(Jason Liu, CEO, Zywave. Source: Zywave.)
The acquisition of ClarionDoor, announced in Nov. 2021, was Zywave’s sixth announced within about a year, including companies such as Advisen and Insurance Technologies Corp (see a full list in a sidebar below). ClarionDoor operates in the same realm as Zywave, being an insurance distribution digital quote, bind and issue (CPQ) software company with an emphasis on the front office. One of the things that makes the acquisition especially interesting is that whereas Zywave has historically focused on the distribution side of the insurance industry, ClarionDoor’s angle to distribution is from the carrier/manufacturer side. Complementary with regard to their focus, the companies are highly compatible in terms of culture, with both focused on industry transformation, the importance of better front-office software, and with a shared open, technology-enabled vision for insurance distribution. Having been interested in ClarionDoor for many years, and having been startled by Zywave’s dramatic acquisition-driven evolution into a prominent player, IIR sought out an exchange with the CEOs of the two companies, Jason Liu, CEO of Zywave, and Michael DeGusta, CEO of ClarionDoor.
Insurance Innovation Reporter: Tell us about Zywave’s acquisition strategy with regard to the what and the why of your M&A activities within the last two years.
Jason Liu, CEO, Zywave: Zywave has been the most aggressive acquirer of InsurTech companies since 2018. With eight acquisitions, and with six acquisitions in the past 18 months, we are way ahead of every other player in our acquisition efforts. A big part of our growth plan is an aggressive acquisition strategy. But it’s not just growth for the sake of growth. We’ve been investing in a wide range of companies that complement our existing solutions, rounding out our end-to-end portfolio of cloud-based offerings.
IIR: And what’s the thinking behind that?
JL: It has enabled us to truly bring world-class tech to our customers that drives their growth. A major differentiator for Zywave is that, unlike our competitors, who mainly focus on what we consider back-office solutions, we focus on front-office tech that solves for sales and marketing challenges and have a real impact on the bottom line. We are one of the five largest platform players in the space and the only one focused on front office/revenue operations. We have a unique position where we use data to drive better automation and decision making for our systems.
IIR: From what I’ve read or heard, I get the impression that the ClarionDoor acquisition is unlike the others in key respects. Is that a reasonable impression? What was the rationale behind a distributor-focused vendor acquiring a carrier-focused player?
JL: Zywave’s strategy with the ClarionDoor acquisition is to be the first to create a true end-to-end configure, price, quote solution, connecting carriers and distributors while solving challenges within the product distribution process. The days of walls between carriers and agencies are breaking down, especially in the revenue generation functions. Together with ClarionDoor, we serve as the bridge between carriers connecting and engaging with their distribution (agencies).
Together with Zywave’s existing CPQ solutions for insurance agencies and brokers, ClarionDoor’s digital distribution solution for carriers and MGAs, enables a cohesive workflow from rating and quoting through presentation to binding and issuance. By combining the two solutions, we are fundamentally transforming the way insurance organizations do business.
IIR: Michael, what would you say is special about the uniting of the two companies?
Michael DeGusta, CEO, ClarionDoor: It really positions us to create something new in the InsurTech space and transform the insurance marketplace. One major problem with virtually all vendors historically is that they either focus solely on the producer side, or they focus entirely on the carrier side. We’re building something fundamentally new: a company that’s focused on the front-office of, both the carrier and producer. After all, those need to operate and function together, and Zywave is now the first company truly able to bring all sides together in one platform.
IIR: How will ClarionDoor operate in the post-merger. Considering the carrier-specific focus, one wonders whether that might counsel greater independence than some other acquired companies. How much will ClarionDoor’s operations be affected by the acquisition, how much independence will it retain.
JL: ClarionDoor will have the best of both worlds. Zywave will be able to provide the ClarionDoor team with a significant increase in account management, customer service/support and product innovation. However, the leadership and the employees of ClarionDoor will be in their own stand-alone business unit so they will be able to continue to drive their own decision making.
MD: I would go even further to say the acquisition really lets ClarionDoor be ClarionDoor! Although we are part of the overall Zywave company, we will be operating as an independent business unit, and that enables us to bring more quality service to our existing customers as well as make us more competitive in the marketplace.
IIR: Tell us a little about the philosophies of the organizations and what they have in common rather than, or in addition to, how they’re complementary.
JL: Both our companies are deeply aware that real change within the insurance industry is required for insurance organizations to be successful moving forward. We also both share an open, collaborative and tech-enabled vision for insurance distribution. We know that information and systems need to be more connected as our industry becomes more complex and digitized.
MD: There is a fundamental problem with how the industry has viewed the role of insurance technology and software. For too long, insurers viewed insurance software as a back office function and mostly because that is what solution vendors offered. There was very little (if any) attention to the front office. We see this all the time with various policy administration system implementations or any other core system. The focus is always on restructuring the data, establishing new database architectures, and migration. There is rarely any attention given to the front office experience.
From the beginning, ClarionDoor recognized this problem and focused on developing innovative solutions that empowered the front office—which directly aligns with Zywave’s approach.
IIR: Michael, what does this acquisition do for ClarionDoor and its customer base? Why was this the right move for ClarionDoor?
MD: In the spirit of what I said before about letting ClarionDoor be ClarionDoor, this is really a major boost for us, as we now have the backing and support of Zywave. It positions us to provide even better service to our customers and invest more into our products and solutions.
We had reached a point at ClarionDoor where we were ready to get to the next level, and joining Zywave will definitely help us achieve that.
IIR: How should the industry think of Zywave in the wake of the acquisition, both the overall enhanced enterprise, but also how the industry should think about ClarionDoor—since it will operate as a separate business?
JL: The Market of Insurance is shifting to be more focused on growth and customer engagement. Zywave is the proven leader in rev operations/front office in the InsurTech space. Moreover, the industry is starting to recognize Zywave as the most innovative and fast growing of the major software platform players in the space. Hopefully, those who have not heard of Zywave or have not been updated by Zywave might take time and inform themselves about our offerings and direction. As for ClarionDoor, the readers should see them as an increasingly major player in the rating, bind and issuance market for carriers and MGAs. They have always had a market-leading product but now they have world class service and support and resources.
MD: The good thing is that this acquisition doesn’t change what ClarionDoor is trying to be in the market: we will still be the provider of the most intelligent insurance product distribution software, but now backed by the capabilities and connections of Zywave. Collectively though, we aim to be the largest enabler of digital commerce and the premiere distribution company for carriers and producers.