Ask someone to name some of the more successful UK insurtech scale-ups and Digital Fineprint (DFP) often gets a mention.
In three years CEO and Founder Erik Abrahamsson has taken DFP from holding meetings in a garden shed to raising £7m in funding and securing an impressive list of clients.
He joined Matthew on Episode 65 of the InsTech London podcast for a conversation that covered:
- Using new data sources for selecting and pricing SME insurance
- Tips for a new company on pitching to prospective clients
- Why in a world that is turning digital, personal contact still matters in insurance
- How DFP is able to recruit senior people from established insurers
- Lessons learned from working in the Lloyd’s Lab
Discovering the data to drive decisions – Episode 65 highlights
Matthew: What took you from working at Twitter, into insurance?
Erik: Twitter was amazing, and I definitely buy into the mission that Twitter has about giving a voice to every person on the planet. I won a scholarship to Oxford and had the opportunity to come back to the UK.
It also meant I could use the savings I’d put away to do a masters to invest in my own business. The question was, what kind of business should I start? Where did I see massive amounts of digital transformation? That turned out to be insurance.
2016 was the beginning of insurtech and that’s when I founded DFP. The ecosystem that you, Robin and Paulo built up was the beginning of that journey. It started with an idea of where we could apply new technologies, new types of big data and AI, and became Digital Fineprint.
What do you mean when you talk about transforming the way insurance professionals serve the SME market?
We want to provide the best data assets and data platforms for SMEs. We’ve built that with basic government data, linking it to website data, social media data, data on properties, websites, cyber etc. Everything an insurer needs to able to serve and protect a small business.
We provide that to insurance carriers to help with underwriting insights, growth opportunities and efficiencies. We show what risks an SME is facing and help the insurance industry do what it does best: providing the cover and the security to help SMEs grow.
How do you differentiate what you’re doing versus other people that can also get access to the data?
Using open data is the first step, but we also acquire proprietary data sets and we build our own predictions and our own data sets. For example, around cyber risk, we look at website quality and we also look at anything related to directors’ risk.
It’s also about making the data accessible and usable and proving that we can have a positive impact, a positive ROI. The fact we’ve been working with QBE now since 2017 proves that they have seen great value in working with us.
At one point you were talking about using LinkedIn data as a way of profiling companies. Is that still one of the sources you use?
It’s becoming standard to use, for example, Companies House data but very few insurers are using the kind of web scraping data that we have access to, or data about directors or cyber.
LinkedIn is interesting and now very relevant, it’s the next part of that frontier. We want to be at the very forefront of having the most relevant, actionable and latest data to create a competitive advantage for our customers.
What about the difference between the US and the UK or Europe? Are there material differences in terms of data you can get access to in these countries?
In the US you can profile individuals much more than under GDPR here in Europe. That’s one of the reasons we went for SME because in the European context you can profile businesses. There are other data providers in the US who do similar things to us but on personal lines that would be very difficult both legally and ethically to do in Europe.
You’ve got a number of clients you’ve announced publicly including RSA, Hiscox, Euler Hermes and QBE. When you go into a company, who are the typical people that you’re engaging with and then buying from?
It depends on the key business objective. I find that insurers come to us to solve one of three challenges. The first is growing premiums by finding and getting access to a new sub-segment of commercial customers that they haven’t been able to serve. The second is underwriting selection to optimise loss ratios.
The third one is about efficiency. Being able to give their data science analytics teams access to new sources of insight and data faster and cheaper than other providers can do.
So we talk to different people. Often, it’s a Head of Distribution, but Head of Broker Relations is also very relevant for the carriers. It can be anything related to ops efficiency and helping them be more efficient in their spend on data.
Insurers are spending so much, but they’re not getting the right value, and that’s where we can help. Of course, if it’s around underwriting, we talk to the chief underwriting officer.
DFP now is very well-known and you’re often cited as one of the companies that have been successful. What’s your advice to other people who are trying to get access to new clients?
It comes down to building personal relationships with other people in the industry. That’s where InsTech London is such an important ecosystem to provide a meeting place for those interactions to happen.
Some people think you can run a virtual business and be a digital nomad. I don’t think that works in insurance. It’s still a person-to-person business. You have to be able to sit next to each other.
With DFP, I’m also building a business that builds on a social media strategy learnt from my Twitter days and figuring out how to have a strong brand, from my Procter & Gamble days.
You’ve started recruiting more people from the industry. How do you go about finding them, because a lot of them are leaving secure jobs? It’s still quite a big risk and it’s different going to work for a smaller company.
It was probably a risk for them in the very beginning. In the early days if a company has a few hundred thousand in investment, it’s probably only working at up to 18 months of runway. Companies with a few million in investment, tend to be safer propositions for people changing roles.
In addition, it can be combined with a big option pool. I’m very glad I set up a big option pool in the beginning, so we can compensate with sizeable salaries and options.
So now we’re hiring people from major insurers. The real leaders of the industry are coming to DFP and what they tell me is that they’re coming because they want a new challenge and that excitement of running something.
When compared to their old organisations, they all say that there’s no waiting period for a decision. There’s no need to go to some committee and see if they can get funding. We make a decision and we execute it the same day.
You were part of Lloyds Lab Cohort 3. How did you find that for the business?
Lloyd’s Lab was a massive eye-opener for us. Despite the fact we’ve been in insurtech for the past three years, we have never interacted in a meaningful way with the Lloyd’s market itself. It is very different from retail SME and personal lines, it’s much more specialised, much more professional, but also more traditional.
It was also great to see some other startups as part of the Lab, for example, Flood Flash. They are also backed by Pentech Ventures. I’m a big fan of Flock and being able to see them succeed within the Lab itself was great and being able to work side by side is really helpful.
In the future will you be talking to some of the other early-stage companies and offering them a way to the market by helping distribute their data?
Potentially. We see a couple of interesting ones out there, like Hyperexponential. Others are trying to create niche data sets so we think we can be a valuable partner in bringing that to market.
The question that we debate is, will insurers want to buy point solutions or specialised data assets from different places? Or do they want to go to a single provider and have a single API for all needs?
What are your 2020 goals? What do you expect to see happen next in insurtech?
2020 is going to be an exciting year. We’re expanding the team, finding new partners and new data assets. I think that’s also mirrored in the wider insurtech ecosystem where we see more and more funding every year.
We see some real challengers, like Next, Lemonade and others, and it’s very interesting to see how they’re going to interact with the standard insurance industry.
For more information on Digital Fineprint, vist digitalfineprint.com
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