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Does Technology Power Root's Competitive Edge in Insurance?
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Key Takeaways
Root leverages telematics and AI to improve pricing accuracy, claims efficiency and underwriting.
Investments in automation, partnerships and risk tools aim to expand Root into new insurance lines.
ROOT shares are up 33.4% YTD, though its valuation trades well above the industry average.
Root Inc. (ROOT - Free Report) , a technology-driven auto insurer, leverages data science, telematics, and automation to price risk with greater accuracy than traditional carriers. Technology forms the backbone of its business model, driving customer acquisition, underwriting precision and claims efficiency.
At the core of Root’s approach is its telematics-based underwriting platform, which evaluates individual driving behavior in real time. By directly linking premiums to actual driving performance, Root improves loss ratios and sharpens pricing discipline. This behavior-based model gives Root a clear competitive edge, particularly as auto insurance costs rise and consumer sensitivity to pricing intensifies.
The insurer also employs automation and AI to enhance claims handling, lower fraud, and improve overall efficiency, lowering the expense ratio. These measures not only reinforce earnings potential but also strengthen Root’s long-term operating leverage.
Root intends to continue its technological investments in AI, automation and product innovation. The company is scaling its telematics engine, broadening embedded insurance partnerships, and building advanced risk modeling tools to extend into renters and other personal insurance lines. These initiatives should improve underwriting profitability while enabling scalable growth.
The insurer believes “the $300 billion U.S. auto insurance market is ripe for disruption.” Root’s proprietary technology allows adaptability across the value chain, supports flexible product design, accelerates innovation and positions it better than its competitors.
What About Other Players?
Lemonade (LMND - Free Report) relies on technology as its backbone, driving AI-powered underwriting, automated claims, and seamless customer interactions. Technology enables Lemonade to cut costs, refine risk selection and operate more efficiently than traditional peers. As policies expand, Lemonade gains operating leverage, strengthening earnings capacity and paving the way toward lasting profitability.
Technology plays a crucial role for Kingstone Companies (KINS - Free Report) , improving underwriting precision, claims handling and overall customer experience. By cutting costs and driving efficiency, Kingstone Companies achieves better control of loss ratios and financial outcomes. As operations grow, technology enhances leverage, enabling Kingstone Companies to expand earnings and ensure long-term profitability.
ROOT’s Price Performance
Shares of ROOT have gained 33.4% year to date, outperforming the industry.
Image Source: Zacks Investment Research
ROOT’s Expensive Valuation
ROOT trades at a price-to-book value ratio of 6.21, above the industry average of 1.54. But it carries a Value Score of B.
Image Source: Zacks Investment Research
Estimate Movement for ROOT
The Zacks Consensus Estimate for ROOT’s full-year 2025 and 2026 EPS witnessed no movement in the last 60 days.
Image Source: Zacks Investment Research
The consensus estimates for ROOT’s 2025 and 2026 revenues and EPS indicate year-over-year increases.
Image: Bigstock
Does Technology Power Root's Competitive Edge in Insurance?
Key Takeaways
Root Inc. (ROOT - Free Report) , a technology-driven auto insurer, leverages data science, telematics, and automation to price risk with greater accuracy than traditional carriers. Technology forms the backbone of its business model, driving customer acquisition, underwriting precision and claims efficiency.
At the core of Root’s approach is its telematics-based underwriting platform, which evaluates individual driving behavior in real time. By directly linking premiums to actual driving performance, Root improves loss ratios and sharpens pricing discipline. This behavior-based model gives Root a clear competitive edge, particularly as auto insurance costs rise and consumer sensitivity to pricing intensifies.
The insurer also employs automation and AI to enhance claims handling, lower fraud, and improve overall efficiency, lowering the expense ratio. These measures not only reinforce earnings potential but also strengthen Root’s long-term operating leverage.
Root intends to continue its technological investments in AI, automation and product innovation. The company is scaling its telematics engine, broadening embedded insurance partnerships, and building advanced risk modeling tools to extend into renters and other personal insurance lines. These initiatives should improve underwriting profitability while enabling scalable growth.
The insurer believes “the $300 billion U.S. auto insurance market is ripe for disruption.” Root’s proprietary technology allows adaptability across the value chain, supports flexible product design, accelerates innovation and positions it better than its competitors.
What About Other Players?
Lemonade (LMND - Free Report) relies on technology as its backbone, driving AI-powered underwriting, automated claims, and seamless customer interactions. Technology enables Lemonade to cut costs, refine risk selection and operate more efficiently than traditional peers. As policies expand, Lemonade gains operating leverage, strengthening earnings capacity and paving the way toward lasting profitability.
Technology plays a crucial role for Kingstone Companies (KINS - Free Report) , improving underwriting precision, claims handling and overall customer experience. By cutting costs and driving efficiency, Kingstone Companies achieves better control of loss ratios and financial outcomes. As operations grow, technology enhances leverage, enabling Kingstone Companies to expand earnings and ensure long-term profitability.
ROOT’s Price Performance
Shares of ROOT have gained 33.4% year to date, outperforming the industry.
Image Source: Zacks Investment Research
ROOT’s Expensive Valuation
ROOT trades at a price-to-book value ratio of 6.21, above the industry average of 1.54. But it carries a Value Score of B.
Image Source: Zacks Investment Research
Estimate Movement for ROOT
The Zacks Consensus Estimate for ROOT’s full-year 2025 and 2026 EPS witnessed no movement in the last 60 days.
Image Source: Zacks Investment Research
The consensus estimates for ROOT’s 2025 and 2026 revenues and EPS indicate year-over-year increases.
ROOT stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.