Root Insurance could be insurtech’s next high-profile IPO

By William Girling
A recent article from Reuters suggests that market leader Root Insurance could become the next high-profile IPO (initial public offering) of 2020...

A recent article from Reuters suggests that market leader Root Insurance could become the next high-profile IPO (initial public offering) of 2020.

The company, which recently topped our 10 insurtech unicorns list, has reportedly been recently re-valued at US$6bn (2019 valuation: $3.65bn), with Goldman Sachs Group brought on board to lead the initial preparations.

Following in the wake of other notable IPOs such as Lemonade and Duck Creek (read further analysis here), the size of Root’s offering would be several magnitudes greater than the former’s, which was itself regarded as one of 2020’s best showings so far.

Pioneering an agile, digital approach

Using smartphone technology, Root is able to measure driver behaviour and build a reflective profile of their overall safety on the road. 

Furthermore, the company offers insurance premiums exclusively to those they decide are the best drivers, thereby also reducing the policy rates to a much more affordable price. The company’s app can be used to purchase, customise or cancel policies, as well as file for claims.

Root’s highly flexible and digitally-advanced operating paradigm is emblematic of the approach recently championed by McKinsey as essential to serving customers in the post-COVID-19 world.

“Traditional insurers’ functional and hierarchical operating models are set up to succeed in relatively stable environments and are increasingly becoming outdated,” the company stated.

“These models were already posing challenges for insurers before the COVID-19 pandemic emerged. As they organise for the next normal, it will be critical for insurers to get faster, leaner, and more effective. Agility helps on all three counts.”

Root’s (as well as Lemonade’s and Duck Creek’s) market confidence to launch IPOs at a time when many other industries are questioning their viability in the new normal suggests that insurance has quickly found its feet.

Indeed, other sectors should look to leading insurtechs’ innovative, tech-driven approach as a roadmap for maintaining relevance in a shifting economic landscape.

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