Root is at the edge of a reckoning in the world of car insurance.
“The industry is awakening to the fact that the old model just isn’t working anymore,” says Root CEO Alex Timm.
What does seem to be working is Root’s methodology that favors a customer’s driving instead of the traditional calculations for determining car insurance rates. Root’s mobile application tracks a driver’s habits, allowing them to earn their own rate.
“Good drivers receive a quote based primarily on how they drive,” Timm says. “Essentially, we put the power back into consumers’ hands by using variables they control to give them accurate and fair auto insurance rates.”
Many a shocked customer gush about just how much they actually save each month with Root.
Since its launch in 2016, Root has expanded to pass these savings on to drivers in 10 states and counting, including Ohio, Oklahoma, Arizona, Illinois, Indiana, Utah, Kentucky, Mississippi, Pennsylvania and Texas.
Their coverage area isn’t the only thing that’s growing. App downloads are up month over month. The Root team has ballooned from 15 to 70 employees in the span of a year. And, the insurance company is taking on innovation in yet another way, being the first to offer discounts for self-driving cars.
The Metropreneur caught up with Timm for an in-depth look at everything from the team’s growth to the future of the industry and how advances in autonomous driving technology will continue to bring change to car insurance.
[Metropreneur] Looking at Root’s overall growth from 2016 to now, what factors have contributed to that growth?
Timm: Word of mouth has been a huge factor in that growth—the idea of fair insurance based primarily on how you drive strongly resonates with consumers. When a good driver earns a fantastic rate, they tend to tell other people. Every month, we see an increase in the percentage of sales coming from referrals.
Also—and most importantly—people are at the heart of Root’s success. Because of the passion and expertise of our team, we’re able to evolve at warp speed, taking what the data tells us to initiate daily improvements to our insurance, app, and user experience.
[M] Root’s team has scaled to 70+ people. What are some of the challenges and opportunities that have come with quickly growing a team?
Timm: Growing our team from 15 to 70 while expanding our market by 25 percent in 2017 felt surprisingly natural. I think our commitment to making informed hiring decisions and thoroughly communicating vision to employees has paid dividends for us. When there is more work than hearts and brains to work on it, there is an understandable temptation to build the team and product quickly.
Our biggest challenge is remaining disciplined in our hiring and product development. So far, I am proud to say we have done this. By building in a cadence of slowing down to make good decisions and then quickly executing on those decisions, we have unlocked a lot of opportunity.
[M] Why is Root’s methodology catching on?
Timm: Customers in the 21st century want and deserve better and they’re going to get it. With the rise of big data and autonomous vehicles, everything about the way we drive and insure our cars is changing—and we’re leading that change. The impact of what we’re doing is already rippling out into the insurance world and the industry is going to have to embrace the power of technology to keep up.
[M] What’s in store for the future of insurance?
Timm: We’re entering a time of rapid technological change that will sweep across the industry and beyond. Consumers’ lifestyles and needs are changing. Even now, we’re seeing new semi-autonomous technologies and alternative transit options hit the road. Within the decade, we’ll see more and more cars hit the road without human drivers. As a result, insurance models need to substantially adapt.
That’s a tall order, yes, but a decade of working in insurance has shown me that even when an industry looks stable from the outside, a new idea can break through. All it takes is an innovative solution that leapfrogs old, established processes. That’s what Root is about.
[M] How does Root’s discount program [for autonomous vehicles] work?
Timm: We’re also the first insurance company to offer a discount for self-driving cars, beginning with Tesla Autopilot. Cars with semi-autonomous technology have proven to be much safer on the road, and our app is able to gauge when a driver is likely using the Autopilot technology and reward them with an additional discount for those miles.
[M] How will continuous developments in autonomous technology further change the insurance industry?
Timm: Autonomous car technology is here to stay and the insurance industry needs to make major adjustments to accommodate this sea change. Data already shows us how much safer this technology is for our roads; the National Highway Traffic Safety Administration found that Tesla’s Autopilot feature reduced its crash rate by 40 percent. The challenge here is that a huge majority of the industry doesn’t have the right tools to calculate accurate risk of semi- and fully-autonomous technologies. But this technology is coming whether the insurance industry is ready for it or not, and, as the autonomous revolution continues to gain momentum, it’s going to become an adapt-or-die game.
[M] What has your experience been growing a business in Columbus?
Timm: I co-founded Root right here in my hometown for a reason. Columbus is a rapidly growing startup hub with top-tier talent and an entrepreneurial culture at its core. It’s an environment that’s extremely welcoming and supportive of business growth, with ample capital investment and business-friendly regulations. Also, because of the thriving business scene, we’re building our business alongside many other innovative startups. It’s exciting to watch the local entrepreneurial community evolve with us. It keeps us on our toes.
The amount of support we’ve experienced in Columbus and the growth potential I see here is inspiring. We’re proud to call Columbus home and excited to be a part of the city’s continued growth.
For more information, visit joinroot.com.