An Aerial View of Repair Vehicles at Sunset in Malibu, California
Midway through December, tech entrepreneur Dan Preston launched Stand’s first product, focusing on protecting property in wildfire zones. Just weeks later, wildfires ravaged parts of Los Angeles, killing over two dozen people, scorching 41,000 acres, and destroying 12,300 structures. The disaster has accelerated Stand’s business, with inbound demand increasing five to tenfold.
Stand’s CEO, Dan Preston, is trying to innovate in the insurance industry, which is rapidly abandoning the California market due to the high risk. At least eight insurance carriers have left the state or limited their exposure. The California FAIR Plan has seen a 137% increase in demand since 2019.
Formerly the CEO of Metromile, Preston wants to offer reasonably priced protection to homeowners in wildfire zones through a combination of technology and reimagined home insurance. He uses artificial intelligence and physics-driven insights to make specific mitigation recommendations for each property, which can make it insurable.
Stand has only insured a few properties so far, but is in talks with hundreds of potential customers. The number is increasing dramatically as property owners understand the consequences of the LA fires. Preston believes that with this event, it will be a lot harder for people to find insurance in the next couple of years, and that the company has a responsibility to level up its ambitions to bring insurance back to the market.
Bill Clerico, one of Stand’s co-founders and initial investors, is working on fire-tech-focused venture firm, Convective Capital, which is raising $75 million for its second fund. He is now using the disaster to raise awareness about strategies for wildfire mitigation and the available tools and technologies.
The bottlenecks are mostly around adoption and deployment, with many technologies being well-established. Clerico believes that what’s unique about Stand is that the competition in its target market is dwindling, making it a more favorable space for startups. However, it’s an extremely tough market, and Stand is currently focused on homes worth $2 million to $10 million.
The company is working with reinsurers and plans to reduce costs as it proves the model can work. However, making a meaningful contribution to the bigger problem requires significant behavioral and structural changes in neighborhoods at risk. Preston believes that the company could play a much larger role in promoting neighborhood resilience and requiring homeowners and city officials to design neighborhoods to be more resilient.