InsTech’s Henry Gale speaks to Roger Ferrandis, Co-founder and COO of Wenalyze, about insuring small and medium-sized businesses (SMEs), poor-quality data and how open data can provide insurers with new insights into their clients.
Henry: Why did you found Wenalyze?
Roger: Wenalyze’s four co-founders all had backgrounds in insurance, working in consulting, digital and innovation roles. Although insurance is an industry that completely relies on data, we realised that inaccurate data is a significant problem. Wenalyze was founded to improve the quality of insurers’ data. The company started by providing data for personal lines insurance and then pivoted to SME insurance.
Henry: What is your role and what does it involve?
Roger: As Co-founder and Chief Operating Officer (COO) of Wenalyze, my role involves managing the operations of the company, leading our expansion in the UK market and coordinating the sales team.
Henry: Why is data quality a challenge when insuring SMEs?
Roger: When insuring large businesses, for example airlines, underwriters can afford to search manually for information about the business and check their data accuracy, because the premium is large. SME insurance premiums are smaller, so it is not profitable for insurers to spend time manually searching for relevant information. Instead they rely on the information provided by brokers and clients in quote forms.
Another problem is that there are no large official online registers of small and medium companies, whilst for larger corporations there is easily accessible information from sources such as Bloomberg. Online information about SMEs is harder to find and is usually located in multiple different sources.
Henry: Can you give an example of the information that may be inaccurate about insurers’ SME clients?
Roger: Two of the most important data points are business activities and addresses. Wenalyze has found that, on average, 47% of SMEs in an insurer’s portfolio have inaccurate information for at least one of these data points. This is based on demos Wenalyze has run with insurers in the UK and Spain.
Henry: How do these inaccuracies happen?
Roger: One reason could be that the activity of a business changes over time, but it continues to renew the same insurance policy, without the broker or business owner telling its insurer about the change. Another reason could be that a business starts an additional business activity without telling its insurer.
Insurers often work with incomplete data; they may know the correct industry of their client but have the wrong business activity. For example, we found an insurer that thought that its client was a shop selling car tyres. After searching various databases and the internet, Wenalyze found that this business was a car dealership. In addition, it had a secondary activity as a car repair shop.
Another recent insight is that, since the pandemic, many businesses now have an additional activity or risk. For example, some SMEs started selling online to keep their business running. Dealing with payments data online is a new risk for the SME. If insurers miss this information, that results in a missed opportunity to sell additional coverage, such as cyber insurance.
Henry: What are the consequences for insurers of poor-quality data about their SME clients?
Roger: If insurers have incorrect data about their clients, they will not provide the product or service their client needs. They might be covering them for risks that do not apply to them, or not covering them for risks that do apply.
When businesses make a claim and find that they did not have the correct coverage, clients are less likely to renew. In some cases, they may take their insurer to court. Insurers also suffer from ‘premium leakage’, which is when insurance companies miss out on revenue because inaccurate data leads them to under-price coverage.
These problems can be solved if insurers are able to identify their clients’ correct business activities and addresses.
Henry: Wenalyze uses open data to source information about SMEs: what is open data?
Roger: Open data is a synonym of public data. It refers to data that is free and accessible to the public through the internet.
Henry: How can open data be useful to insurers?
Roger: There is considerable information about businesses available on the internet. For example, you can look at Google business profiles to see how a business is tagged, see how a business describes itself and the services it offers on its website and social media profiles.
Wenalyze searches through this data automatically. For each company we search for the business activities and addresses listed at multiple websites.
Where different sources disagree, we prioritise the sources that have been most recently updated. For one company, Wenalyze can perform this search in 20 seconds.
Henry: What solution does Wenalyze offer?
Roger: Wenalyze’s solution uses open data to enable insurers to correctly identify their SME clients’ business activities and addresses. Insurers often use this to identify how a risk has changed before renewal, so they can understand if they need to update their client’s coverage or premiums. Insurers can also use the solution to support pre-fill and question removal in the underwriting process. Instead of asking clients about their business activities and locations, Wenalyze can provide that data automatically.
Henry: What clients is Wenalyze working with that you can name?
Roger: Wenalyze’s current clients include insurers Zurich and Hiscox in Spain, as well as Banca March and Bankinter, which are banks that sell insurance.
Henry: How accurate is the data Wenalyze can provide?
Roger: Wenalyze’s data scientists manually review data samples on a regular basis to measure accuracy. These reviews show that 96% of the information Wenalyze provides is correct. For the remaining 4%, the information may not be available or different data sources contradict each other. When sending data about SMEs to insurers, Wenalyze provides confidence level tags so the insurer can review the data if required.
Henry: Does Wenalyze offer demos to insurers interested to learn more?
Roger: Wenalyze offers free demos where we will analyse 200 SMEs in an insurer’s portfolio. In addition to providing the required data we will also indicate where the insurer originally had inaccuracies, why we think that data is inaccurate and where we found the new data we believe is accurate. This allows the insurer to undertake a full evaluation.
In addition, Wenalyze provides an estimate of how much an insurer would gain by repricing and extending their coverages for companies with inaccurate data.
Henry: Why has Wenalyze joined InsTech as a corporate member?
Roger: Wenalyze is expanding in the UK and InsTech is the UK’s largest insurance technology community. We also appreciate the global reach of
InsTech’s work as the company continues to grow. Wenalyze’s relationship with InsTech helps us gain exposure to insurers and join conversations happening in the industry.
Henry: What sort of companies is Wenalyze looking to connect with?
Roger: Wenalyze is interested to connect with commercial insurers and MGAs that cover SMEs.
To find out more about Wenalyze and organise a free demo, email firstname.lastname@example.org