Why We Invested in reThought Insurance: The Future of Commercial Flood Insurance

Prototype Capital
3 min readJun 13, 2019

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We’re thrilled to announce our investment in reThought Insurance, a technology-enabled insurance venture, using sophisticated technology-driven underwriting methodologies to offer Commercial Flood Insurance on behalf of A-rated insurance carriers. Commercial Flood is reThought’s first line of business, others are in the works as well. Welcome, Cory and reThought team, to the Prototype Capital family!

Coming in, we saw a few relevant fundamental truths:

  1. Global warming is driving an increase in storms and flooding. According to research by the European Academies’ Science Advisory Council, global floods and extreme rainfall events have surged by more than 50% this decade.
  2. Flooding is one of the most underinsured areas in property insurance. According to reporting by the New York Times, despite the uptick in floods and extreme rain, people tend to underestimate the odds of something bad happening to them. Add to that the escalating cost of coverage, spurred by rising risk levels and changes to the federal flood insurance program, and the result is a persistent hole in the home owner’s defenses against climate change. In particular in 2018, there was almost a $110b gap between the property damage from flooding and properties that were insured.
  3. Big carriers and reinsurers are delegating the underwriting of flooding to Managing General Agents, like reThought Insurance. Given the lack of in-house expertise in the nuanced flood insurance market, many of the large US home insurance companies are entering the flood insurance market through specialists.
  4. To accurately estimate the potential flood hazard to a given structure, very detailed information is required. To estimate potential flood damage, detailed information, including specific topology around the structure, specific height of the structure itself, type of construction, etc., is needed. It requires an engineering-level approach, and it has been said that “inches matter” in regard to this peril. Because of this technologies like machine perception, computer vision, and better data pipelining tools can significantly help measure and reduce risk.

We believe reThought Insurance provides the level of subject matter expertise needed and technological sophistication to realize these fundamental truths. reThought has developed significant expertise, methods and has a developed proprietary technology on top of third-party model and data vendors to provide the most advanced precision underwriting for the peril of flood insurance. They have formed strategic relationships with carriers and reinsurers; these partners provide the insurance “capacity” needed for reThought policies. reThought fills a key need for these partners, to innovate in profitable commercial markets, especially those that are challenging to underwrite. With their team of experts and proprietary technology, reThought will be able to expand beyond Flood into other major lines of Commercial insurance such as Additional catastrophe insurance (e.g., Earthquake, Severe Brush Fires), Convective Storms, Cyber, Supply Chain, and Product Liability.

Currently, reThought has 5 separate programs in place, each with its own group of reinsurers and carriers to attack specific areas of the US Commercial Flood market

Ultimately though, our partnership and investment in reThought was mainly predicated on the team. CEO Cory Isaacson has built a successful career in technology where he was most recently CTO of Risk Management Solutions. Chief Underwriting Officer Nick Lamparelli is a 20+ year insurance veteran and has worked in various capacities in the industry, including broking, underwriting and analytics. COO and Chief of Sales James Rice is an industry veteran who has been delivering complex solutions to the insurance and financial markets for 20+ years.

We’re excited to be working with an impressive team to tackle a large, timely, and important problem for the property insurance industry. We look forward to a future where business and high-net-worth individuals will feel confident that they are protected if a catastrophic event should befall their property.

Cheers to a cleaner, safer future,

Team Prototype Capital

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Prototype Capital

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