandemic. He added that there has also been an increase in customer service calls received. Total premiums have risen to $270 million, up 140 percent year over year, he said.
The Series E round will help Hippo finish paying for its acquisition of the New Jersey-based Spinnaker Insurance, which Hippo paid an undisclosed sum to buy in June. It’s not the only insurtech startup to receive investment recently.
In July, investors valued the Chicago-based health insurance platform GoHealth at $6.6 billion, after it raised $914 million through an IPO; New York City-based property insurance startup Lemonade was valued at $1.6 billion, after it raised $319 million through an IPO; and the Austin-based AgencyKPI platform for insurance agents raised $5 million in late June.
McCathron said the recent wave of investor interest represents a “natural progression” of the $100 billion insurance industry, since many of these tech companies were founded five years ago and have now grown. He said Hippo plans to invest in integrating additional data sources into its platform, as well as expanding beyond the 29 states it currently operates in. McCathron said the insurtech startup has its eye on moving into New York, Florida and a few other states by the end of next year. He added that Hippo will likely be ready to go public next year.
“I think in 2021 we will be ready to go public,” McCathron said. “Whether we choose to do so, I think it’s still yet to be determined, but we’ll be ready to go public if we decide to, with a clear path to profitability.”
The Series E round brings total investment in Hippo to $359 million.
Investors include FinTLV, Ribbit Capital, Dragoneer, Innovius Capital, BOND, Comcast Ventures, Felicis Ventures, Fifth Wall, Horizons Ventures, ICONIQ Capital, Innovius Capital, Lennar Corporation, Pipeline Capital, Propel Venture Partners, RPM Ventures, Standard Industries and Zeev Ventures.