I often refer to the “3 waves of innovation” to describe the state of innovation in FinTech: Banking, which is at (or even a little past) its peak, Insurance, which has seen disruption in some areas but is still very backwards in others, and WealthTech, which is still way behind. In the world of Insurance, there has been a fair bit of disruption in consumer/customer-facing ‘front-end’ applications. However, the “back office” of most insurers, even the most innovative ones, seems to be stuck in another time: Underwriting, claim management and policy portfolio management are still run virtually the same as they used to 20 years ago, with little leverage of modern data sources, automation tool and technologies such as AI.

In the world of insurance, as is the case with many other financial services, SMBs are greatly under-served, and when it comes to applying for insurance or filing a claim, most underwriters are still very far behind (like, Stone Age far behind). That means there’s a huge opportunity to disrupt in this area, and our investment in Planck Re is testament to our conviction (and theirs) in the long overdue need to streamline the commercial underwriting process.

These days, even though consumers may experience a streamlined and user-friendly experience when they interact with insurers – like learning about why they might need insurance in the first place (the ‘education’ phase), or searching for the right solution (comparing insurers and insurance products) and comparing prices– they only experience the visible ‘tip of the iceberg’. What they don’t necessarily see are all the complicated process that happens behind the scenes when it comes to signing up, filing claims, etc. For them, the experience is seamless even though back-end processes are arcane.

Incumbent insurers such as Lemonade understand these challenges and are using technology to overcome them, which is why in many cases they are being described as “technology companies that happen to sell insurance”. As a result, they pride themselves on taking just 90 seconds to onboard a customer and 7 seconds to reimburse customers who file a claim. “Easy and instant insurance”, as it should be in the 21st century.

But when it comes to insuring small businesses, it’s an entirely different experience. The back-end that exists to insure SMBs is so primitive, you still need to fill out a bunch of complex forms and fax them through (yes, it’s industries like old-school commercial insurance that have kept the practice of ‘faxing’ alive even in the digital age). To make things worse, these backwards methods to process a single claim can sometimes cost more than the value of the claim! It’s such a surreal reality that even the insurance companies themselves know they’re operating in a sort of time warp, and that is why it’s an industry that’s so ripe for disruption.

Enter Planck Re.

Planck Re’s founding team – a unique combination of 2 seasoned “second-timers” with a very strong technological background (whose previous company BlueTail was acquired by Salesforce.com) together with highly experienced veterans of the InsureTech industry – identified the huge inefficiencies associated with SMBs in the insurance world. They recognized that the cost of underwriting SMBs and servicing them as customers, as well as the barrier to entry for SMBs to apply for insurance in the first place can all be significantly lowered through the introduction of technology and AI, thus increasing addressable market for insurance carriers. We often see strong technology teams that lack deep understanding of the industries they target, so Planck’s ego-less approach is a breath of fresh air.

Planck Re’s solution automates this entire process: All that’s needed to begin the process with Planck Re’s solution is the name and address of the business, and Planck’s Artificial Intelligence (AI) driven data platform does all the rest.

By leveraging deep industry expertise and breakthrough data science, Planck Re streamlines the commercial underwriting process by aggregating the SMBs’ digital footprint to help insurers acquire a comprehensive understanding of customer risk.

This data might include, for example, information about how long the SMB has been “in business”, whether there’s another company in the same vicinity as the SMB being underwritten that uses open fire (for example a restaurant), neighborhood crime rates and how close is the nearest police station, whether emergency exit doors are properly marked and emergency sprinklers in working condition, etc.

These types of details can help build a profile of the SMB which makes it very easy for the insurance company to ascertain the level of risk (and therefore appropriate premium) associated with insuring it.

The “intelligent business profile” created by Planck Re platform (with an accuracy rate of over 90%) undergoes continuous monitoring to highlight any changes to ensure it’s up-to-date, which also simplifies renewals since they can be automated. Also, its algorithms can crunch historical client data to finetune existing models and introduce new criteria, resulting in a frictionless underwriting process with greater insurance carrier visibility into risk factors, leading to improved conversion, retention and reduced loss ratios.

Planck Re’s solution is a giant leap in the right direction for InsureTech. We’re excited by the opportunity to lend our expertise at Viola FinTech to this impressive team, and to opening the doors for them together with our strong, like-minded co-investors at Arbor Ventures, as they continue disrupting this market.

Not only is Planck Re addressing a long over-due need to bring commercial underwriting from something resembling a 19th Century status quo into the digital age, but by making it possible to for insurance companies to perform the underwriting process in a fraction of the cost and time that’s currently considered “normal” (as absurd as it may be) – it also opens the door for more innovation and disruption to follow.