PEAK6 InsurTech to acquire Team Focus, parent company of Mac
PEAK6, a capital market and investments company, has announced that its insurance operations subsidiary, PEAK6 InsurTech will acquire the Florida-based insurance provider, Team Focus, which works in the Property and Casualty (P&C) insurance industry.
PEAK6 says that the acquisition of Team Focus will broaden its insurance service offerings in the P&C industry by providing a channel to distribute new private flood insurance products. Deb Franklin, managing director of PEAK6 InsurTech, said: “Team Focus Insurance Group’s technology is robust, functionally superior, and backed by a team with several decades of proven experience.
“We see enormous potential in their core offering and, combined with our demonstrated expertise in technology and insurance services, our entities are a perfect complement to enable rapid scale into new markets”, he added.
Leveraging Team Focus’ policy management system, PolicyPort
The insurtech also plans to leverage Team Focus’ customised service offerings as well as their policy management system, PolicyPort, which is a cloud-based platform driving profits for insurance carriers and Managing General Agents MGAs. It achieves this with the use of self-service digital portals, “smart underwriting”, proactive risk management, and speed-to-market capabilities designed for the marketplace and investor community.
“We’re excited to expand our insurance offerings,” said Jenny Just, Co-Founder and Managing Partner of PEAK6. “Today’s insurance market is volatile, particularly in Florida, but in that uncertainty, we see tremendous potential. We are excited to grow Team Focus under the strong leadership of President and CEO Kevin Tromer, who will have an equity stake in PEAK6 InsurTech”, she said.
The acquisition of National Flood Services
PEAK6 has also made other acquisitions, such as its purchase of National Flood Services in 2018, a technology-first flood insurance provider recently appointed by the Federal Emergency Management Agency (FEMA as the National Flood Insurance Program (NFIP) Direct Servicing Agent.
In partnership with the FEMA and Write Your Own (WYO) carriers, National Flood Services, a leader in flood insurance, manages over US$1.4bn of premiums annually and more than 1.5mn policies.
The Team Focus acquisition is due to close in the fourth quarter of 2021, subject to regulatory approval.
Insurtechs are winning the race with legacy system companies
Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.
That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.
The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector.
What exactly is insurtech?
Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.
Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.
The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.
Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.
More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.
Insurtechs and risk
But there are some obstacles in the way of insurtech’s continued evolution.
Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.
Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?
There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.
While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.
Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal.