Sumitomo Mitsui Insurance is reportedly investing US$350 million in US-based home insurance tech startup Hippo.
According to a report by Nikkei Asia, the Japanese insurer looks to harness Hippo’s expertise in artificial intelligence to boost its capabilities in minimizing damage from fires and other risks.
The cross-Pacific deal will see Sumitomo Mitsui purchase convertible bonds from Hippo, which is valued at around US$1.5 billion. This follows a separate investment made in July through the insurer’s venture capital unit.
Established in 2015, Hippo provides its customers with a device that can shut off water lines automatically once a leak is detected. It can also alert users when smoke is detected in their property. According to the startup, by preventing issues before they can occur, it can offer its customers savings on their insurance premiums.
The Nikkei Asia report noted that Sumitomo Mitsui is facing pressure in its home market of Japan as more frequent typhoons and other natural disasters have impacted its main casualty insurance business. The insurer is looking to bring over a smart sensor system like Hippo’s to Japan, as well as incorporate its customer communication and onboarding capabilities.
Following the transaction, a representative from Sumitomo Mitsui will join Hippo's board as an observer. The Japanese insurance giant also will also provide reinsurance for Hippo’s policies, as it seeks to expand its US footprint.