State Farm is the largest writer of automobile insurance in the United States writing one out of every five insured automobiles on the road. Historically, however, the insurer has not been a factor in the Massachusetts insurance industry nor in its neighbor to the south, the state of Rhode Island. Persons from either of these states using State Farm’s website to locate an agent will simply not find one. Instead, they receive a message, “State Farm does not actively market new business in the state at this time.”
That message, however, could be on the verge of getting an update.
In November 2017, a new automobile insurance, HiRoad Insurance (“HiRoad”) began operating in just one state, Rhode Island, as a direct writer. The insurer’s website invites visitors from other states, such a Massachusetts, to suggest HiRoad come to their state. It may not be long until some Massachusetts insureds make that suggestion.
Dynamic pricing monthly using telematics through a smart phone app
HiRoad, a wholly-owned subsidiary of State Farm, touts on its website, it is “here to stay” as a Providence, RI-based separate company in the State Farm family of companies. It website also states the company’s consumer value proposition as:
- install an app;
- drive;
- drive well; and
- save.
On the ‘save’ part of the proposition, the company claims careful driving can save its insureds up to 50% per month. The 50% per month saving is based on each month, an insured driver getting a fresh start, which means future safe driving allows the insured to control their monthly payments for insurance.
HiRoad, as opposed to some other Telematic solutions, uses a smart phone app instead of a plug-in dongle to monitor its insureds driving. The dynamic pricing results from the app communicating with high road to receive monthly rating based upon their driving. The insured’ s app provides high road with real-time feedback for I wrote assessing monthly premium payments. An example of the app from HiRoad’s website showing this monthly computation is to the right.
HiRoad starts operations with an A– rating from A.M. Best
The stated purpose of the State Farm Group in forming HiRoad is to provide the Group more flexibility in marketing business to mobile‑centric consumers. A.M. Best has assigned HiRoad, a financial strength rating of A-.
Based on the filings with the Rhode Island Department of Business Regulation Insurance Division, HiRoad expects its premium and base rates to average ten percent less than the new business rates for State Farm.
HiRoad has high opinions and goals
HiRoad’s LinkedIn page leaves no doubt that the company and its staff have a very expansive view of their goals and abilities.
They not so modestly claim, “We’re incentifying the world to live smarter,” stating they are starting to accomplish this goal, “by reinventing insurance.”
Their claim, which may well be correct, is that because of smart phones their model can recognize and reward good driving choices in real time. This real-time analysis of risk they claim can result in their insured saving monthly premiums up to the claims 50%. They then state that “It takes a special crew to reinvent insurance, from customer care to data science, design, engineering, insurance, product, research, user experience, and more.”
The company claims its greatest goal is “Building a better future together—a future where doing right pays off for all of us.”
HiRoad launch party scheduled for February 1, 2018,
HiRoad has scheduled a public-invited launch party for February 1, in Providence. On its Facebook page, the company has asked Rhode Islanders to join with them stating, “We can’t wait to celebrate with our local community by treating you to refreshments, music and a number of surprises..”
The public event is scheduled from 6:00 to 8:30 PM at the Rooftop at Providence G, 100 Dorrance Street, Providence.
As of this article, 104 people already had indicated on Facebook they were interested and 51 had already signed up to go.
HiRoad app and technology comes from another State Farm Group’s portfolio company
The Hi Road technology is produced by an Insurtech startup known as Blue Owl Technology. Blue Owl is headquartered in the financial district of San Francisco and Blue Owl has received over 35 million dollars in initial financing. $22.5 million of that amount has come from State Farm. State Farm is also listed on the California filings of Blue Owl’s LLC as a member.
Blue Owl states in his website that they will not accept media inquiries so little is known about it beyond State Farm’s involvement. Blue Owl like HiRoad, claims to be “reinventing the insurance industry” as “a next-generation InsurTech startup.”
While Blue Owl’s mission is only cryptically mentioned on its website, a job posting on its site portrays an ambitious and commendable, but seemingly impossible, goal:
A million people a year die in car collisions around the world. That number can be zero. You can help us build an InsurTech company that uses the latest technology, data science, and behavior modification methods to save lives by preventing car collisions before they happen. to this end, we helped launch hiroad.com, a cloud native insurance solution that rewards people for the act of driving well. We are a well funded team of elite developers, data scientists, and business people who truly care about making a difference in the world, located in the financial district of San Francisco…” (Emphasis in original).
In this job posting, Blue Owl was offering $350,000 for the right data engineer.
Agency Checklists will keep you posted
Since agents and Agency Checklists may question if Rhode Island is a stepping stone for HiRoad’s app and business model into the larger automobile market in Massachusetts, Agency Checklists plans to follow Hi Road in Rhode Island and keep our readers informed on the company’s progress and plans as they become available.
