The insurance industry is slowly but surely moving away from branded distribution towards insurance ‘moments’, bringing targeted products to consumers as and when they are needed.
Accessing customers at the right time and place has led insurers to distribute products through widely used third party platforms and beloved digital players. As insurance customer journeys are remade by emerging digital channels, insurers risk being locked out of the customer relationship and therefore need to build partnerships and data sharing protocols with eventual distributers.
Now is the time for the insurance industry to seriously rethink its technology stack and we believe Aventus, the latest addition to the Outward VC portfolio, is positioned as the ‘Operating System’ to enable this new world of insurance.
Consumers are increasingly served up insurance products via bank apps and aggregators, with 50% of home insurance and 70% of motor insurance purchased through price comparison websites. As it stands, distributing insurance products across the relevant channels requires each market participant (insurer and TPP) to invest in specific bilateral interfaces – a task of high complexity. Neither product owners nor distributors can, on their own, justify investing the requisite money and time to create the interfaces that would enable supply to match demand.
Say this technological barrier was solved for, and the distribution playing field became leveled with third party platforms controlling customer access – insurers are then faced with the challenge of how to differentiate from competitors? Similarly, distributors will be striving to create the best customer experience thus aggregating product offerings and pitching insurers against each other via digital solutions or marketplaces – further enhancing the need for differentiation.
The Aventus platform removes these distribution and connectivity barriers through a system architected on APIs. These APIs serve as a conduit between old and new systems, enabling slick front end user experiences, thereby leading to higher conversion rates. Additionally, Insurers can protect/ build their competitive advantage through the platform’s customer data feed which helps to optimise risk selection and informs competitive pricing strategies for a wider audience.
In speaking with Aventus’ customers, three consistent strengths emerged: 1) speed to market; 2) access to enterprise tools (eg. Salesforce) otherwise available only to very large insurers; and 3) reduction in capex. MGAs, insurers and brokers all validated GWP could be increased through cross selling, opening up new distribution channels, and providing the customer experience one would expect in 2020.
Peter Goodman (CEO) and team are an experienced bunch. Whilst they started out on a different path, spending 2 years building a B2C insurance model (Homelyfe), it lead them to identifying the real B2B market opportunity. The team responded quickly and re-purposed the tech stack into a compelling proposition. Founders are often extremely stubborn, protecting the ideas they that have fought so hard to create and receive financial backing for. To see a team act with agility and critically adapt the business based on past experience/learnings gives us confidence in their ability to endure difficult markets and seize new opportunities – attributes especially important in today’s climate.
On the back of its early success, Aventus raised a £2.6m funding round led by Outward VC and Notion Capital. We see this as a significant market opportunity which plays on the increasing commoditisation and insurance aggregation amongst platform distributors. We believe the timing is right for Aventus to build momentum as the integral ‘middleware’ provider, and in the long term become an essential partner for players looking to build their presence around an API based strategy.
We are still at the very start of the journey but look forward to seeing the Aventus platform shake up an industry ripe for disruption.