Reinsurance start-up Kettle has announced that it has been reinsuring homes during the 2021 wildfire season and that it has raised $25 million in a Series A funding round led by Acrew Capital, with participation from Homebrew, True Ventures, Anthemis, Valor, DCVC, and LowerCarbon Capital.
The reinsurance sector has seen a 68% drop in return on equity due to a spike in catastrophes causing more than $1 billion in damage over the last 15 years, Kettle said. Founded by Andrew Engler and Nathaniel Manning, the company is structured as a reinsurance managing general agent that can underwrite these growing risks. Kettle is also setting up its own risk-bearing entity.
Engler has more than a decade of experience in the insurance and reinsurance space, most recently serving as vice president of digital at Argo Group. Manning spent years working with data for humanitarian efforts as the CEO of Ushahidi, the largest open-source software platform for community crisis response, and as the first chief data officer of USAID.
“We are thrilled to be helping provide insight and relief to the California insurance market,” Manning said. “There are 14 million structures in California, and, in 2020, [approximately] 11,500 of them burned down – less than 0.1%. While the risks of wildfire have certainly increased over the past decade, the key is understanding exactly where the risk is. If we can do that, we can bring stability back to the California insurance market.”
In 2020, Kettle’s model predicted that the 14 largest fires, which accounted for 98% of the wildfire damage, were in the top 20% of areas most likely to burn across California’s more than 100 million acres. This year, the company’s model predicted the areas impacted by the Dixie and Caldor fires as some of the most dangerous parts of the state.
Kettle’s artificial intelligence technology and proprietary algorithms use data from public and private sources, including NOAA weather data and NASA satellites. The company’s networks run upward of 140 million model parameters to calculate the probabilities of fire damage and the half-square-mile resolution across California.
“When you take a minute to think about it, it becomes very obvious why traditional reinsurers can’t accurately underwrite climate risk – their methodologies look to the past,” said Lauren Kolodny, partner at Acrew Capital. “And our climate is changing in ways that can’t be predicted on the basis of historical data. Kettle is solving a massive, global problem, and we’re so thrilled to deepen our partnership with this incredible team.”
“Climate change is here; it’s right there in the words – the climate has changed,” Manning said. “Now we need to build the best safety net we can to help people recover from these catastrophes.”