Hippo Holdings Inc. is the name for a new insurtech homeowner insurance agency that will result from the planned merger between Reinvent Technology Partners Z and Hippo Enterprises Inc., a Delaware corporation.
Hippo Insurance Services is a general agent for affiliated and non-affiliated insurance companies. Hippo is licensed as a property casualty insurance agency in all states in which products are sold. It offers online homeowner insurance quotes within 60 seconds, with savings up to 25 percent. Hippo’s online underwriting technology includes aerial imagery to evaluate roof conditions and refers to building permits to provide details of home features.
Hippo, referred to as a home insurance startup, is valued at $5 billion in this transaction, which is expected to generate $1.2 billion in capital.
Hippo sells homeowners insurance in 33 states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Michigan Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, and Wisconsin. They expect to expand into additional states, offering coverage across 95 percent of the country.
Topa Insurance Company underwrites the homeowner policies sold by Hippo in the states of Arizona, California, Colorado, Nevada, Oregon, Utah, and Washington.
Spinnaker Insurance Company underwrites the homeowners policies sold by Hippo in the other states listed above. Spinnaker is a national property and casualty insurance company domiciled in Illinois, headquartered in New Jersey, and operating in 49 states overall. It focuses on using on short-tail business (with an emphasis on homeowners, renters, and small commercial), certain specialty lines, and fronting opportunities.
In September 2020, Hippo acquired Spinnaker Insurance Company, a national property and casualty insurer licensed in 50 states and rated A- (Excellent) by A.M. Best Company. As part of the acquisition, Spinnaker joined Hippo’s family of companies.
Hippo homeowner insurance premiums in force total $400 million, according to its website. The company reports an 87 percent 1-year retention rate. Distinguishing product features highlighted by Hippo include:
- Complimentary smart home devices to eligible customers, plus potential discounts
- Enhanced coverage to repair or replace anything that uses electric power, such as appliances, HVAC equipment, water heaters, TVs and more.
- “Hippo Home Care” for ongoing home maintenance
- Use of advanced technology to correlate coverages suitable protection levels
Hippo Homeowner Claims
The Hippo homeowner insurance agency maintains a claims department. A Claims Concierge is appointed for each insured as a single point of contact throughout the claims process. Insurance adjusters are also on staff to handle claims. The company maintains a network of pre-approved home repair service providers. A one-page fact sheet details the “Hippo Insurance Claims Pledge.” A part of this pledge states,
“When you file a claim on your own policy, you have the right to have your claim processed and paid promptly. If Hippo Insurance fails to meet required claims process and payment deadlines, you have the right to collect 18% annual interest and attorney’s fees in addition to your claim amount.”
On March 16, 2021, Hippo announced two partnerships aimed at increasing the speed and processing of its back-end customer claims services using automation. Through Claimatic and Five Sigma, Hippo Insurance Services will dramatically increase its ability to process new claims faster and manage them end-to-end, while maintaining its high bar for customer care and convenience.
Claimatic, based in San Antonio, Texas, will provide a software platform that is designed to eliminate claim reassignment issues, acting as a matchmaking service between the claimant and adjustor to deliver the best possible outcomes for Hippo customers at an expedited pace. In 2020 Claimatic celebrated over 1 million claims being processed through its Intelligent Decisioning Engine.
Five Sigma CMS offers a cloud-native, data-driven claims management platform with embedded artificial intelligence and machine learning capabilities focused on claims resolution for the Insurance Industry. Hippo will be able to identify the severity of a claim at the earliest possible point when a loss is reported. Five Sigma sets clear reserving suggestions, and reports on reserves over time. This automation will help Hippo streamline claims-handling processes, improves communication with adjusters and auditors, and ensures the accuracy of claims earlier so that customers are paid faster.
Hippo homeowner insurance represents a change for insurance defense law firms, since it is an insurance agency rather than an insurance company. Nevertheless it does maintain claims and litigation professionals in-house. We are researching homeowner panel counsel opportunities.
Background on the Reinvent Technology Partners Companies
Reinvent Technology Partners Z is a blank check company incorporated on October 2, 2020, as a Cayman Islands exempted company. Affiliated company Reinvent Technology Partners was established in July 2020, also as a blank check company formed for the purposes of effecting a business combination. Reinvent Technology Partners Y is yet another blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting its own initial business combination.
The Reinvent companies fall into the category of a “special purpose acquisition company” or SPAC. The Corporate Finance Institute defines as SPAC as “a corporation formed for the sole purpose of raising investment capital through an initial public offering (IPO). Such a business structure allows investors to contribute money towards a fund, which is then used to acquire one or more unspecified businesses to be identified after the IPO.”
SEC offering documents filed by the Reinvent companies report that directors and officers (D&O) liability insurance for special purpose acquisition companies (SPACs) is facing greater restrictions. Fewer insurance companies are offering quotes for directors and officers (D&O) liability coverage, the premiums charged for such policies are increasing, and policy terms are becoming less favorable. It is possible that these trends may continue.
Hippo Management Team
Mr. Assaf Wand, a serial entrepreneur, is Hippo’s co-founder and will serve as the Chief Executive Officer. He is a lawyer (IDC Herzliya in Israel), holds an MBA (University of Chicago) and is a former McKinsey consultant. Prior to building Hippo homeowner insurance he founded Sabio, a design company for baby boomer products, which was sold to Urbio after reaching $10 million in sales.
Reid Hoffman (co-founder of LinkedIn), Mark Pincus (founder of social game company Zynga), and Michael Thompson (a co-founder of BHR Capital) established the Reinvent companies to “partner with a technology business to innovate and achieve entrepreneurship at scale.” They plan to remain long-term participants with the Hippo management team.
Other Insurtech Articles of Interest
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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.