Fintech

Investing in hyperexponential

Angela Strange, Joe Schmidt, and Santiago Rodriguez Posted January 11, 2024

Over the past decade, data infrastructure across industries has been modernized by many disruptors like Databricks, Fivetran, et al. The modern data stack has made it much easier for companies to ingest, store, query, and analyze vast amounts of data from multiple sources — at today’s SaaS speeds. However, large parts of the insurance industry struggle to take advantage of this modern infrastructure. 

This is especially surprising given that insurance is essentially a $7 trillion global data and risk business. An insurance carrier collects vast amounts of data related to the risk they are insuring e.g., a fleet of ships or planes. The carrier then underwrites the risk resulting in a price for this insurance, and tracks the performance of the risk (using claims and other related risk data) to modify the price of this type of risk going forward. 

This large, mission-critical data and risk underwriting operation of an insurance carrier does not take advantage of the modern data infrastructure (though, some customer-facing functions like claims processing have begun to). The core function of pricing risk by actuaries and underwriters is still executed in cumbersome Excel models and legacy software. This limits the rate at which they can update the pricing of risk with new data or use modern machine learning analyses. The impact? Lost premium through poorly targeted pricing, losses incurred that could have been avoided, and overheads that should have been automated away years ago. Insurers estimate the aggregate impact of underperformant pricing to their business as upwards of 6% over their premiums. 6% of $7 trillion is a big number! Arguably worse, customers are often paying premiums misaligned with their risk. 

Of course, pricing tools exist (some in Excel, some in C#), but none have met the product requirements for an actuary or underwriter in a simple modern developer environment  — until hyperexponential (hx). hx’s Renew platform — which ingests data from various sources and presents it in a simple, web-based Python modeling environment — is the modern data and risk pricing platform that allows actuaries to build and refine models in hours not days. With these dynamic models, actuaries can refresh insights rapidly and underwriters can run quotes and bind policies in minutes. Customer references, from a usually unanimated group, range from “I now enjoy spending almost my entire day in hx Renew” and “hx has enabled me to take a 2 hour task down to 15 seconds,” reflecting how dramatic their impact is.  

Disrupting such a complex business and combining very different worlds takes unique talent: Amrit Santhirasenan and Michael Johnson leveraged their actuarial experience and their technical software engineering background to design a modern data infrastructure stack for insurance pricing. They have built a product that actuaries, underwriters, and IT professionals all love. 

Amrit, Michael and the hx team are building a company that is rapidly becoming the operating system for pricing risk in the global insurance market. Their vision, where vast amounts of data can be leveraged and analyzed seamlessly to price risk across insurance lines, will create a category-defining business. We are thrilled to join forces with the hx team as they launch in the U.S. and scale.

About the Contributors
Want More a16z Fintech?

Commentary and analysis on recent news, and compelling trends in the fintech space.

Learn More
Recommended For You
Fintech

new Investing in Lio

Seema Amble, James da Costa, Eric Zhou, and Brian Roberts
Bio + Health

new Investing in Ease

Daisy Wolf, Anish Acharya, and Eva Steinman
Infra

Investing in QuiverAI

Yoko Li, Guido Appenzeller, and Martin Casado
American Dynamism

Investing in Chariot Defense

Erin Price-Wright and Ryan McEntush
American Dynamism

Investing in Heron Power

Erin Price-Wright and Ryan McEntush

Want More Fintech?

Commentary and analysis on recent news, and compelling trends in the fintech space.

Sign Up On Substack

Views expressed in “posts” (including podcasts, videos, and social media) are those of the individual a16z personnel quoted therein and are not the views of a16z Capital Management, L.L.C. (“a16z”) or its respective affiliates. a16z Capital Management is an investment adviser registered with the Securities and Exchange Commission. Registration as an investment adviser does not imply any special skill or training. The posts are not directed to any investors or potential investors, and do not constitute an offer to sell — or a solicitation of an offer to buy — any securities, and may not be used or relied upon in evaluating the merits of any investment.

The contents in here — and available on any associated distribution platforms and any public a16z online social media accounts, platforms, and sites (collectively, “content distribution outlets”) — should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Any charts provided here or on a16z content distribution outlets are for informational purposes only, and should not be relied upon when making any investment decision. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. In addition, posts may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein. All content speaks only as of the date indicated.

Under no circumstances should any posts or other information provided on this website — or on associated content distribution outlets — be construed as an offer soliciting the purchase or sale of any security or interest in any pooled investment vehicle sponsored, discussed, or mentioned by a16z personnel. Nor should it be construed as an offer to provide investment advisory services; an offer to invest in an a16z-managed pooled investment vehicle will be made separately and only by means of the confidential offering documents of the specific pooled investment vehicles — which should be read in their entirety, and only to those who, among other requirements, meet certain qualifications under federal securities laws. Such investors, defined as accredited investors and qualified purchasers, are generally deemed capable of evaluating the merits and risks of prospective investments and financial matters.

There can be no assurances that a16z’s investment objectives will be achieved or investment strategies will be successful. Any investment in a vehicle managed by a16z involves a high degree of risk including the risk that the entire amount invested is lost. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by a16z is available here: https://a16z.com/investments/. Past results of a16z’s investments, pooled investment vehicles, or investment strategies are not necessarily indicative of future results. Excluded from this list are investments (and certain publicly traded cryptocurrencies/ digital assets) for which the issuer has not provided permission for a16z to disclose publicly. As for its investments in any cryptocurrency or token project, a16z is acting in its own financial interest, not necessarily in the interests of other token holders. a16z has no special role in any of these projects or power over their management. a16z does not undertake to continue to have any involvement in these projects other than as an investor and token holder, and other token holders should not expect that it will or rely on it to have any particular involvement.

With respect to funds managed by a16z that are registered in Japan, a16z will provide to any member of the Japanese public a copy of such documents as are required to be made publicly available pursuant to Article 63 of the Financial Instruments and Exchange Act of Japan. Please contact compliance@a16z.com to request such documents.

For other site terms of use, please go here. Additional important information about a16z, including our Form ADV Part 2A Brochure, is available at the SEC’s website: http://www.adviserinfo.sec.gov.