(Chris Lafond, CEO, Insurity.)
The insurance core systems market is dominated by a small number of large companies, and when it comes to companies that serve the property/casualty market exclusively, the number is smaller. Recent news that Duck Creek Technologies (Boston) was to revert to being a private company through its acquisition by Vista Partners coincided with a scheduled catch-up conversation between IIR and Insurity CEO Chris Lafond. Tentatively arranged for some months, the conversation coincided with Insurity’s announcement, made at its most recent analyst briefing, that it had surpassed $300 million in annual revenue, placing it as the number-two player at some distance behind Guidewire Software (San Mateo, Calif.), but ahead of Duck Creek. Insurity’s growth is especially interesting because it has historically been a commercial lines system provider, as compared with the mix of personal and commercial systems business of the other top-three players, to say nothing of the major providers of both P&C and life-and-annuities systems. Lafond attributes the company’s success to its outstanding industry expertise, aggressive cloud strategy, its assessment of where growth opportunities are to be found in the industry, along with a few key acquisitions.
Today, Insurity, based in Hartford, Conn., reports that it has more than 500 customers, including 15 of the top 25 P&C carriers and seven of the top 10 MGAs in the U.S. The company’s suite of products include policy, billing, claims and analytics software that power all phases of the policy lifecycle. Chris Lafond joined the company in 2017 as a board member. He was named CFO later that year, and in 2019 he became CEO.
“We feel really good about how the business has continued to grow,” Lafond comments. “We’ve expanded our offerings to the customer base, and out of the over 500 customers we serve, 400 are in the cloud in some way, shape or form.”
Insurity has enjoyed strong momentum, says Lafond, who attributes that advantage to recognizing that growth in the market was going to come from the tier three to four segment of the industry, as well as from the MGA space. Lafond says that the number-one topic of feedback customers give the company as to how it differentiates from other providers is its commercial insurance expertise. That includes regulatory expertise, Lafond says. “We have many customers who insist that they don’t see anybody else that can provide the regulatory support the way Insurity provides it,” he elaborates. “That’s one of the reasons why commercial has continued to be one of our big strengths and why we continue to grow in that area.”
Though Insurity has historically focused on commercial lines, personal lines is a growth area. Among its acquisitions, the most important one in the long run is may be personal lines system provider CodeObjects, a modern core system founded by Anil Annandata. Insurity’s business today is about 80 percent commercial lines, but CodeObjects serves as the company’s growth platform for personal lines business. “Anil did a great job with the platform, the technology and the architecture,” comments Lafond. “In fact we’re using it now as a foundation for some of our commercial lines business with lower tier carriers.”
Another of Insurity’s most important strategic acquisitions was Valen Analytics. Acquired in 2017, Valen operates as an Insurity company providing proprietary data, analytics, and predictive modeling to help carriers manage and segment their portfolios through its InsureRight platform. When it comes to Valen, Lafond stresses what he calls Insurity’s platform agnosticism. “We don’t only sell our data and analytic services to people that buy Insurity software,” he notes. “We have plenty of customers that are using other applications who are buying our data and analytics products.”
More recently, Insurity acquired geospatial analytics vendors SpatialKey, in Jan. 2020, and MapRisk in Oct. 2021. As a result of these deals, Lafond says that Insurity has a greater range of data sources and feeds than any competitor, by far. “If a customer is saying, “I want to have a platform that provides me a view of a variety of geospatial data that I can then use and make sure I’m making the right choices,” our platform has well over 30 different data sources that we bring into it normalize it make it really easy for customers to digest,” he elaborates.
Cloud Success, Customization Conundrum
Insurity has gained credibility in the market through the number and proportion of clients it has in the cloud, according to Lafond, and that metric has grown as a result of the company’s pursuit of lower-tier customers. Lafond stresses that Insurity has had great success with tier-one companies—clients include AIG, Liberty Mutual, Chubb and Tokio Marine—including in getting their technology onto the cloud. However, he notes the top-tier companies struggle with over-customization, which complicates cloud migration, among other downsides. “They’ve done things that they think are very important for their business, but, when you say, ‘Let’s pick that up and move it to the cloud,’ they’re risk averse,” he says.
With lower-tier customers, it tends to be easier to achieve speed-to-value, Lafond notes. “We have plenty of examples of our customers being up and running in as little as 90 days, and we can achieve between 90 days and six months, depending on how much integration they’re doing with other systems,” he says. “We don’t see pushback from that those segments, with people saying, ‘I’m not sure I want to be in the cloud.’”
“We don’t have some of the issues that I’ve read about in the press that some of our competitors have with this migration,” Lafond continues. “We’re seeing great uptake, but of course it’s also a question of how they think about moving their cloud. Some go from their own on-prem solution to, ‘I still want to be in my own private cloud’ before they move into the pure public cloud model. Others have just said, ‘We’re ready to make that move; we recognize the value.’”
Sometimes, however, there is a disjunction between what a CEO has decided needs to be done and what the company’s technology company is actually executing, according to Lafond. In this regard, Insurity has moved away from a policy of “the customer is always right.” More often now, Lafond says that Insurity actively pushes back and advises against the tendency for insurers to customize their core systems. “We’ve walked away from a few customers who came to us during the process and said, ‘We love your software, but here’s the 82 customizations we need,’” he says.
Data Management Progress
Apart from the customization vice, insurers are eager to use the cloud and other advanced technology, in particular data, according to Lafond. “One of the biggest demand items from customers is, ‘How do I get and use the data I have better?,” he says. “‘And once I have my data, how do I then leverage things like predictive analytics geospatial and bring all that together?’”
Often, customers underestimate the difficulty of reconciling data over disparate systems, Lafond cautions. “The biggest challenge that we see with our customers is being able to take all that data in and be able to use it in a way that allows them to do exactly what they envision,” he says.
“I think we’ll to continue to see many insurance companies spending a lot of time figuring out how to get all of their data into a usable condition and then pair it off with solutions of ours that allow them to make the right decisions—whether that’s a predictive model like Valen, whether that’s the geospatial data from Maprisk and SpatialKey,” Lafond continues. “We see huge implications there for their success, and those who are doing it well with us love it and are seeing great successes.”
Personal Lines Opportunity
When asked whether there’s potential for this traditionally commercial lines-focused vendor to have great success in personal lines, Lafond responds, “Absolutely there is. We believe that with CodeObjects we have the newest, best technology today. We absolutely are seeing a nice pipeline of personal lines business. We’re seeing a lot of opportunities there, and I fully expect we’ll continue to grow.”