Hippo CEO Rick McCathron said that home insurers are “finally reaching levels of great adequacy” but acknowledged that the current market is “challenging” for consumers.
On a call with analysts Wednesday morning, the executive said the InsurTech has “significantly decreased” its exposure to weather-related events in its Hippo Home Insurance Program (HHIP).
The pullback on cat exposure was reflected by a 9% reduction in HHIP’s gross written premiums in Q2 earnings.
“I don't anticipate weather-related events to decrease; if anything, they're likely to increase, and simply raising deductibles or putting reschedules on homes are not in the best interest of customers,” McCathron said.
“It's my belief that over time, we're going to find these types of weather-related exposure risks to be taken outside of a traditional homeowners’ policy, similar to what happened with earthquake.”
He also mentioned parametric providers buying back deductibles as another solution that could gain traction in the coming years.
While the company is pulling back on cat exposure, the executive emphasized plans to expand in other areas of commercial and personal lines.
“Our objective is to build a well-balanced portfolio in which homeowners is only a portion,” he said. “It creates more revenue predictability and reduced volatility.”
Hippo’s overall GWP grew 16% YoY to $299mn, driven by organic growth and new hybrid fronting programs. Existing programs contributed $24mn in organic growth (a 13% increase) and new programs added $23mn.
In July, the company announced the closing of a deal to sell its homeowner distribution network to The Baldwin Group. Hippo said the deal will “accelerate premium growth and enable faster diversification across lines of business.”