As a former CIO, Tim Hardcastle understands all the arguments as to why legacy systems can’t be changed. But as CEO of no-code insurance platform INSTANDA, he also knows those excuses are wearing thin
INSTANDA’s co-founder and CEO Tim Hardcastle has a straightforward approach to transformation: he believes every insurer in the world can operate and behave like a Lemonade – the well-regarded startup that offers insurance driven by social good.
That’s because the technology and processes that go with Lemonade’s transformative digital model are ready and raring to go. But many insurers are hampered by their reliance on IT systems that belong to the history books, says Hardcastle… and it’s time for them to reassess their organisational culture and embrace new technology.
Infact, by leveraging the INSTANDA platform, Hardcastle, who was previously CIO at Hiscox, promises insurers will soon be able to go far beyond what Lemonade is offering. The company’s recent pairing with artificial intelligence (AI) firm Cytora, for example, will help underwriters price risk more accurately, while INSTANDA is also working on a hush-hush project focussed on better technology integration.
Cloud-based INSTANDA is among a new wave of software providers that are shaking up the insurance world. But its innovative customer engagement platform is based on ‘no- code’ technology – an industry first. It provides insurers, brokers and managing general agents (MGAs) with a software tool that can easily be customised by insurance providers, allowing them to move swiftly from product concept to binding online in a matter of weeks.
There’s nothing that looks remotely like an off-the-shelf, one-size-fits-all model, says the company, boasting: ‘No templates. No limitations.’ It sounds an exciting proposition, and investors clearly agree. INSTANDA recently completed a $19.5million (£15million) Series A fundraising round, led by Assembly Capital Partners. This investment will support the firm’s international expansion in the US, Europe, Asia and Latin America as it looks to add to existing clients that include giants of the industry such as AXA, Hiscox, Aviva and Zurich.
It also recently partnered with technology and consulting company Softelligence – its first link-up in Europe – as it expands its mission to digitally transform the insurance industry and expland across the continent. In May 2020, Steven Haasz, who has 30 years’ experience with Prudential, Chubb and AXA, was appointed as Partnerships and European Accounts Director to lead the charge.
The Insurtech Magazine (TIM): Let’s take COVID-19 off the table for a moment: what’s the biggest issue facing the insurance industry as a whole?
Tim Hardcastle (TH): Let’s step back even further than COVID-19 and ask ourselves the more fundamental question: what’s the purpose of insurance? In principle, insurance, which has been operating for hundreds of years, has been doing a really good job of what it’s intended to do, which is to protect people, pool risk and ensure they don’t have to pay very much for this protection.
In that sense, at the macro level, I think insurance will continue to work really well in terms of what it’s there to do. But there are things it clearly could be doing much better. One common complaint is that insurers, on average, take too long to pay out – some companies spend far too long manually processing claims.
Sometimes, it’s also not that easy to buy insurance – it’s too complex and there are too many questions. Or the cover that’s available doesn’t suit everyone’s needs. I may be a gig economy worker, or a business with particularly complex needs, and I don’t feel as though the cover I’m getting suits me. These problems, which are a complex mixture of perception and reality, aren’t necessarily new, but there is too much friction in the process and there are significant improvements that the industry, as a whole, could make. Technology will unlock these improvements.
TIM: Earlier this year, INSTANDA announced a Series A fundraising round. Congratulations on that! What does this extra capital help you to focus on?TH: It’s given us another level of credibility and, more importantly for me as the CEO, ammunition to accelerate and further scale what we’re doing. When we’ve finished building it out, we’ll have one of the world’s most advanced digital platforms.
This injection of capital has allowed us to put in place the cogs we need to underpin our growth and develop the platform’s capability. We’ll be able to offer different use cases that will help insurers to solve even more of their pain points, giving them a strategic advantage in the market that they didn’t previously have. There’s the platform extension, but we’re also investing far more in our partnership network. We’re rapidly onboarding new partners and building our internal team at the same time, so that we can have more conversations and get our solution in front of more people.
We recently brought on a new EVP in the US, Greg Murphy, and his comment to me was: ‘You guys are far too humble. You’ve got this amazing platform and yet very few people know about it’. He believes there are thousands of companies across the US that we could talk to that would get tremendous value from using our platform. So we will talk to them!
