By Chad Hemenway 

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Calling embedded insurance the “next secular trend in distribution,” Root Inc. CEO Alex Timm in a letter to shareholders said the company has an advantage to scale access in the channel and become profitable.

Root reported a net loss of $58.3 million for fourth quarter 2022, an improvement over a net loss of about $110 million during the same period in 2021. For all of 2022, Root recorded a net loss of about $298 million compared with a net loss of about $521 million in 2021.

However, Timm said the insurtech is positioned for profitable growth in new writings and continued improvements in loss ratios. The company’s fourth quarter combined ratio clocked in at about 180, which is an improvement over combined ratios of about 185 and 217 for the third and second quarters of 2022, respectively. The Q4 2021 combined ratio was about 212.

Root remains committed to embedded insurance, which made up 41% of new writing in Q4 thanks to the company’s partnership with Carvana.

“We continue to see opportunities to increase new writings from Carvana, as well as scale the platform to new partners,” said Timm in the letter, adding that Root “signed a commercial agreement with a national digital financial services” to expand its embedded platform. A third partner is expected soon, said Timm during an earnings call.

“We believe our early embedded success demonstrates our differentiation and serves as a strong proof point for future partners,” he added.

According to its 10K filing, Root said its long-term growth will depend on its ability to attract new customers through its embedded channel, machine learning loss models, and telematics-based pricing. “Our proprietary dataset will continue to scale as we grow, enabling us to enhance predictive models to further improve pricing and attract new customers,” Root said in the filing.

Root said its models, rate increases, underwriting adjustments, and new fee structures allowed the company to reduce the impact of increased claims costs as it “responded to the worst auto insurance cost inflation in history.” Root implemented 53 rate increases in 2022 at an average of 37% across its total book of business. CFO Rob Bateman said during the earnings call that Root expects its renewal book to shrink as the company takes on new embedded customers.

“As we continue to lower loss ratios and manage expenses in the business through 2023, we believe that we are in a strong position to significantly reduce operating loss in 2023,” Timm said.


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WRITTEN BYChad Hemenway

Chad is National News Editor at Insurance Journal. He has been covering the insurance industry since 2007, reporting on trends and coverage in most lines of insurance as well as natural catastrophes, modeling, regulation, legislation, and litigation. Chad can be reached at


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