Root Inc. Narrows Q2 Net Loss to $37M, Remains Committed to Pricing Model

Insurtech Root Inc. posted a another net loss for the second quarter 2023 of about $37 million.

The loss was a 62% improvement from the net loss of about $96 million during the same period in 2022. Over the first half of 2023, Root has recorded a net loss of $77.6 million compared to a net loss of $173 million in the first half of 2022.

The Columbus, Ohio-based company’s Q2 net combined ratio was 150.5, an improvement from the 217.3 combined ratio of Q2 2022 and the 316.1 combined ratio of Q2 2021.

“We remain vigilant on pricing and underwriting as we cautiously scale our marketing spend. We believe the actions we have taken—and that we continue to take—put the company on a path to profitability,” said co-founder and CEO Alex Timm in a shareholder letter.

Timm said Root’s pricing and underwriting “will continue to be a competitive advantage” because its new, advanced pricing model that uses data collected from policyholders gives Root the ability to “rapidly detect changes in the loss cost environment and quickly respond with underwriting and pricing changes” to control loss ratios. The gross accident year loss ratio in Q2 was 68% compared to 85% a year ago in Q2, and it was a point better than Q1 2023.

“We believe we are still in the very early stages of realizing the benefits of this technology and that over the long term, this will provide substantial value to our customers and shareholders,” he said.

A second partner in embedded product offerings and the launch telematics capabilities is “seeing strong interest” driven by its success with Root’s first partner, Carvana. The customer-adoption rate tripled, Root said, adding that total new writings grew 65% over Q1 2023.