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Former QBE North America executive Athula Alwis is working on a blockchain and AI-driven MGA start-up aimed at simultaneously cutting loss and expense ratios that will initially underwrite management liability for SME insureds, The Insurer can reveal.
The start-up –AllDigital Specialty– has developed anAI module and teamed up with a blockchain vendor to build a private permissioned blockchain infrastructure that will begin testing with brokers and insurers this summer.
Its aim is to create a low touch/no touch specialty insurance platform that will deliver an average expense ratio of 25 percent, compared to 35 to 40 percent including commissions that is typical in the commercial insurance
It is also using AI algorithms and machine learning techniques such as deep neural networks to develop underwriting tools and analytics to drive better risk selection and pricing as it pursues lower loss costs.
AllDigital Specialty will initially target private company and not-for-prot company management liability insurance solutions for small and medium size insureds that will be offered via its online platform to brokers.
The start-up will then look to move into other lines and has identied small company cyber liability and transactional liability insurance as segments to diversify into over time.
The scalable platform is targeting to build a book of MGA business of $400mn in the next ve years that produces a return on capital of 25 percent.
Alwis, who was chief pricing actuary at QBE North America Specialty and head pricing actuary at Freedom Specialty, told The Insurer that the MGA will provide an easy-to-use end-to-end process for brokers and its insurance capacity providers that it can scale up at a low cost.
“We’re committed to improving everyone’s performance by putting broker partners, insurers, and TPAs on the platform. Our goal is to improve efciency, give everybody a single version of truth in real time, provide transparency, privacy and data security.
“Then the biggest part of the value proposition is the ability to get into different products and segments when we are ready, with the capacity to scale it up at a very low cost,” he said. The start-up is initially targeting SME management liability business.
The offering from AllDigital Specialty aims to strip out a signicant portion of the expense base associated with doing the business for both brokers and its insurance partners.
SME management liability is a fast-growing area that has a relatively low penetration rate, with 70 percent of the 5.8 million potential customer base not buying the cover today.
“The key opportunity is opening up those non-buyers who are not buying because the process is cumbersome, time consuming, while price and available capacity are uctuating. We want to make it a seamless end-to-end process.
“The long-term vision is to build an eco-system that delivers distinctive customer experience to our broker partners and their external clients.” said Alwis.
The partners AllDigital is initially testing with include three national brokers and one carrier with an AM Best rating of A or higher.
Alwis said the start-up would be open to retail and wholesale distribution channels.
The development of the underwriting platform and its AI module includes signicant segmentation of the market to determine where to write business and what sub-products to write.
The platform will provide line of sight to insurer partners and brokers with real time visibility on the underwriting portfolio.
The start-up is expected to engage potential investors ahead of a series A funding after testing with brokers and carriers has completed later in the summer.