Leading insurance technology firm Applied Systems has agreed to acquire digital insurance technology startup Indio Technologies.
The move will enable Applied Systems to offer Indio’s digitized commercial insurance application and renewal process to its 13,000 agency and brokerage customers and their business customers. Applied Systems plans to integrate Indio into its popular agency management system Epic.
As part of Applied Systems, Indio will be able to have its insurtech product installed into more agencies and be able to expand its capabilities sooner than it could do on its own.
Both firms are private, and neither would disclose the purchase price. They hope to close the deal within a month.
“What Indio allows us to do is to have a very, very seamless capture of customer risk data at time of renewal or application and seamlessly populate that data into the Epic agency management system. That eliminates double entry for customers, creating productivity for them,” said Applied Systems CEO Taylor Rhodes in an interview with Insurance Journal.
“It’s a better customer experience because it takes steps out of what the customers need to do to get an application renewed or granted for the first time. When we talk about integration, we mean you don’t have to type things into more than one system, and the systems work well together.”
Indio, founded in 2016 by Mike Furlong, Adam Bratt and Matt Watson, has raised $28 million in venture financing since its start. It is based in San Francisco with an office in Austin, Texas, and has about 80 employees. It says its 360 agency and brokerage customers include 40 of the top 100 U.S. based brokerages.
After the deal closes, Indio will be run by Furlong as a division within Applied Systems and will be part of the company’s product strategy effort, according to Rhodes.
“Indio was founded on the belief that technology can make insurance processes faster and simpler while keeping customer experience as the number one priority for an agency,” said Furlong, chief executive officer and co-founder of Indio.
Indio’s product speeds up and simplifies the largely manual, paper-and-PDF document-based process of completing carrier commercial lines applications, renewal forms and related documents. Indio promises not only a better experience for customers but also lower costs and reduced risk of errors and omissions for agencies.
The software automatically digitizes all of the applications, maps the common data points between all of the forms and year over year, and reduces data redundancy. It then creates a link to a web page with instructions that help customers complete the documents online, asking only for information that is new or needs to be changed.
“So instead of sending an email with 10 attachments, long explanations how to go through the documents, and what have you, the agent just generates a link from our system and sends it in an email to the customer. Then our system walks the customer, the insured, through the application process in a wizard-like, sort of like a TurboTax-like manner,” explained Furlong.
Applied Systems, based in University Park, Illinois, is majority-owned by investment funds advised by private equity firm Hellman & Friedman, which bought it in 2013 from the Bain Capital for approximately $1.8 billion. Last year, Google joined JMI Equity and Stone Point Capital as minority investors.
Rhodes declined to discuss the payout but said his company has “plenty” of balance sheet strength pay for the deal.
Asked about Google’s role in the deal, Rhodes said that while Google bought stock in Applied Systems last year, it is not a funder of this acquisition. “Certainly, as owners, they participated in the diligence conversation and were excited about it. We have their backing,” he added.
How the Deal Happened
The Applied Systems-Indio deal came together over the past few months.
Applied CEO Rhodes said his company was looking for ways to improve its commercial lines systems because it had been hearing from agents and carriers that they were frustrated with the costly and time-consuming sales application and renewal processes of dealing with customers and carriers.
He said agents told him they want the process to be “more user-friendly” and able to drive productivity in revenues or costs or, ideally, both.
Rhodes said that Applied Systems was aware that many of its agencies already use Indio as a separate system for commercial lines sales and those that did use it praised it.
However, these agents that loved Indio said they would love it even more if it were not a point solution but were instead integrated into their overall Applied Systems Epic agency management system.
“What our customers want is to have Indio share data seamlessly back and forth with Epic,” Rhodes said.
That was the catalyst for Rhodes contacting Furlong a few months ago to get to know Indio and its team.
“As we developed our relationship it was just very clear that Applied with our large platform could really help the Indio team do what they’re doing on a bigger stage and accelerate their reach into the market,” said Rhodes.
Furlong said he was not looking to sell Indio before Rhodes came knocking.
“The business is growing extremely quickly, and I had no plans to sell and I don’t think we would have done it to anyone else but Applied. We have many mutual users with Applied and they love Applied,” Furlong told Insurance Journal.
“When I met Taylor and looked at Applied as the market leader in the agency management systems space, it was clear to me that we could gain much faster and wider market share and adoption on our product…and Applied could help us realize our vision in a faster and more efficient manner,” the insurtech executive said.
Rhodes said Applied is in a position to extend the digitization of the submission process beyond agencies and customers to carriers as well. Applied owns IVANS, a cloud-based software for connecting agents and insurers, which the company believes will be able to expand its data exchange capabilities with the addition of Indio.
“Our vision here is an absolute end-to-end digital process for commercial lines,” Rhodes said, describing a process that starts with simplified data capture with clients, then integrates that data with the agency management system, and finally extends that data digitally into the policy administration system on the carrier side.
Connectivity with carriers also interests Indio and is something it has been working on as well, according to Furlong.
Rhodes took over as CEO at Applied Systems in June, replacing Reid French. Rhodes background is in cloud software having served as CEO of both Rackspace and SMS Assist.
Rhodes said he believes the Indio deal is a “differentiating move” for Applied Systems. “If I were a competitor, I’d be worried about this move,” he said.
“Indio is a power move for us,” he said. “It really is an exclamation mark on our industry leadership. I think it’s a big statement to our agency and broker customers on the one hand and carriers on the other that we want to continue to push forward and create value for them and to strengthen the relationship between carriers and the channel.”
Rhodes thinks additional acquisitions in the insurtech space are likely even as some insurtechs go on to being big companies on their own.
“I think what you’re seeing is a normal evolution in an industry that is just starting to wake up to the technology value as opportunity,” he said.
“We want to be the place where insurtech creates value for our customers. We don’t want to be a sort of smug incumbent that sits back and let’s insurtech happens to us,” Rhodes said.
While insurtechs continue to launch and form partnerships with insurers, reinsurers and agencies, there have only been a handful of insurtech acquisitions reported to date.
Perhaps the most notable acquisition, announced last month, is Aon’s purchase of CoverWallet, a digital small to medium commercial insurance platform. It provides Aon with the opportunity to leverage CoverWallet’s platform to develop other digital client experiences.
In August 2019, Insurance Technologies Corp. (ITC) acquired Ohio-based Smart Harbor, which provides smart forms, websites and data analytics to insurance agents. In 2018,The Hartford purchased Y-Risk, which has an online hub, gig.protect.com, that lets independent contractors purchase insurance and insurance agency Seeman Holtz Property & Casualty acquired online personal lines insurance agency Goji and its technology platform.
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