Kin gives large advantages by disrupting the change-resistant home insurance business – Yahoo Finance

  • Kin Insurance Inc. goes public through merger with Omnichannel Acquisition Corp. (NYSE: OCA)

  • The direct customer business operates in countries that are hardest hit by natural disasters

  • Home insurance has $ 105 billion TAM

  • PIPE investors include Hudson Structured Capital Management, Senator Investment Group, Gillson Capital, Park West Asset Management

  • Other investors include billionaire Stephen Ross, former chairman and CEO of Willis Group Holdings Joe Plumeri, CEO of VaynerMedia Gary Vaynerchuk

  • Prominent investors include golfer Rory McIlroy and NBA player Draymond Green; Entrepreneur Bobbi Brown is on the board of directors of SPAC

  • Omnichannel led by Matt Higgins, longtime investor who acted as the "Shark Tank" judge

  • Kin co-founder and CEO Sean Harper is well known in the fintech industry

By Jarrett Banks

Previously, if you wanted home insurance, you had to find a broker and then meet them in person to discuss your options. It was a time-consuming, arduous process that was ripe for an interruption.

Step inside Chicago-based Kin Insurance Inc., an "insurtech" company that uses housing data to determine prices and risk, and reduce customer costs by eliminating agents. The direct-to-consumer company goes through a merger with Omnichannel Acquisition Corp. to the stock market, a blank check firm led by Matt Higgins, a longtime investor who has acted as the "Shark Tank" judge.

Home insurance has a total addressable market of $ 105 billion. The insurer has exceeded $ 100 million in annual recurring premium after just 21 months as a carrier in an industry where more than 90% of home insurance is still sold through stationary agencies. Kin expects to more than triple its written awards in 2021 and total more than $ 400 million in written awards by the end of 2023.

Using artificial intelligence, the company can approve an insurance policy in minutes instead of weeks. It also uses machine learning to engage customers by running huge amounts of data through an algorithm and capturing traffic with a level of sophistication that no one else does.

The story goes on

Kin also reduces premiums when policyholders weatherproof their homes based on the recommendations. And by automating the back office operations, it can focus its human efforts on the customer relationship. The average age of a customer is 57 and prefers a digital experience. Kin's speed is a huge benefit for people who want a mortgage fast but can't get it without insurance.

The company plans to expand its offerings, but for now the focus is on large coastal states where the weather is more volatile. Rather than fleeing disaster-prone states like some big insurers, Kin rushes headlong into the idea that climate change is a reality that all insurers will have to adapt to at some point.

Kin operates in Florida, California and Louisiana and uses its enormous data advantage to hedge risks. It can take up to a year for states to issue insurance licenses, but the detour is to acquire insurance companies that are already licensed in other states. To that end, Kin recently agreed to buy an inactive insurer that has licenses in about 43 states.

Kin co-founder and CEO Sean Harper is well known in the fintech industry for starting a company called FeeFinders that was acquired by Groupon. Omnichannel is led by Matt Higgins, who is also an Executive Fellow at Harvard Business School. Higgins is also CEO of RSE Ventures, an investment firm that has bet on companies like Momofuku, Bluestone Lane and David Chang's & Pizza on behalf of billionaire Stephen Ross. Higgins is also vice chairman of the Miami Dolphins.

Higgins leads a marketing campaign with micro-influencers to accelerate growth at Kin, which benefited from increased e-commerce adoption during the pandemic. Brand builders in videos like Kin's "Florida Man" campaign are helping the company raise awareness of the funnel.

In Florida, with a TAM of $ 14 billion, roofs are the leading cause of damage. The state is also a leader in fraudulent claims, which Kin successfully stopped through its use of data and its anti-fraud determination in policies.

Kin's unit economy sets it apart from competitors. The ratio of customer lifetime value to customer acquisition cost is 7.9x, which is higher than comparable companies like Hippo Holdings, Lemonade, Inc., Root, Inc., and Metromile, Inc. It also has a higher retention rate of 92%.

In terms of valuation, Kin is trading at a reasonable 15x gross profit by 2022. That's a multiple of 51 times for Lemonade, according to Sentieo, an AI-enabled research platform.

Investors Hudson Structured Capital Management and Senator Investment Group run the PIPE, with the participation of Gillson Capital and Park West Asset Management, among others.

Individual PIPE investors include executives from Related Cos. Including billionaire founder Stephen Ross, CEO Jeff Blau and President Bruce Beal Jr., as well as Joe Plumeri, former chairman and CEO of insurer Willis Group Holdings, and Gary Vaynerchuk, CEO of VaynerMedia . Prominent investors include golfer Rory McIlroy and NBA player Draymond Green.

This is a mission-driven company with great management in a change-resistant industry. His avowed desire is to remove all friction from the buying experience. Investors have the opportunity to get into a future giant early on – and they can say goodbye to the agents.


Jarrett Banks, Editor-at-Large

Twitter: @IPOEdge

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