TIM: It must be in an insurer’s best interests to actively enable the client so that they don’t ever have to make a claim. Does that resonate with you?
TH: I think that’s true generally – in terms of the way people behave, the way they operate machinery, the way they drive their cars, the way they look after their pets, and the way that we can build packages of support, enablement, and advice so that those risks
are significantly reduced. We’re working with a client in South Africa that is currently building out a pet ecosystem, which is a much broader way of looking at how to provide risk coverage.
It’s enabling owners to get much more engaged and involved in preventative measures. So, you’re absolutely right, you can affect behaviour, or actions, and that will start to reduce risk. But there are still going to be acts of god, and other random things that will happen, where insurance will play a very important role in protecting and providing that safety net.
I think there will be a trend for insurers to work more closely with the customer, to influence their behaviour and reduce the risk of a claim. It will help, but there will still be claims that need dealing with in a more frictionless fashion. If you look at Lemonade, for example, which has the philosophy that ‘we’ll look at your claim, and aim to settle it within three seconds’, it’s redefining claim management and removing the friction so that customers feel they’re getting what they need at that point in time.
Lemonade is highlighting how every insurer in the world could operate and behave, because the technology and the processes that go with that are actually available. They’re ready to go. That’s one of the things we promote when we’re talking to our clients and prospects. INSTANDA enables you to behave like Lemonade.
TIM: Lemonade, of course, is a lot younger than most insurers and so doesn’t have a legacy problem. Do you think legacy technology and the associated issues, such as organisational culture, are holding the larger insurers back?
TH: At INSTANDA, we’re saying you don’t have that excuse any more! Companies can use our platform to embrace Lemonade-like behaviour. You may claim to be held back by technology, but there are solutions like ours out there that enable you to do the things consumers are asking you to do, better. I used to be a CIO, so I know this argument only too well. You still have the technology teams
who’ll say ‘well, yeah, but I’m managing things that have been built in the last 10, 20, or even 30, years.
These systems are very, very old, and they’re very, very difficult to change, because they contain a lot of our historical information, our customer data. They are our system of record and we can’t just move them aside’. Now that may be true, however, what you can do is start talking to those older systems with new, modern ones. Integration usually becomes the next stumbling block, so we’re in the process of setting the industry a challenge on integration, because we know from our experience that there are multiple ways to solve that particular challenge. We’ll be revealing more about this project shortly.
TIM: How do you then avoid your own INSTANDA platform being the legacy technology in 20 years’ time? How do you make sure that it will continue to be part of an evolving ecosystem?
TH: I’ve been in the technology space for quite a while and I’ve seen a lot of changes. The good news is that we now have an abundance of data at our fingertips to feed the technology, which helps to fuel collaboration that drives new solutions. When we were designing INSTANDA, we took the view that we need to be working in collaboration, in cooperation, with multiple other applications and data sources. For example, we recently integrated with Cytora, a great company that specialises in risk algorithms and data source capture. These guys take a bunch of datasets, run algorithms on it and give you a risk score.
If you were to buy your house insurance policy, for example, you could use Cytora to do all the analysis on flood, subsidence and all other risks. Old-world, monolithic systems need structured data, but new-world platforms like INSTANDA should always be able to work in combination with others to harvest multiple open data sources and provide the right insight. That’s the key difference.
TIM: Finally, looking at your expanding customer base, there are a lot of very large companies in there. Have you seen
a lot of neo-insurers start to come your way now, too?
TH: We’re very fortunate in that we’re seen as one of the companies that progressive insurers of all shapes and sizes should make the effort to go and talk to.
There’s no shortage of ideas in the industry; there’s no shortage of ambition and enthusiasm for doing things differently and that’s a positive sign. But there’s still some reticence, at board level in many companies, of course. There’s this psychology about being prepared to commit significant parts of a business to a modern platform. It’s therefore important to have a sensible conversation about how we could add value to a business. We’ve got to be able to stand in front of our prospects and our clients and be confident about the strength and flexibility of our proposition. I feel that we can now do that with any insurer in the world, which is very exciting for us, and very exciting for the industry.
This article was published in The Insurtech Magazine: Issue #4, Page 22.