Insurtech business focuses on claims in growth modelReprints
Founder and CEO Phil Edmundson has found a new direction with Corvus Insurance Holdings Inc., his latest venture in an industry where he has already made a significant mark.
His Boston-based insurtech company recently completed a $4 million seed round investment led by Bain Capital Ventures L.L.C.
Mr. Edmundson founded and ran William Gallagher Associates Insurance Brokers Inc. before selling it to broker Arthur J. Gallagher & Co. in 2015.
Seeking his next venture, he gravitated to insurtech, although in some respects it found him.
“It started because, being in Boston, I heard from venture capitalists, professors and contacts at the business schools and MIT who seemed to think insurance was the great frontier for the venture capital world and digitization,” Mr. Edmundson told Business Insurance.
Mr. Edmundson thought he could leverage his industry experience and acumen to find a useful and productive way to apply technology to the insurance industry. He soon became convinced a different approach was needed.
“Most tech entrepreneurs look at insurance the same way they look at other financial businesses,” Mr. Edmundson said. “Their first instinct is to look for intermediaries and use technology to eliminate those intermediaries and gain efficiencies.”
Insurance, however, with its premium on longstanding relationships, did not easily lend itself to such a process.
“I don’t think middle-market and large commercial insurance buyers are going to get rid of brokers any time soon,” Mr. Edmundson said. “Relationships will continue to be important.”
Rather than focus his efforts on technology in distribution, Mr. Edmundson turned toward the claims end of the business, which he says consumes more resources.
“We’re not looking at the 15 cents on the dollar spent on distribution,” Mr. Edmundson said. “We’re looking at the 65 cents on the dollar spent on claims.”
Using data captured during the activities of clients, such as shipping, Corvus seeks to identify claims scenarios and then avoid similar such instances in the future.
If data show that a company has a claim or even repeated similar claims, such as spoilage or delays with a specific shipper in a specific region or route, similar instances can be avoided by planning around those situations.
“Corvus takes unique data and uses it to predict and prevent insurance claims,” Mr. Edmundson said. “We think data is predictive of future claims.”
The proliferation of sensors and advances in their technology enables the capture of far more specific data, and Corvus has positioned itself to leverage that growth.
“We have an exclusive agreement with the largest temperature sensor company in the world, Sensitech, a division of United Technologies,” Mr. Edmundson said. The relationship gives Corvus proprietary access to increasingly granular data it believes can help identify and thus avoid claims situations.
“We’re betting that Corvus is the company to establish a new playing field in commercial insurance,” Matt Harris, managing director at Bain Capital Ventures, said in a statement.