Root (NASDAQ: ROOT) is an auto insurance company looking to flip the industry on its head. It plans to do this using telematics, a fancy way of saying it collects information on its customers' driving behavior through their phones and uses that to determine the cost of their coverage.
The company's ultimate goal is to eliminate the use of credit scores in insurance , making the case that insurance should be priced based on driving performance and not demographics. While other insurers have used telematics in pricing before, Root argues it's the only company using these insights to price insurance policies up front. As the company prepares to expand its operations from 30 states to 48 in 2021, let's dive more into this auto insurer, how it seeks to disrupt the industry, and if it's worth investing in now.
Root prides itself on its ability to measure distracted driving. According to the National Safety Council, 1 in 4 accidents in the United States is caused by distracted driving. Root says its telematics are special, because they are "built on a proprietary integrated data claim set of complex behavioral data tied directly to actual claims experience."
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This Startup Is Attempting to Disrupt the Auto Insurance Industry