And so it’s a structure that’s been used before. In terms of how we get credit essentially for our data advantage, well, yes, by being able to create better underwriting results and being able to use our data to be able to price more effectively. We benefit in two ways. One, we can help premiums grow faster, right? So being able to provide lower pricing to the right consumers, we can go and be able to win more consumers to grow premiums more quickly, the faster premiums grow the higher our fees are, right, because we get fees as a percentage of the premiums. And so we are very incentive to help premiums grow quickly. Our data gives us an advantage. You’ll be able to do so. Secondly, we can pay fees appropriately based on having a healthy sustainable reciprocal exchange.
And so by being able to have the right customers priced correctly, that affords this entity to be able to pay those fees and have potentially growing fees over time. Adam, anything else you would add?
Adam Kornick: I think you did great. I wouldn’t just make it more complicated.
Dan Kurnos: Does this €“ obviously you’re reducing both seeding levels and also I guess the GWP is sort of reflective of your plan to move to reciprocal exchange this year in the guide. So does this kind of change the TAM at all in your minds? And who you can go after, obviously you can go after a smaller TAM but have it be substantially higher margin, right? But just can you help us think through that a little bit?
Matt Ehrlichman: So I’ll take this last one and then get the team involved, but I think the TAM is interesting in two ways. One, like we noted in the call, no, our fees are largely similar to the types of fees we would get when we would seed premiums to reinsurance companies and they would pay us. So our take, our opportunity is no €“ not materially different, no. One thing that I do think is interesting just in terms of the TAM of homeowners insurance, just general, the category in general is that unlike categories like auto insurance that have risk of being a smaller market over time as cars become safer. Homeowners insurance we get questions like, okay, is this a good industry to play in because of the weather, right? That’s out there and the weather that should increase over time.
In our view, it actually becomes a very attractive dynamic long-term because insurance companies are going to price to be able to generate profit. That’s just the reality of it. Prices will go up as there is more weather, which means the TAM is going to grow and we believe that the homeowners insurance TAM is going to grow substantially. If you look forward over the next five years, would I be surprised if it’s a €“ if the TAM is twice as large as it is now? Not at all. And so not only are we going to be able to benefit from just executing our plan, growing our business, but we would expect prices and the TAM to continue to go up and we would be the direct beneficiary of that through the this fee-based model.
Dan Kurnos: Got it. That’s helpful. I’d ask you my standard app question, but if something tells me it’s going to be a long call and not the focus tonight, Matt, so I’ll move along.
Matt Ehrlichman: Thanks, Dan. Good to see you.
Lois Perkins: Thanks, Dan. Next up is Cory from JPMorgan. Over to you, Cory.
Cory Carpenter: Hey, thanks for the questions. Just a couple sticking on the reciprocal just €“ in terms of financial impact just to make sure we understand like when a weather does happen under this new format. Does that basically just pull from the HOA cash reserves then it essentially has no impact on your P&L? Is that the right way to think about it? And then does this impact the bundling opportunity, like with Porch Home Plan at all? Like are there limitations around what you can do from that perspective? I have one more, but I’ll stop there.
