Los Angeles wildfires put Stander at the center of homeowners’ search for insurance | Real Time Headlines

In mid-December, tech entrepreneur Dan Preston debut Insurance startup Stand’s first product is focused on protecting properties in wildfire areas. He should have several months to work with potential customers and market the product before any catastrophic fires hit the United States

In Stander’s home state of California, fire season typically lasts from early summer through October or November. Stand, which Preston co-founded early last year, announced a $30 million funding round and new products on December 16, just days before winter officially began.

But this is a winter like no other. Three weeks after Stand launched, wildfires raging Strong winds hit parts of Los Angeles, killing more than 20 people, burning about 41,000 acres and destroying at least 12,300 buildings.

“This is certainly not a time when you would typically see an event like this,” Preston said in an interview this week. “It gives a huge boost to business. As soon as this happens, inbound demand increases overnight. 5-10 times.”

For more than a decade, Preston has been trying to innovate in the often boring and slow-moving insurance industry. In 2013, he became head of technology at auto insurance upstart Metromile and later became CEO, leading the company to the public markets through a special purpose acquisition company (SPAC) in 2020. Metromile encounters difficulties after launch SPAC and Sell In 2022, Preston was acquired by Lemonade, a technology-driven insurance company.

At Stand, Preston aims to make it big in a market where traditional insurance companies are quickly abandoning it as too risky. As of mid-2024, at least eight insurance companies had left the state or limited their exposure. this California Equity PlanInsurers generally viewed as a last resort have seen premiums increase by 137% since 2019, long before the recent Los Angeles fires began. According to LendingTree, about 10% of homes in Los Angeles are without insurance.

It’s not surprising that companies are pulling out of the state. Goldman Sachs It is estimated that insurance companies may face $30 billion in losses Related to Los Angeles. fire.

By combining technology with the reimagining of home insurance, Preston hopes to provide affordable protection to homeowners in wildfire areas.

The key for homeowners is to realize that they must make changes to their home and surrounding land to prevent a fire from spreading out of control. This could include trimming trees, replacing wooden fences with steel or adding concrete barriers between homes. Stand uses artificial intelligence and what it is incoming call “Physics-driven insights tailored to each property” to make specific mitigation recommendations that can make a property insurable.

The company, which currently has 13 employees, has insured only a few properties so far but is in talks with hundreds of potential clients, Preston said. He said that number is increasing dramatically as property owners begin to understand the consequences of the Los Angeles fires.

“It’s going to be more difficult for people to find insurance in the coming years as a result of this event,” Preston said. “In some ways we have a responsibility to increase our ambition to bring insurance back into the market.”

Bill Clerico, co-founder and one of the original investors in Stand, expects January to be busy, but for a very different reason. He and his wife had just had their second child. On January 7, Convetive Capital, a venture capital company under Clerico that focuses on fire protection technology Application to raise $75 million It is its second fund.

Clerico said he can’t talk about Convective’s fundraising efforts at this time, but he is using the disaster to try to raise awareness about wildfire mitigation strategies and some of the tools and techniques available. in a Post on X On January 8, Clerico wrote that the four keys to fighting wildfires are forest and fuel management, rapid detection using cameras and satellites, “hardening” homes and communities, and reducing utility-caused fires.

“The bottleneck is mainly in terms of adoption and deployment — a lot of these technologies are not cutting-edge,” Clerico said in an interview. “Drones have been around for decades, satellites have been around for decades. Its cameras and software have penetrated every aspect of society, including public safety.”

Before launching Convective three years ago, Clerico was co-founder and CEO of fintech startup WePay, where he Sell arrive JPMorgan Chase 2017. managing Director For Bay Area banks,

Clerico lives in San Francisco and owns a cabin in Anderson Valley, about 115 miles north of the city. He said a wildfire there in 2018 inspired him to volunteer with the local fire department and was what prompted him to start investing in the field.

He said that while VCs have poured into cleantech in recent years, they have mostly avoided investing in companies focused on resilience and adaptability, in large part because the buyers are “pretty big slow-moving institutions, like Utilities, Governments and Insurance Companies”. .

Clerico said Stand is unique compared to other tech startups trying to crack the insurance space in that competition in its target market is decreasing, not increasing.

“The existing insurance companies are not competing and they are exiting,” Clerico said. “If you can develop a deeper understanding of risk, that’s a more favorable place for a startup to be.”

Still, this is an extremely tough market.

Stander is currently focusing on homes worth $2 million to $10 million, which Preston said covers properties facing a lot of “distress.” The company is working with multiple reinsurers and hopes to drive down costs as it proves the model can work.

However, making a meaningful contribution to the larger problem requires significant behavioral and structural changes in the community, e.g. Pacific Palisades In Los Angeles, they are suddenly in danger of disappearing almost overnight. This mission must go far beyond protecting a single home at a time.

“If we can work with communities and ask homeowners and city officials to design more resilient communities, we may be able to play a bigger role in making our communities safer,” Preston said.

watch: When the fires recede, rebuilding Los Angeles is the most pressing issue