PYMNTS MonitorEdge May 2024

Porch Reports Unique Data Improves Underwriting, Boosts Results

Porch Group has found that unique data provided by its home services software and partnerships has enhanced its underwriting of homeowners insurance and boosted its results.

During the first quarter, the company reduced its GAAP net loss to $13.4 million, down from $38.7 million in first quarter of 2023, and improved its adjusted EBITDA loss to $16.8 million, down from $21.9 million a year earlier, Porch said in a Wednesday (May 8) earnings release.

The company attributed these improvements in part to the unique data provided by its software-as-a-service (SaaS) products used by inspection, mortgage and title companies, according to a presentation released Wednesday in conjunction with the company’s quarterly earnings call.

“Maintaining our strong client retention with these companies through ongoing product innovation creates long-term competitive advantages, including valuable introductions to homebuyers and unique insights into properties,” Matt Ehrlichman, CEO, chairman and founder of Porch, said during the call.

These products and the partners who use them provide Porch with “unique data” and “advantaged underwriting,” according to the presentation.

When predicting and pricing risk, Porch uses not only the personal and geographic factors used by all insurers, but also its own unique “Home Factors.” These include water heater location, type of piping, presence of wood floors, roof type and defects, window quality, and foundation type and defects, per the presentation.

“With all of these Home Factors, we have a clearer picture of the risk and can price more accurately,” Efram Ware, president and general manager of Homeowners of America (HOA), Porch’s insurance carrier, said during the call. “With our data, we have verified insight into a large number of properties. We have so much data that we can then effectively model and predict Home Factors on virtually all properties across the U.S.”

With this data, the company can reduce exposure and stabilize results, the presentation said.

The firm’s underwriting performance is driven by its ability to leverage unique data to evaluate risk, implement rate and deductible increases to drive profitability, and non-renew higher risk policies in line with its risk appetite, the presentation said.

“This is where we outperform homeowners insurance peers,” Matthew Neagle, chief operating officer at Porch, said during the call.

Porch plans to continue to expand its use of these Home Factors and to monetize them, per the presentation.

“We will continue to expand these capabilities across more insights and states and build on its positive impact on our underwriting,” Ehrlichman said during the call. “It’s early days, but there will be ways to monetize these Home Factors in states where we do not write policies ourselves.”