Just weeks after announcing its first product and securing $30 million in funding, Stand, an insurance startup co-founded by Dan Preston, is now navigating a dramatic shift in California’s insurance market. Devastating wildfires that have upended Los Angeles have led to this major shift in the market. The fires have left more than two dozen dead, razed 41,000 acres, and destroyed over 12,000 structures.
“As soon as this stuff started happening, the inbound demand was about 5-10x overnight,” Preston said, reflecting on the surge in interest his company has experienced since the fires began.
The timing is as unexpected as it is critical. Preston debuted Stand’s wildfire-focused insurance product in mid-December, during what was supposed to be a lull between California’s fire seasons. Yet, this year has brought unprecedented winter wildfires, fueled by extreme winds and drought conditions, catapulting Stand into an unanticipated spotlight.
A Bold Vision in a Fleeing Industry
The insurance industry’s retreat from California has been years in the making, with rising wildfire risks pushing at least eight major carriers to either exit or limit their coverage in the state. The California FAIR Plan, a last-resort insurance option, has seen demand skyrocket by 137% since 2019, long before these latest disasters.
Preston, however, views the exodus as an opportunity to innovate where others have abandoned hope. Using advanced technology and a fresh approach to risk assessment, Stand aims to offer reasonably priced insurance tailored to properties in wildfire zones.
Through a combination of technology and a reimagining of home insurance, Preston wants to provide reasonably priced insurance products to homeowners again, especially in the wildfire zones.
Stand’s approach emphasizes proactive mitigation measures. The company employs artificial intelligence and physics-driven models to evaluate risks and recommend specific actions, such as pruning trees, replacing wooden fences with steel, or installing concrete barriers, to make homes safer.
Building Momentum Amidst Tragedy
Despite Stand’s early-stage status, with just 13 employees and a handful of insured properties, interest is rapidly growing. “It will be a lot harder for folks to find insurance the next couple years because of this event,” Preston said. “In some ways, we have a responsibility to level up our ambitions, bringing insurance back to the market.”
The task is monumental. Stand targets homes valued between $2 million and $10 million, often those in high-risk zones like Pacific Palisades. While this focus allows the company to address urgent needs, Preston acknowledges the broader challenge of fostering resilience at a neighborhood level.
“We might be able to play a much larger role in the state of safety if we can work with neighborhoods, and require homeowners and city officials to design neighborhoods to be more resilient,” he said.
Innovation Meets Urgency
Stand’s efforts are part of a broader conversation about wildfire resilience, a topic passionately championed by co-founder and investor Bill Clerico. Inspired by his personal experiences with wildfires, Clerico has made it his mission to promote tools and technologies that can mitigate fire risks.
“The bottlenecks are mostly around adoption and deployment,” Clerico said, noting that proven solutions like drones, satellite monitoring, and fire-resistant materials remain underutilized. “It’s cameras and software, which found its way into every aspect of society expect public safety.”
Clerico’s firm, Convective Capital, is simultaneously fundraising for its second wildfire-tech-focused project, further signaling the growing intersection of technology and disaster management.
Challenges Ahead
While Stand’s approach offers hope, the road ahead is fraught with challenges. The exit of Legacy insurers highlights the extreme risks associated with California’s wildfire-prone areas, with Goldman Sachs estimating up to $30 billion in losses from the LA fires alone.
Preston remains undeterred, leveraging reinsurers and demonstrating Stand’s effectiveness in mitigating risks to reduce costs over time. However, he emphasizes that true progress will require a shift in collective behavior and infrastructure planning.
“The mission has to go well beyond protecting individual homes one at a time,” Preston said. “We might be able to play a much larger role in the state of safety if we can work with neighborhoods, and require homeowners and city officials to design neighborhoods to be more resilient,” he added.
A Defining Moment
As LA’s wildfires continue to influence the insurance market, Stand’s early achievements reflect the power of innovation in the face of adversity. By combining advanced technology with a commitment to community resilience, Stand is offering a lifeline to homeowners when they need it most.
