As wildfires ravage parts of Los Angeles, leaving devastation in their wake, a new insurance startup named Stand has emerged as a potential savior for homeowners in high-risk areas.
Launched just weeks before the fires began, the company has seen an unprecedented surge in interest, highlighting both the growing need for innovative insurance solutions and the urgent challenges posed by climate change.
A Startup Born in Crisis
Stand, co-founded by tech entrepreneur Dan Preston, officially launched its first wildfire-focused insurance product in December, supported by a $30 million financing round. Traditionally, California’s wildfire season runs from early summer to late fall. However, this year, unseasonal fires fueled by extreme winds have left more than two dozen dead, scorched over 41,000 acres, and destroyed 12,300 structures in Los Angeles.
“This is not when you’d expect wildfires of this magnitude,” Preston said. “It has dramatically accelerated demand for our services, with inquiries increasing 5 to 10 times overnight.”
Stand aims to fill a void left by traditional insurance carriers fleeing California due to escalating wildfire risks. By mid-2024, at least eight insurers had stopped offering policies in the state, leaving homeowners with few options. Many are forced to rely on the California FAIR Plan, a last-resort insurance program that has seen a 137% surge in enrollment since 2019.
Technology Meets Innovation
Stand sets itself apart by using advanced technologies like artificial intelligence and physics-based insights to assess wildfire risks and recommend property modifications. These suggestions range from pruning trees to replacing flammable materials with fire-resistant alternatives.
“Our approach isn’t just about insuring properties but about making them safer and more resilient,” Preston explained. The company is already in talks with hundreds of potential customers, focusing on homes valued between $2 million and $10 million—properties often considered too risky by traditional insurers.
A Changing Landscape for Insurance
The LA wildfires have exposed vulnerabilities in the U.S. insurance market, with Goldman Sachs estimating up to $30 billion in potential losses tied to these fires. For companies like Stand, the exodus of established insurers creates an opportunity to redefine the market.
“Legacy insurers are exiting, not competing,” said Bill Clerico, a co-founder of Stand and a fire-tech investor. Clerico believes that by combining innovative technology with a better understanding of risk, startups like Stand can carve out a sustainable niche in the high-risk insurance market.
Beyond Individual Homes
Preston’s vision for Stand goes beyond individual policies. He advocates for community-wide resilience, encouraging collaboration between homeowners and local governments to redesign neighborhoods to withstand future wildfires.
“Our mission is not just to protect homes but to create safer communities,” Preston said. “This is about rethinking how we live in high-risk areas to mitigate disaster before it strikes.”
The Road Ahead
Despite its innovative approach, Stand faces significant challenges in scaling its operations and influencing broader behavioral and structural changes. However, as wildfires increasingly defy seasonal norms, the company’s mission to make wildfire insurance accessible and practical feels more urgent than ever.
Stand’s rise amid a disaster underscores the need for tech-driven solutions in a rapidly changing climate. As traditional insurers retreat, the startup is stepping up to fill the gap, offering hope to homeowners who thought they had none.
