Root Insurance has secured $100m in series D funding led by Tiger Global Management with participation from previous investors such as Redpoint Ventures, Ribbit Capital, and Scale Venture Partners.
Image: Root Insurance secures $100m funding. Photo: Courtesy of why kei/Unsplash
The funding, which has raised Root Insurance’s valuation to $1bn, will be used by the company to provide additional capital to deepen penetration in existing markets, expand into new states.
It will propel the company’s hiring plans, with focus on engineers, actuaries, claims and customer service to support increased scale.
Root co-founder and CEO Alex Timm said: “We are excited that Root continues to attract the commitment and capital of some of the largest and most successful venture funds, like Tiger Global Management, who recognize the power of the Root platform and our prospects for growth and success.
“This additional capital will allow us to accelerate our strategy to transform the car insurance world and reinvent a broken industry from the ground up by setting the new standard for how customers buy and use insurance.”
The insurance start-up is considered to be the first car insurance company to incorporate individual driving behaviour in every quote. The company claims to be bringing the $250bn US auto insurance industry into the mobile age with the use of smartphone technology to understand individual driving patterns.
Consumers can directly obtain their personalized quote after two-to-three week test drive and they can purchase and manage their policy entirely within the Root mobile app. Root claims that with this approach, good drivers and save more than 50% in premiums while compared to traditional insurance carriers.
Tiger Global Management Partner Lee Fixel said: “Root Insurance is leading digital innovation in US auto insurance. This industry is ripe for change, and we are excited to invest in a team that has the expertise, vision, and momentum to deliver real results. We look forward to growing our partnership with Root and helping them expand their footprint across the United States.”
In the last two years, Root Insurance says that it has expanded into 20 states and while delivering robust growth and claims more than 4500% year-over-year increase in direct written premiums in the first six months this year.
Its technology-enabled platform and pricing algorithm provide the ability to price auto insurance more accurately than the competition and win and retain customers who seek a modern, alternative approach to legacy carriers.
The company anticipates to expand across all the 50 states in US and Washington DC by the end of next year.