Insurtech | Matt Hodson | Blue Zebra
Matt Hodson grew up in Hednesford, a small ex mining town about 30 miles north of Birmingham in England. Growing up Matt wanted to be a soccer player and play for Aston Villa but never ended up getting close. So when Matt turned 16, he focused on becoming an actuary, first at university and then initially with PwC in London. Today, Matt works with Blue Zebra, a company that offer insurance products to insurance brokers through their purpose built portal.
Matt Hodson, , from aspiring soccer star to Blue Zebra COO
Where did the idea for Blue Zebra come from?
Colin Fagen (our MD) and Blair Nicholls (former CEO) co-founded the business in late 2017 and I came on board as one of the early founders at the start of 2018. In simple terms, we felt there was a gap in the market for supporting insurance brokers to efficiently deliver products to their customers. There is a proportion of the population that need and want to use an insurance broker. Brokers were feeling underwhelmed by the technology, service and product options available to them from the main players and we exploited that gap in the market.
When we considered technology options for the business it quickly became evident that developing our own technology was optimal as we couldn’t see any cost effective and quick to deploy insurance Platform As A Service (PaaS) offerings. This became another key part of the business model. The initial BZI team had all witnessed enormous IT projects that cost many millions of dollars and delivered very little. We felt there was a gap in the market to solve insurance distribution technology problems in a cost effective way, particularly for high volume, low premium products.
Brokers place around 10% of business in personal lines in Australia and we think that could be around 25%, which is the equivalent proportion in the UK and many overseas markets. So, there is room to protect and grow broker’s market share with the support of the right partner.
With external data integrations we can deliver SME and personal lines quotes quickly, including pre-populating answers where required. Our average time to quote a personal lines policy is easily less than 1 minute.
For our first year in business we didn’t actively advertise to brokers, but onboarded more than 7,000 individual broker users just through our own contacts and word of mouth. We now have a user list of more than 10,000 brokers that can access the Zebra Lounge. We regularly have more than 1,000 users on our Zebra Lounge platform every day.
Within 2 years of launch we had written $100m of business on a rolling 12 month basis. This was a reflection of demand in the market for an underwriting agency focused on products in which brokers were losing ground against the direct to market insurers that were often managing internal distribution channel conflicts.
What does Blue Zebra do? Who is the solution for? What problem does it solve?
There are two related parts to our business:
We offer insurance products to insurance brokers through our purpose built portal - the Zebra Lounge. The key thing we are solving here is offering brokers great technology-led options so that they can compete efficiently and offer their customers advice. Automation of many of our back-end processes mean our expense base helps the supporting insurers get to market for a low cost. Also, by integrating external data into decision making and rating we are able to speed up the quote flow and enhance risk selection. For business insurance (‘SME’), for example, we are helping brokers protect their SME portfolios from Direct to market distribution trends. At the same time, our offerings support them being able to cross-sell to their customers and enhance their personal lines product penetration.
The Blue Leopard technology we have built is able to be deployed to other underwriting agencies and insurance businesses. We have already delivered on a couple of opportunities with carefully selected partners and are ready to scale our Blue Leopard solution further. The key issue here is that building and deploying technology to support insurers and underwriting agencies is traditionally timely, costly and complex. By using a modern and flexible approach to our IT platform we have a PaaS approach that can be deployed quickly and cost effectively.
What is your elevator pitch?
Brokers have the best of both worlds when working with Blue Zebra – we give them the tools they need to compete with the Direct Insurers and we also listen to and respond to feedback to continually improve and operate more efficiently. With more than 50 system upgrades in the last 2 years we deliver on our promises. For our insurers, we give them the option to expand their footprint to more than 10,000 registered insurance brokers that have access to our Zebra Lounge platform and products.
In terms of our Blue Leopard PaaS proposition, quite simply with the right partners we can deliver new products to market within 30 days. We are very forward thinking with our technology and method of deployment and we are excited to work with the right partners to help them grow their businesses.
What is unique about Blue Zebra?
On the technology with the new platform re-build we are at the stage where we can make important changes to technology overnight - underwriting questions, referral rules, new data partners, documentation, pricing, product – the whole value chain can be updated immediately. It’s an extraordinary leap that means BZI and our Blue Leopard customers can really respond to the changing environment in real time, with minimal IT spend. This gives them the adaptability to compete efficiently and effectively in the market.
