Our first post on Insurtech in March 2015 was headlined “Not That Many InsurTech Startups Yet”.
Since then one fact has jumped out from our analyses over the past 5 years: there is a logjam caused by legacy systems that has not been tackled effectively until now by insurtech innovations. I could see the logjam because of my years selling core banking back office software. I knew that innovation only delivers value when transactions execute at scale and that is really hard because of legacy system integration.
Ignatica may have finally solved this problem using a fundamentally different approach.
Ignatica is a relatively young company, founded in late 2018 (with some earlier ideation and technology development), that is reinventing these core legacy platforms and making some really interesting claims such as launching new insurance products in 2 – 4 weeks, cutting current admin costs by 65%, and facilitating regulatory (e.g. IFRS17) and operational compliance. The impact of these claims is simple – it is no longer prohibitively expensive to rapidly launch new and different products in the market. New business models such as Insurance on Demand or Usage-based Insurance (which we wrote about earlier) are now made accessible to a broader set of the market players. In other words, the innovation logjam is set to break.
Delivering on those bold claims requires some serious technology. If you have technology experience you can look at how Ignatica mixes event based microservices with distributed ledger technology. Or you can look at the market validation of people who have done that kind of analysis such as this white paper co-authored by Price Waterhouse Coopers (PWC) and Ignatica.
In short, Ignatica is more about what we call Business Process Elimination, as opposed to the enterprise norm of Business Process Optimization. By eliminating interdependence on existing processes Ignatica have aligned their technology to precisely avoid the logjam that has impacted innovation in the industry. You do not need to do legacy system integration, with all the attendant risks and processes, because all product processing and settlement can be done on the Ignatica platform.
Of course, having some serious technology that delivers on those claims will only get you through the door of major enterprise players. If you then cannot answer the tough questions around security, regulation and accounting, and risk management (all of which are career threatening for senior executives), you will soon be shown the door. It looks like Ignatica is getting some traction with big enterprise players such as Deloitte, KPMG, EY and PWC, who do not put their name behind technology startups like Ignatica unless the vendor can back up those claims and handle the tough questions. Ignatica say they will shortly be launching their first product for a multinational insurer into the Asian markets.
Unlike consumer ventures, the business model in enterprise ventures is simple – the customer pays. Ignatica has got pricing right. This enables innovation in the distribution channel because Ignatica can be used to power startups as well as incumbents. Distribution is the most critical subject in the transformation of insurance through technology.
For those who prefer to learn via podcasts, check out this interview with their CEO focusing on product personalization and dynamic definitions of risk. Personalization is key to user experience and you cannot do personalized insurance without dynamic, event driven risk management.
Disclosure; Ignatica is a client of Daily Fintech advisory services.
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