Root Insurance – A Pure Play InsurTech Stock

Ever since the Italians issued the first insurance contract in 1347, companies have been making money issuing insurance policies. It’s not just about accurately predicting your claims so you can price policies that are profitable. It’s about having a massive pool of cash that you receive from the people you insure which can then be invested to generate a return. Lately, innovative startups have been applying technology to improve the insurance industry, something that’s often referred to as “insurtech,” which falls under the umbrella of fintech.

If you’re in the business of auto insurance, you want to be particular about who you ensure. The worst 30% of drivers are responsible for nearly 45% of all accident costs. If you can avoid insuring these accident-prone individuals, you’ll have a very profitable business. That’s exactly what Root Insurance does, and now they’ve filed for an initial public offering (IPO).

The Root Insurance IPO

We first wrote about Root Insurance about a year ago in a piece titled