Kettle CEO Espinoza says 'the market is ripe' for what wildfire insurtech MGA is building

By James Thaler

April 11 - (The Insurer) - After writing around $20 million in premium in 2024, recently installed Kettle CEO Isaac Espinoza has said “the market is ripe” for what the wildfire insurtech MGA is building and that its losses from the Los Angeles wildfires were minimal, with all claims closed out by early March.

The former Greenlight Re and Root executive made those comments in an interview with The Insurer TV at last month’s WSIA Underwriting Summit in Phoenix, Arizona, where he detailed the intricacies of his firm’s wildfire model.

“The market is ripe for what we're building. We've been around only five years, (we’re a) venture-backed business, starting in 2020 but this peril wildfire is something that I think has been overlooked over the years or undermodeled,” he commented.

Kettle’s ambition is to bring a modern tech stack and deep data resources to develop advanced wildfire modeling to better underwrite the peril.

“Initially in the first number of years, we were very heavy with a lot of PhDs and scientists, and we still have many today,” Espinoza explained.

“But over the last couple of years, it was a little bit of a pivot to focus more on how we can apply those models we built to be able to write our own book of business,” he added, saying that his company is “thrilled” to operate in its segment of the market.

After a career in reinsurance underwriting and insurtech venture investing at Greenlight Re and serving in a senior strategy role at auto insurtech Root, Espinoza is clear-eyed about the current skepticism generally aimed at insurtech firms and in his decision to join Kettle.

He said that Kettle has the advantage of operating in the E&S market, which he noted has seen “tremendous growth” and brings “tremendous opportunity,” with significant flexibility in underwriting, which he said stands out in contrast to his previous insurtech experience.

“We aren't filing rates, and we aren't waiting for approvals, and we have the ability to be nimble in terms of how we build up the book and how we think about aggregation,” Espinoza commented.

“One of the criticisms that insurtechs have had is they haven't got to profitability as quickly as some expected, or maybe they didn't grow as much as people would have expected, but I would say that that's a little bit unfair, to an extent,” he remarked.

“Because if you take an industry where the average insurer has been around, in many cases, 100 years, to have someone come in and within a five-year period be a leader, is very unrealistic,” he said.

Espinoza said that “one very fundamental difference” at Kettle is that his company has priced the accounts it underwrites at a profitable combined ratio “from day one,” which the company has maintained since it was launched.

“We aren't looking to buy our way into a market. We aren't overspending on acquiring customers,” he argued.

“We are taking the traditional underwriting fundamentals but enabled by a tech platform and a model that we built in-house to give us pricing advantages, and from there, writing a profitable book from day one,” he added.

The Kettle CEO called January’s Los Angeles-area wildfires “tragic” as he noted that the industry loss event is likely to turn out to be “multiples” of the industry’s previous largest wildfire loss.

“From the perspective of our business, we do model with a very detailed level of granularity. And I would say that in general, when we look at the areas that were impacted, no one's going to predict where a wildfire is going to happen,” Espinoza said.

He also noted that thousands of wildfires occur across the U.S. every year.

“But what I would say is that we did have a fairly bearish view of the areas that were impacted, just because of where they're positioned,” he commented, highlighting the fact that Kettle writes throughout the U.S., with California its biggest state and Southern California its peak zone.

“But we largely avoided most of the losses that were experienced because our pricing and where we thought rates needed to be based on where our models indicate – we just simply were not as competitive as maybe some others out there,” Espinoza said.

The CEO said that that the insurtech nonetheless had some losses from the event, but made sure to pay claims quickly.

“The key thing about what we wanted to do is, given the event, given how awful it is, we wanted to make sure that people were made whole as soon as possible,” Espinoza explained.

“So, very pleased to say that as of today, in fact, we have no remaining open claims from the event. So, we're pleased to be able to get the money in the hands of our customers who were impacted by these events,” he added.

The Kettle CEO detailed how his firm’s wildfire models work, pointing to data sets it has on the ignition of anywhere up to 10,000 wildfires that ignite each year, as well as thorough analysis on how wildfires spread through embers carried by the wind.

“That's taken into account a number of different variables, in terms of, once a fire starts, how does it grow from there, if it grows at all, that can take into account neighboring vegetation, which we would call fuel, and we have an index for that based on satellite imagery, about the level of vegetation that's effectively something that can burn.

Espinoza said his firm, which distributes its products exclusively through the wholesale channel, is looking to bring on additional capacity partners, and that its growth potential depends on how market conditions continue to evolve.

“It may be significant, but it would only be if we felt that the profitability is there. It's very clear across our organization that we prioritize profitability over growth,” he commented.

“It's possible we could grow, but it would only be because the opportunity is there and we're confident that we can get the profitability level that we think is appropriate for the risk we're taking,” he concluded.