Q&A: Genasys co-CEO Andre Symes discusses the fundamental questions for insurance startups in an evolving technology ecosystem

Traditionally start-up insurance businesses used to have to decide whether to buy or build when it came to technology; are the options so binary today?

The options are no longer binary, but sometimes the thinking still is. When start-ups and greenfield organisations, such as managing general agents or insurtechs, want to launch, they try to get seed funding. Investors would usually ask whether the firm was going to buy or build their technology. That kind of question stems from the technology that was available to insurance businesses five years ago. At that time, off-the-shelf policy administration and go-to-market quote and bind software was expensive and extremely inflexible.

A firm typically had a single monolithic platform to fulfil all their insurance technology solutions, from quote and bind and policy performance, through to mid-term adjustments. And for MGAs, it would take them all the way through to the carrier, with the data and their order. So, start-ups had a binary choice of whether to buy something off the shelf that was quick to market – but was not necessarily a good fit for the business – or to build something slightly more bespoke to their organisation, with the burden of a 12 to 18 month build time as well as the cost itself.

This has changed with the evolution of the technology ecosystem. As the cost of inter-system connectivity through things like APIs and webhooks has come down, it has become much more cost effective to buy technology that has optionality to flex according to changes to the business structure. Nowadays, firms can still own the policy record, but they can plug in a separate organisation to manage quote and bind fronting. And they can have a partner to manage claims if necessary as well as a separate accounting system. Plugging these partners in and out has become extremely cost-effective. We see this within the no-code and low-code world and in software-as-a-service systems these days. Even if firms use components like Monday.com, there are pre-integrated apps across a variety of business functions, and they can simply select or deselect partners.

This kind of model allows start-ups to make the decision to buy a little, build a little and then switch between those two options as they progress and start scaling their business up. It also allows them to couple and decouple complementary products and technologies to create new go-to-market products at pace. The biggest opportunities stem from the ability to change course when they need to, with improved speed to market.

What key questions do insurance businesses need to ask before they begin scoping and acquiring technology?

The questions for insurance businesses have changed a lot in the last 24 months.

Pre-Covid, firms were asking how to build something in a stable, monolithic way that would drive efficiency and potentially be more cost-effective than their existing systems. Obviously, budget is still a factor in their decision-making process. But with the groundswell of change from monolithic platforms to ecosystem platforms, the total cost accounting or total cost of ownership are no longer the biggest considerations. A lot of these platforms charge on a SaaS-based model and insurance businesses can include this in the balance sheet as operational expenditure rather than capital expenditure. This gives them flexibility in how they want to change their direction of travel.

Nowadays, they are asking themselves what kind of architecture they have. Suddenly, having an open architecture with access to other ecosystems has become much more important. The main questions that they need to ask themselves today are: what kind of future proofing they want to have access to and what lines of business they might want to pivot in. Because with open access architecture and new technologies, it’s easy to add claims or distribution, for example, from one moment to the next. And the scope of questions that insurance businesses can ask themselves are vastly expanded. They can now ask whether they want to go into a whole different market and launch a life company, for example, rather than just offering non-life products.

Is it possible to marry technology that both improves efficiencies and customer experience?

Start-ups usually have a lot of shareholder pressure to drive customer acquisition and onboard quickly and cost-effectively. However, when investing in these start-ups, the main consideration for venture capital and private equity firms is the customer acquisition cost versus the lifetime value. The efficiency aspect is the customer acquisition cost portion of that, and customer experience is the long term value. Investors know that the better the customer’s experience, the longer they will stay on board. So, start-ups are now putting more focus on keeping customers through good experience rather than just acquiring them very quickly.

So, you can marry efficiency and customer experience from a technology perspective. But there is an inflection point where companies can degrade the customer experience if they make their systems too efficient and remove too many human touches. They should be using technology and automation to drive efficiency in the mundane, repeatable, and non-customer-facing aspects of their business and then refocusing the human touch on customer interactions. That is where they would find the balance. If they start removing too many human touches from the customer interaction, they are probably using technology to make their firms too efficient and will likely see customers drop off sooner or later.

When it comes to selecting a technology/software vendor to work with, how important is it for them to be able to scale up with the insurance business’ growth plans?

Traditionally, budget comes ahead of scalability. It is easy to pick a vendor that can do things cost-effectively and quite quickly at the start. But, if that is the only thing firms consider when selecting a vendor, they may have to re-platform when they start gaining scale. Re-platforming is like ripping out the engine that is driving their business; it’s the last thing a start-up wants to do once they hit the scale-up phase.

It is extremely important for start-ups to ensure that they have enough seed capital to select a partner that can scale up with them from the beginning. And they should find a partner that can present a commercial model that shares the risk so that they aren’t too expensive in the beginning. And then, when they do hit scale, they can simply share some of their success with the technology partner that was there from day one.

We hear the word ‘partnership’ bandied around a lot these days; do you see yourself as a partner rather than simply a vendor, and how does this manifest?

We absolutely see ourselves as partners. We don’t charge exorbitant licence fees on a flat rate. We charge a percentage of on-platform written premiums, thereby attaching our revenue to our customers’. This means that if our customers succeed, we succeed and if they fail, we fail. This creates a natural alignment, where we work in their best interests as part of a genuine partnership.

Finally, what is on the Genasys to-do list in 2022?

We’ve got a winning sauce, which is growing sustainably, and we are happy with what we are currently achieving. So, in 2022, we will continue to offer our customers more of the same high-quality solutions, with implementations that are on time and on budget. The bigger the technology menu we can offer, the better, and we are always growing our ecosystem to offer more pre-integrated solutions for our customers to choose from. Ultimately, our main goal for 2022 is to have an improved customer experience for our customers so that they can drive better customer experience for theirs.

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