Pricing Decision Intelligence Vendor hyperexponential Sets Sights on the U.S.

The firm’s recent funding round will help it to expand its presence in the U.S. and increase investment in new product capabilities beyond large commercial.

(Image source: hyperexponential.)

Last month, pricing decision intelligence (PDI) solutions vendor hyperexponential (London) announced the completion of a $73 million Series B funding round led by Battery Ventures (Boston), with Marcus Ryu, who came aboard the VC as a partner in 2022, serving as sponsor of the round and joining as a board member, along with Andreesen Horowitz/a16z (Menlo Park, Calif.) General Partner Angela Strange. The funding will help hyperexponential to expand its presence in the U.S. and to enable increased investment in new product capabilities to serve growing client demand in adjacent insurance markets, including the SME insurance sector.

Like companies before it, hyperexponential’s raison d’etre is to help insurance companies make better decisions about the risks they price, because those decisions ultimately have the greatest effect on their bottom line, according to CEO Amrit Santhirasenan. Unlike other pricing technology vendors, hyperexponential was created to take advantage of developments in technology occurring at a time when new degrees and types of risk were emerging globally.

Amrit Santhirasenan, CEO, hyperexponential.

Santhirasenan, a software engineer who became an actuary, comments: “I could see very clearly that the shift to the cloud, the emergence of open-source technology, and a shift in mindset both from executives and people learning the technology as they were coming into the workforce, meant we’d finally be equipped to move the needle on pricing decision.”

Among the novel risks insurers are facing on a global basis today are supply chain discontinuities, cyber terrorism, and physical attacks on shipping. Santhirasenan notes, “the amount of risk has gone up but the capacity to absorb that hasn’t, so, our clients are facing unprecedented demand to price risk. Risks have become more complex, technology has become more prevalent, and the data to analyze those risks has become more sophisticated as well.”

A Morass of Spreadsheets

Historically, risk data was the domain of what Santhirasenan calls “a morass of spreadsheets,” with manually typed data sets pulled from a variety of sources and analyzed through algorithms built into the spreadsheets. While it’s been hard for actuaries to break their spreadsheet habit, circumstances have made it necessary, he suggests.

“The modern insurance company has an enterprise technology environment full of databases, third-party data sources, sophisticated structured and unstructured data sources—you just can’t analyze those data sets in a spreadsheet,” Santhirasenan insists. “You can’t build a machine learning algorithm at speed and deploy it at pace in a spreadsheet.”

hyperexponential achieves new levels of algorithmic sophistication through the use of open-source technology Python, which has become popular with newer generations of actuaries. “It allows our clients to build far more sophisticated pricing models,” Santhirasenan says. “And they can deploy the models to the web, accessible by a browser, or to an API, which enables decisions to be made completely algorithmically.”

Some of hyperexponential’s clients share the vendor’s technology with other providers to be able to achieve API-based pricing and risk trading. “As more risk is traded digitally, the tools pricing that risk need to be more algorithmic,” Santhirasenan explains. “We allow clients to do that, entering the value chain in multiple ways—either surfacing an insight to an underwriter, who then makes that decision offline, or surfacing it algorithmically directly within our client’s technology environment.”

The Protean Pricing Technology Space

Examples of hyperexponential entering into the value chain in different ways include partnerships with other vendors, such as reinsurance software provider Supercede (Telford, Shropshire) and solutions vendor Akur8 (Paris). These partnerships represent the protean state of pricing technology, where users can gain a march on their competitors through the latest innovation. “I think we’re going through a kind of pre-Cambrian explosion of advanced techniques,” comments Santhirasenan. “We’ve never seen more evolution. You just have to look at AI right now in terms of what LLMs enable with respect to data ingestion and analysis. What we want to do is make those techniques much more available to the analytical professions, like the actuaries, to help support the underwriters in their data-driven decision making.”

To illustrate the increasing pace of change, Santhirasenan recalls his work as an actuary for a cyber underwriter whose risks would change daily. “These models are not static things that are being developed once a year,” he explains. “Sometimes the risks are changing daily and the tools that are used to synthesize these risks need to be able to keep up with the speed of the market.”

Founded in 2017, hyperexponential raised its Series A funding round in 2021. Santhirasenan reports that the company has grown tenfold since then. It currently has about 120 associates and has offices in London and Warsaw, with New York slated for 2024. Santhirasenan boasts that the company is broadly acknowledged as a leader in its technology space, but typically thought of as a very successful but U.K.-centric provider.

“What people may not know about is us that many of our largest clients are in the States,” Santhirasenan notes. “We service some of the world’s biggest insurers, who are American. And the company is well-positioned to expand into these markets in the coming years, which is why we completed our series B fundraise.”

hyperexponential now serves about 20 clients worldwide, including a mix of established and new companies, such as Aviva, Convex and Conduit Re. The vendor has been documented as reducing Aviva’s new model build time cut by 75 percent and new policy creation time cut to 5-10 minutes from 1hr, and hyperexponential’s hx Renew technology underpins multiple lines of business for 2019-founded specialty insurer Convex. Santhirasenan says hyperexponential has signed multiple large insurance companies in the U.S. with billions of dollars of premiums and thousands of users of the company’s technology.

hyperexponential is investing in its U.S.-based operation because it anticipates expanding demand on this side of the Atlantic. “Great technology comes from a deep understanding of your users and there’s no better way to understand your users than to be co-located with them,” Santhirasenan says.

New Geographies, New Verticals

The vendor also seeks to expand with regard to the kinds of risks it can be used for. hyperexponential has a reputation for working in large commercial and reinsurance, but many of its clients are interested in using the technology for other lines they sell. “The next space that people wanted to use our product for was in the small and medium enterprise space,” Santhirasenan relates.

Because hyperexponential has always been profitable, the company has more money on hand than it has ever raised, according to Santhirasenan. That puts the company in an advantageous position to select its investors for expertise rather than just for money.

“I think that’s very much reflected in the caliber investor that we were able to attract,” Santhirasenan says. “People like Marcus Ryu don’t want to come just to plug a hole in a balance sheet—they want to add value. So, we could see the likes of Andreessen Horowitz and Battery Ventures coming to the table to help set us up and take on these exciting challenges in new geographies and new verticals.”

hyperexponential raises $73M in Series B Round Led by Battery Ventures 

hyperexponential and Akur8 Partner to Power Data-Driven Specialty and Commercial Pricing 

hyperexponential and Supercede Partner to Speed Reinsurance Transactions

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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