Hippo reports that its estimated $42 million in net, pretax losses from the Los Angeles wildfires did not come from its preferred new housing channel.
President and CEO Rick McCathron (pictured above) said rising catastrophe losses underscore the importance of managing geographic risk concentration and demonstrate the need for insurers to collaborate with home builders to strengthen homes against weather-related perils.
He noted that these risks are unlikely to improve and that increasing rates alone is not a sustainable solution. Instead, he said, insurers should take a proactive approach by working with builders to mitigate potential losses.
The wildfires have been a major turning point for California’s market, with strategic shifts seen among major insurers.
Facing substantial losses, State Farm General Insurance Company has requested an emergency 22% rate increase to address a $5 billion deficit. However, this request has met a major roadblock following a scandal involving one of its vice presidents.
Allstate and Farmers, two major carriers, have also ceased issuing new policies in California due to heightened wildfire risks and financial uncertainties. While they have not announced specific rate increases, their market withdrawal indicates a strategic reassessment of their positions in the state.
Hippo said that it has been expanding partnerships with housing developers to provide homeowners’ insurance, particularly in states like California, where McCathron said it serves as the company’s primary source of new business. The insurer currently has access to about 120,000 new dwellings nationwide, with continued quarterly growth.
McCathron said he regularly engages with builder partners and has observed that many are highly focused on affordability, both in terms of home prices and insurance costs.
He noted that builders are working to control expenses while incorporating features that improve insurability, as they want buyers to remain within their brands when relocating.
Hippo reported a 58% year-over-year increase in revenue for the fourth quarter, reaching $102 million. Full-year 2024 revenue was up 77% to $372 million.
The company’s total gross premium (TGP), adjusted for the First Connect transaction, rose 16% year-over-year, with its Insurance-as-a-Service (IaaS) segment growing by 22%.
The gross loss ratio for Hippo Holdings Insurance Partners (HHIP) improved by three percentage points year-over-year in the fourth quarter to 50%. The HHIP non-PCS loss ratio was 43%, while the PCS loss ratio stood at 7%.
For full-year 2024, HHIP’s gross loss ratio improved by 28 percentage points to 73%, with the net loss ratio improving by 46 percentage points to 60%.
What are your thoughts on this story? Please feel free to share your comments below.
