What Does It Take To Remake The UX Of A $90 Billion Industry?

By Cliff Kuang

Blink and you’ll miss one of the most telling details behind Hippo, a homeowner’s insurance startup launched last week. Enter your address, and you see a prefilled form detailing exactly how your home was built: how many square feet, when your roof was made, what’s its made of, what type of frame your house has. You hardly have the time to ask the obvious question: How’d they know all that? The answer: Big data, painstakingly collected. The service has scraped almost every source of housing data out there—including satellite imagery—all in an effort to make the arduous process of buying home insurance into a 90-second affair, while lower prices by 25% in the process. The larger goal: to remake the UX of a $90 billion industry that’s been hiding in plain sight, and to turn home insurance into a veritable gateway for the internet of things.

Assaf Wand

In that way, Hippo, whose site was designed by Work & Co, is a good example of the opportunities that lie open for design-driven startups in the post-Uber world. You’d be hard-pressed to find billion-dollar opportunities that you can start from scratch. The smarter money lies in finding knotty, sleepy industries that haven’t been rethought. Like homeowner’s insurance.

The company started when Assaf Wand began panning around for new ideas, after selling Sabi, his previous startup, which tapped designers such as Fuseproject and Barber & Osgerby to create well-designed home accessories that looked contemporary, but were actually designed with the elderly in mind. “I hate inventory stories,” Wand insists. “For me, it’s data- and logic-driven.” So while Sabi was outwardly a stylish housewares company, it was actually a bet on a swelling population of elderly aging in place rather than going into nursing homes—while expecting the modern comforts of good design made commonplace by Target and Ikea.

Wand eventually landed on homeowner’s insurance, which he’d had some experience with while working as a consultant at McKinsey. “I always thought that insurance was one of the most messed up industries I’d ever seen,” he says. Other startups have taken a shot at the insurance industry: Lemonade is trying to modernize condo and renter’s insurance, while Oscar has tackled health insurance. But the byzantine complexity and relative sleepiness seem to have kept would-be innovators away from homeowner’s insurance.

Wand managed to raise $14 million in venture capital off a couple insights. For one, it was a massive industry. But more intriguingly, the economics of home insurance have caused the industry to evolve away from modern notions of UX and customer service. Take the agents themselves. They’re incentivized to sell larger plans—that’s one reason why car insurance, a relatively low-value sale, has moved away from live agents and toward self-help agencies, like Geico and Progressive. Therein lies the rub: We live in an era where people don’t like dealing with people, even while home insurance remains a stubbornly face-to-face transaction. “People don’t want to deal with an agent,” Wand explains. “They don’t want someone who is going to try and shove a crappy product at them.” The problem was that the home insurance industry is so complicated that agents still seem like critical gatekeepers: After all, how else are you going to get someone to sit through 70 questions? Wand, of course, disagrees, which is where Wand’s idea of really big data comes in.

Hippo aims to turn home insurance from a service you grudgingly sign up for when you buy a house, to something you love (or at least like) because it’s become a service to you—just as friendly as Bark Box or Warby Parker. In Wand’s imagining, Hippo will evolve to become a service that’s intelligently pinging you at the right moments: It’ll be monitoring your house to check its condition. It’ll be using data to monitor what claims your neighbors are making. All so that it can periodically nudge you to take better care of your house. For example, if satellite imagery suggests your roof had deteriorated—which is an easy thing to judge, simply using image analysis—Hippo might suggest roofers to call. At opportune times, it’ll prompt you to schedule a free appointment with someone to clean your gutters and look for dead trees that threaten to fall on your house. And for every year that you go without a claim, the company will send you a new IoT device—such as a water-leak monitor in the first year. In that way, it’ll be managing the preventative maintenance that, when neglected, ends up costing thousands of dollars down the line in home repair.

“The reduction in risk is going to pay for itself,” Wand insists. “We’re going to try to aggregate as much data as we can to help with home maintenance.” If Hippo pulls that off, it’ll then become more like a vendor, safeguarding your most prized possession—your home—rather than a monthly bill you simply pay (a Hippo plan is typically around $60 a month, and the company claims this represents a 25% savings over competitors).

Behind the scenes, the idea is that with more data on your home, the company will be better able to price risk. For example, it might use its data sets to discern all the ways that different types of home damage are correlated, and how your home is likely to age. Shockingly, this isn’t how home insurance is done today. Your zip code is one of the only mitigating factors insurance companies use to give you a personalized risk profile—standard risk models rely on agent-administered questionnaires to account for all the nuances of how your house is built, which studies have shown aren’t very accurate. Those risk models don’t update as the years go on. Meanwhile, the plans themselves haven’t been adjusted much in the last 50 years: The standard coverage, already baked into fees, includes $6,000 for fur coats, $4,000 for pewter and china, $5,000 for mausoleums and crypts—and $2,000 for all your home electronics. The source for such strange estimates are simply surveys taken in the 1960s, which haven’t been updated because of how highly regulated the industry is.

To simply get rid of the provisions for mausoleums and pewter, Hippo had to undergo an intensive, state-by-state application process. So for now, Hippo is only available in California, though it plans to expand to other states soon. But just being in the markets is almost certainly just a small part of the challenges that lie ahead. Homeowner’s insurance is still often sold on relationships. Anyone who’s bought a house probably remembers their mortgage broker passing on the number of an agent. By the time you’re ready to buy, spending time shopping for insurance is about as appealing as shopping for a new lawnmower. The trick for Hippo will lie in getting their brand in front of customers. But if it works, it’ll become a telling example of how big data powers modern UX. “Just a few years ago, people didn’t trust online brand. But now you manage you money through Wealth Front and buy mortgages through Rocket Mortgage,” Wand says. “Data, technology, and increasing trust mean that industries change. Insurance is one.”

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