RockRose Risk, a US insurance brokerage specializing in wildfire zones, raised $12.5 million in a Series A funding round that was co-led by Crosslink Capital and Congruent Ventures, with participation from asset manager Nuveen.
The San Francisco-based startup serves commercial property owners like homeowner associations and hotel groups as well as individual homeowners in the states of California, Colorado and Nevada. It seeks to lower clients’ insurance costs by quantifying the steps they take to reduce their wildfire risk. Now it’s looking to make risk mitigation services a part of its business.
RockRose plans to perform work such as tree trimming and roof upgrades and use those improvements to negotiate with insurers.
“We kept realizing this needs to just be an all-in solution,” Chief Executive Officer Andrew Engler said. Property owners should be able to reduce their risk and “importantly, in the end, get insurance for it and find a way to pay for it,” he said.
The startup is considering opening a $30 million to $40 million credit facility to acquire tree-trimming and roofing businesses, Engler said.
The strategy targets a critical problem as wildfire losses rise and insurance becomes more expensive or difficult to obtain in some areas. Insured wildfire losses in North America have grown by about 14% a year since 1970, according to the Swiss Re Institute, which points to fire weather and fuel conditions as well as growing property exposure.
RockRose isn’t alone in seeing an opportunity in preventing losses. Insurers including Zurich Insurance Group AG, Chubb Ltd., Axa SA and FM have business lines advising customers on protecting property from climate threats.
Yanjun Liao, an economist and fellow at the nonprofit Resources for the Future who researches disaster risk management, described the company’s model as “encouraging” but noted that it operates on a small scale. That is “far below what is needed to address the insurance affordability issues and to incentivize wide adoption of mitigation actions,” Liao said. She added that changes “regarding data availability and insurer and community practices” are also needed to address problems in the US insurance market.
Engler said RockRose is working with about $7 billion of property and has obtained average insurance discounts of 35%. It works with 27 carriers, he said; three are state-licensed insurers and the rest are more lightly regulated, “non-admitted” carriers, who typically cover risks that standard insurers are unwilling to take.
At McCloud Condominium, a homeowner association in Nevada’s Incline Village on Lake Tahoe, annual premiums had increased exponentially in just five years, Engler said. After mitigation measures were carried out, such as creating defensible space around buildings, the rate fell sharply. The association brought it down again by reinvesting its savings in fire safety, according to Engler.
The company ultimately wants to shift its model to focus more on mitigation.
“The brokerage model, it’s a very outdated model,” Engler said. RockRose still receives commissions based on premiums, but much of that work can be automated, he said, allowing the company to focus on “the hard work, the actual part that matters,” which is making properties safer.
Topics Agencies
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