3 Things – Public Insurtech Q3, Other Results, Embedded Auto & a Lawsuit

Hello Friends!  It is a good week to be in insurance as our tried and true industry marches forward even amidst catastrophes and inflation, just ask the crypto world who is reeling with the collapse of FTX.  This week we are following public insurtech results, other results, embedded auto insurance news and State Farm suing Amazon:


Public Insurtech Q3 Results

We have been waiting to see how the most prominent public insurtech unicorns fared in what has been a tough quarter for loss costs due to Ian and inflation.  Root’s Q3 letter to shareholders highlights they are reducing headcount by 17%, transforming from direct to embedded distribution and increasing rates 35%.  As expected, Lemonade’s loss ratio spikes due to their Metromile acquisition and Ian.  They are making similar moves to slow down.  Hippo largely avoided Ian losses by ‘stroke of luck’ and reports a reasonable loss ratio claiming their technology and risk selection is working.  Overall, it remains to be seen when all of these companies will become profitable and self sustaining.  Reinsurance, which they depend greatly on, will increase in cost creating a formidable headwind for them all.


Other Q3 Results

Berkshire Hathaway overall took a significant loss.  This gives a good look at a sample of the industry with their reinsurance, personal lines and diverse portfolio of insurance businesses.  Their GEICO unit was particularly hard hit not only by cat events but inflation increasing loss costs.  Zurich provides a similar example with their cat loss ratio rising 2 points for the first time this year.  They indicate success in increasing rates and will hold an investor day next week.  UPC, one of the big Florida carriers, is reacting to growing issue of insuring property in Florida and other coastal regions by pulling out of FL, TX & LA.


Headline #3

Kyte, a startup offering rental car pickup and delivery, raised $60M.  They are looking at making at offering insurance, along the lines of the Avail / LAZ partnership announced last week.  There is an emerging play in the auto space for ‘micro’ insurance products that are embedded, two of the magic concepts sweeping the industry.  In the first of what could become many litigation moves from insurers, State Farm is suing Amazon for allegedly copying health insurance marketplace tech.  As Amazon enters into other areas of insurance, like they did with home in the UK, will insurers defend this encroachment on their turf by legal action?  We will be watching.

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