Andy Homer is well known in the insurance industry. Over the past 25 years, he has built a career as CEO of four of the best-known insurance companies, including Towergate, Folgate, Axa UK and Commercial Union (now Aviva). He is also an Angel investor, backing start-up companies such as Percayso Inform, Bikmo, Bought by Many and more.
In this interview with Percayso Inform’s Commercial Director, David Kelly, Andy explores the opportunity within the UK insurtech sector, why data without intelligence will get you nowhere, his investment decision to back one of the upcoming data intelligence providers in the UK market for a second time since its inception and what they hope to continue to achieve together.
Percayso: What challenges are faced in the UK commercial lines insurance market today?
Homer: In recent years, the commercial lines rating cycle has been beneficial, so it’s a no-brainer that it will attract more capital, and rates will level off and then fall. When this happens, it will put pressure on insurer operating expenses.
And the personal lines insurance market?
There is a sharp readjustment because we have been selling motor and home insurance too cheaply. History reminds us that solid balance sheets will win the fight for market share.
What role does data play in helping insurance providers face up to these challenges?
I see it too often – having data with no intelligence will get you nowhere. You need to have both to start with to be able to look forward, not back in the rear mirror. Only then can insurance providers genuinely understand consumer behaviour and where they will deliver market-leading data strategies and deployment. Looking ahead is always the key to success.
What areas need a market-leading data strategy and deployment to drive success?
Pricing, renewal and claims propensities. Then pricing and pricing again!
Are providers optimising their data strategies?
No. But some are getting there. The difficulty of cleansing and using data across multiple legacy systems, combining it with other external data sources and then using it intelligently is another massive challenge.
What’s holding them back?
A lack of imagination. It is easier to ‘stay in your lane’ and take little or no innovative risk. Then there is the bureaucracy of Risk Committees, Pricing and Underwriting Committees, and Compliance Committees – it is no wonder innovation gets stifled.
You are known as a serial investor and have made some good bets. Can you reveal some of the highlights?
Funding Circle, Tractable, and Many Group (Bought by Many) stand out since I was in early with each and they all hit unicorn status. And don’t worry. [Laughs]. I’ve had three or four failures as well.
So what do you do when you back a business?
The trick is to really understand how these businesses will make money – that might sound basic, but it is fundamental. Provided I see top-line growth in income and customer numbers, I tend to follow my money and keep backing additional funding. Forget about EBITDA for three years – it’s customer numbers that generally drive success.
What are you looking for?
A clear definition of marketplace and position. For example, back in the days of Towergate, we were unashamedly SME and VSME focussed. Bikmo is obsessed with cycling. Many Group with pets. Percayso with data.
Once that’s been vetted, I then reference check the management team. Who are they? What have they done? Why are they here? What have they won? Where did they lose? Key learnings? The list goes on.
That’s good for Percayso. [Laughs]. Is that what drew you to our business?
I was introduced to Rich Tomlinson [Managing Director at Percayso) by yourself [Dave Kelly, Commercial Director at Percayso]. We knew each other well from the OpenGi Board when Peter Cullum and I were major shareholders – so I should credit you with the intro!
Why did you decide to invest in Percayso?
There was a lot of alignment. I was seeing what the Percayso management team were seeing – the three things that were going to help insurance underwriting and claims: data, data and data! I was involved in the first round of funding back in 2021.
And the second round of funding this year?
As I said, I follow my money, if I see growth and believe the management team knows what they are doing. I am confident that Percayso and the team do and that they can be pre-eminent in this sector.
We are thrilled to have you onboard. You were also a seed investor in Cazana.
Yes, you are right. I was also a seed investor in Cazana, which Percayso acquired this year to create Percayso Vehicle Intelligence. A strange (yet very aligned) coincidence.
Have you seen much change in the insurtech industry since 2021?
Yes, since first investing in Percayso, it’s become even more complex for insurers to make a margin. Especially in the uber-competitive personal lines such as motor and home. This has an effect all through their supply chain. But at the same time, there are still plenty of solid businesses in the insurance ecosystem with innovative solutions and well-thought-through and executed plans delivering value to their audiences. These are the ones that will continue to thrive.
How are we placed to help insurers solve some of these issues?
Access to accurate, robust and market-leading data has never been more important to both protect insurance providers from adverse risk and enable them to differentiate against their competitors.
And our competitive advantage?
The ability to easily access, manage and adapt those data strategies is a crucial step forward that the Percayso team have spotted and provided unique solutions for – this really sets them apart and offers enormous value for the insurance providers they work with.
Any parting advice?
Nothing is stopping us but fear of failure; do not be afraid. We are all dead sooner or later, so go for it.
Want to learn more about Percays? Get in touch with the team today.