3 Things – Amazon Partnership, Hippo / Ally & Root Earnings – 8/13/2021

Hi All!  This week we are following an Amazon partnership, Ally / Hippo and Root / Carvana along with earnings.  Here are the three things we learned this week:


Amazon Insurance Partnership

The industry and likely the whole world is watching as Amazon announced an ‘insurance accelerator’ partnership powered by Bold Penguin and several broker and carrier relationships to provide product liability coverage for sellers with over $10K in sales in one month.  Amazon controls many markets and this arrangement is typical with their business practices.  Marsh, Chubb, Travelers & Hiscox are likely keeping a close eye on how this will work and have protections to ensure Amazon doesn’t try to back the insurance with their own capital.


Hippo and Ally Partnership

Partnerships and embedded insurance are key themes we follow, as discussed in item #3 insurtechs can lower their high customer acquisition costs by embedding.  With this in mind we were interested to see Hippo and Ally Financial are joining forces for distribution.  This will double Hippo’s underwriting capacity and create their largest MGA distribution arrangement.  The now public Hippo would like to see this arrangement help to power profitable growth.


A Tough Week for Root

Root announced Q2 earnings this week that must have been disappointing to many.  They tried to hide behind a partnership and capital infusion with Carvana to create an embedded insurance product for their used car buyers.  This was not enough to keep the stock from hitting an all-time low.  We do believe this indicates a change of strategy, since their customer acquisition costs are eating them up they are looking to embedded partnerships (not to mention selling 5% to a potential acquirer).  The only problem is that they will not have the customer selection control their current strategy depends on.  Are all of Carvana’s customers going to be Root’s ideal customers?

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