How HazardHub Carved Out a Unique Service and Value in the P&C Insurance Industry
In just five years, HazardHub has gone from a relatively unknown entity to the talk-of-the insurance industry, culminating in an acquisition by Guidewire in August 2021. I recently sat down with Bob Frady, the company’s co-founder and CEO, and now the Vice President of Guidewire HazardHub, to discuss what made the company’s journey so special – and how that translated into value for the customer.
“The main thing that sets us apart mentally from other companies is that we’re not afraid of being wrong,” reflects Frady. “Too many businesses are afraid of mistakes, and they opt for safety. Once you bet on safety, you lose your inventiveness. That has never been our style.”
And taking the riskier road of inventiveness has certainly paid dividends. HazardHub has pioneered a new technology-driven approach to become the fastest-growing supplier of geospatial risk data for the insurance industry.
At its core, HazardHub curates, analyzes, and distills vast amounts of property risk data, covering a range of perils from the more obvious (wind, wildfire, and flood) to the more obscure (sinkholes, mold damage, and radon levels). The “secret ingredient,” Frady explains, “is taking data and combining it or making it useable in ways that other people can’t.”
Tell me more about this secret ingredient.
“It’s our technology,” Frady replies. “Part of the founders’ vision was to exploit the boom in data availability and blend it with the latest technology.”
A unique cloud-based API approach enables HazardHub to provide fast, nimble, and tailored service to its clients. In less than two seconds it can provide risk scores and underlying data for any of the millions of properties in the United States.
“It’s almost magical when you think about what technology enables today,” continues Frady. “Everything we provide is cloud based, virtual, and scalable in a way that – to this day – others can’t replicate what we’re doing. When our competitors started up, this just wasn’t possible.”
Starting a business from scratch, however, is a huge task, requiring grit and determination. Frady’s small team spent a year hand-examining more than 50,000 fire stations and millions of fire hydrants across the U.S. Bob personally inspected 5,000+ fire stations while his co-founder, John Siegman, examined more than 200,000 hydrants.
“I hated it,” Frady admits, “but I wanted to make sure that if we were going to put our names on it, we knew that it was done right.”
The biggest hurdle was building trust. Start-ups are inherently risky, and HazardHub’s product proposition was new and untested in what was already an established market.
“The API mentality is a different mind-set to the traditional system the insurance industry is built on. It was a big leap for people to make mentally. We spent a lot of time building partnerships to get ourselves established.”
It took two years for HazardHub to establish a strong reputation, at which point they hit an inflection point and demand soared. And from there, they have not looked back, tapping into the insurance community’s growing thirst for easily accessible, detailed, and up-to-date data.
The world is changing at a faster pace than ever before, whether it’s altered weather patterns, population shifts, or rising sea levels – all of which impact property risk. Traditional historical data and out-of-date databases struggle to reflect these changes – and that translates into errors and risks. HazardHub, by contrast, offers current and forward-looking data, designed to help insurers understand the current state of risk.
HazardHub’s Property Fire Score model, for example, offers property-level risk assessments based on critical factors that many traditional models overlook. These include a property’s proximity to a fire hydrant and fire station, including details such as the drive-time to the station, the capacity of the station, the water network surrounding a property, and monthly updates on whether the station remains operational.
“Opening or closing a fire station has a dramatic impact on a property’s ability to withstand a fire,” Frady explains. “Most existing models completely ignore this data. As a result, they’re not nearly as powerful at assessing the fire risk of a property.”
The Next Chapter
In August 2021, HazardHub was acquired by Guidewire, marking the next phase in Frady’s and the company’s journey. Both Guidewire and HazardHub share a passion for data and technology, and they offer different but complementary value propositions. HazardHub’s data brings a new dimension to Guidewire’s platform, enabling clients to inject property-level data directly into their workflows. Meanwhile, Guidewire offers HazardHub the chance to expand and mature.
But it was Guidewire’s vision for the future that really brought the two together.
“We wanted to become more streamlined, more flexible, and to maintain our inventiveness. And it was clear from talking to the leadership team that Guidewire absolutely shared that vision. That’s when it got really exciting,”
He concedes that maintaining an innovative spirit becomes harder as a business matures. “That’s one of the reasons we looked to Guidewire. Their goal is to become nimbler and to maximize the opportunities from the cloud. And we thought, ‘We want to be part of that.’”
So what’s next for HazardHub?
“First, we have unfinished business in the U.S., answers Frady. “The U.S. is the largest insurance market in the world. We’re not done, so we have to keep our focus on this market.”
He added that he would like to grow the HazardHub international client base, tapping into the global insurance companies that write U.S. business. There are already four London Market clients, and Frady would like to see that grow.
“About half the risk that runs through Lloyd’s is U.S. property,” he explains, “so that’s where we’d like to be. Property risk is very localized, and these insurers don’t have the ability to drive down a street and see it in person. So they rely on data far more than other companies do. That’s where we can add value.”
The HazardHub team’s ultimate, blue-sky ambition is to expand their datasets and risk data beyond the U.S., and they are currently exploring the possibility of a global wildfire model. While Frady is excited about their international ambition, he is also cautious and stresses that they need to be pragmatic. Because the nuances that impact property risk are very local, data gathering techniques that work in the U.S. do not always translate to other countries.
“On a recent business trip to the UK, some of us were initially puzzled at the lack of fire hydrants – until we realized they were underground. Now, that makes them much harder to track. Little challenges like that are actually a big thing, and every country has its intricacies that we must assess.”
“The Best Time to be Alive”
Reflecting on what HazardHub has achieved in just five years, Frady returns to the phenomenal advances in technology: “As much trauma as there currently is in the world, today it really is the best time to be alive. If you want to start a business your opportunities are almost limitless; you’re not limited by technology or talent.”
Can you offer one piece of advice from your journey so far?
“Be solid in who you are and find a way to add value,” Frady responds quickly. “If some people don’t like it, move on and find those who do love who you are and what you do. It’s not so easy to hold firm at the beginning – but that, for us, was the biggest lesson learned from the past five years.”