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.
Angela Strange is a general partner at Andreessen Horowitz, where she focuses on financial services including fintech infrastructure, insurance, real estate, and increasing financial inclusivity.
Joe Schmidt is a partner at Andreessen Horowitz, where he focuses on fintech and insurtech.
Santiago Rodriguez is a partner on the Growth investing team, focused on fintech, consumer, and crypto technology companies.