Matt Hicks: Addressing underinsurance via digital transformation

Broker management software provider Recorder is aiming to address underinsurance and digitally transform commercial lines broking via its artificial intelligence (AI) powered insurance management platform for commercial lines brokers.

Speaking exclusively to Insurance Times, Recorder co-founder and chief commercial officer Matt Hicks explains: ”We’re keen on solving the large rates of underinsurance in commercial lines, which impacts customers making claims.

“Ultimately, underinsurance impacts brokers and insurers because they’re missing out on potential revenues from clients not having the right cover in place.”

However, Hicks notes that it is not just underinsurance that proper data management can protect against. 

He explains: “We have also observed that it is not just underinsurance – it’s over-insurance in certain places.

”Making sure businesses have got the right cover in place – that’s what we care about.”

Gap in the market

The idea for Recorder originated from software platform business Codat, which Hicks previously co-founded back in 2017 alongside Recorder co-founders Alex Cardona and David Hoare.

Codat helped banks and lenders integrate with SMEs’ financial data using application programming interface technology (APIs), which allows for the easy, digital communication of data between two devices. 

And after working with a number of insurers at Codat, Hicks, Hoare and Cardona spotted a gap in the insurance market where firms were experiencing issues with sharing SME data, since relationships were predominantly broker-based.  

The trio saw an opportunity to improve SME data flows for commercial lines brokers in the insurance sector.

Hicks says: “For small companies in the UK, there’s a big gap in the amount of funding that can be provided to them.” 

For small companies that do not meet two of the following criteria – £10.2m in turnover, £5m in assets and 50 employees – it is considered “too burdensome” for third parties to audit financial statements with a third party, Hicks explains.

“As a result of that, for a large majority of UK companies, the publicly available information on a business is not sufficient for credit underwriting,” he adds.

Therefore, for banks to lend SMEs money, information would need to be provided by the small business itself.

Hicks notes: “Lending to small businesses is unprofitable because automating the underwriting process is not possible and the loan size is too small to really make it work.

”That leads to capital constraints, which is in turn bad for the economy as small businesses can’t get access to loans required to employ more people and grow.”

Promoting eTrading

As part of its proposition, which is launching at next month’s Biba conference where it hopes to onboard brokers, Recorder also aims to increase the adoption rate of eTrading.

Hicks explains: “ We’re not trying to disintermediate the broker in anyway, we’re trying to enable them by licensing them via a technology platform. We are going to be building a connection to imarket. Brokers who are using Recorder will then have coverage across all insurers who are participating in the imarkets scheme.”

Imarket is the flagship digital trading platform for commercial insurance from general insurance technology provider Polaris UK, which connects brokers and insurers to facilitate digital trade.

Hicks’ intention is for the full end-to-end process of collecting data, retrieving quotes and signing a policy for commercial lines to be fast-tracked digitally.

When using structured data and APIs connected to a system and customer records, he explains, APIs can automatically be polled for updates.

Therefore, should there be a change in circumstance for a business, updates can be performed automatically via the insurtech’s smart notification system.

Once that happens, information can be pre-populated instead of having to be re-keyed.

This is essential, Hicks notes, as after spending time with some of Recorder’s early insurer clients, he realised that many brokers spent 75% of their time carrying out administration work, including rekeying data into several carrier portals to access different quotes.

He says: ”I am sure that there is still a good chunk of brokers, particularly smaller ones who don’t have the technology in place to do this effectively.”

And in terms of future growth, Hicks adds that developments will eventually launch that will allow companies to connect their own data, alerting brokers automatically around any necessary mid-term adjustments.