My biggest question marks around Root are if their systems are above and beyond the competition in auto insurance. This past quarter of results for all types of insurance was a tremendous boon to the industry in general. For example on the last quarter of results, there are 20 insurance companies which have growth rates over 40%.
There’s also companies which refer to insurance companies and take a cut, all of which have 100%+ yoy growth rates.
From looking into EVER, QNST, and MAX the reason they are seeing such huge growth rates is that consumers have been shopping around, since legacy providers dramatically increased rates in insurance. The shake up in the market is bigger in auto than in home insurance which is why those three referral companies see bigger growth rates in auto. There’s also a shake up in health insurance too where companies like Oscar Health are doing well.
I am not opposed to investing in an insurance company in principle, but I’ll likely be on the sidelines for ROOT until the shake up in the industry is over. If ROOT continues to put up impressive numbers after the consumers settle down I might be interested to start a position, however I’d want to see that play out first.