On the people side we have been painstakingly careful about our recruitment and this means the team is full of capable and commercial people who know how to get things done. A regional manager – for example - deeply understands our appetite and underwriting process, an underwriter knows all about the finance automations that we have embedded in our business, the finance team know how the claims process work and the claims team understand how underwriting decisions are made. This all comes together to mean we can give great service to our broker and insurer partners and continually make the business better with fewer people than a traditional insurance business. This really came to the fore during the COVID lockdowns – we spoke every day as a whole Blue Zebra team, we released 3 new products and changed underwriter for our core Personal Lines product…all whilst working remotely.
What have you learnt about raising capital?
I wasn’t involved in the initial capital raise, but Colin and Blair connected to Envest to get the business rolling at the start. Envest are particularly focused on helping their ecosystem of tech enabled businesses thrive and grow. Since the initial capital raise at the end of 2017 we’ve not sought additional external capital and the business has been self-funding and our cashflows are in good shape.
What do you think Corporates can learn from early stage businesses?
Colin (our MD) often speaks about not developing ‘the frozen middle’ of an organization. Usually in a big corporate environment there are too many hand-offs and decision making doesn’t happen sufficiently quickly – at Blue Zebra we have permission to test things out and get things done.
We all feel empowered to get things done and move Blue Zebra forward. By focusing on a few key metrics and key risks, we make decisions quickly and execution has become second nature. I think that is quite rare in a big corporate environment.
Where do Corporates need to improve in working with/supporting early stage businesses?
Corporates should get someone in the business that is focused on supporting the early stage business, understanding the strategy and supporting sensible decision making. We have had that partner with Youi and it has meant we have been able to deliver a lot to our broker partners in a short space of time. By focusing on decision making speed and feedback loops – test, improve, experiment, big corporates can support businesses like ours to move forward quickly. It’s also a positive to understand and acknowledge differences in early-stage businesses, particularly around ability to adapt and change quickly.
For IT budgets Corporates should look beyond the traditional big spend options. Blue Zebra has consistently delivered on its promises and we back ourselves to execute on insurance technology projects.
Looking back, with what you know now, what would you have done differently?
It was always the plan to re-build our technology platform based on lessons learnt to date and technology advancements within 3 years of launch and we are about to finalise that re-build process. Our broker partners won’t see any change in our offering, but it means we can scale our PaaS offering much more quickly. I guess if we knew then what we know now we would have built it slightly differently on day one, but that’s kind of the point! The technology and approach we are using now has only really come to the fore in the last 2 years.
Colin, our MD, pushes us every day to think a across multiple time horizons. I’m really proud that we have almost completed that technology re-build process, which is a key outcome of that mindset. It’s often a stated aim of start-ups to re-build their technology and it doesn’t actually get fulfilled as the BAU steps up. We are also lucky to have a tenacious and forward-thinking CTO that has absorbed all the lessons of the past 3 years and focused heavily on the delivery of the technology re-build project.
Where do see your proposition in ten years time?
In 10 years we will expect to be in a number of countries overseas as the flexibility of our system allows easy adaptation to new geographies.
I expect our PaaS partners to thrive and we are excited to help them efficiently deliver on their business plans and to compete in the market. We don’t have a traditional sales pipeline for PaaS opportunities and are working off warm leads and a strong emerging reputation of technology delivery. It’s exciting to think where that could take us and we see that part of the business having a high growth trajectory – the demand is clearly there.
I’m comfortable that in 10 years we can be $0.5bn-$1bn in GWP, and I expect we’ll need 30-40 people to give the right level of service to our partners. Our cost base at that point will be less than 3% of GWP, which gives us a strong long-term strategic advantage over our competitors.
I think the key thing about our business is that we can move with and move ahead of the market. When we initially launched we didn’t contemplate offering Personal Accident insurance, Cyber insurance or even changing our main underwriter at the same time as a global pandemic. Recently we have seen underwriters withdraw from the broker market and that has already created opportunities for Blue Zebra.
Biggest challenge you have faced so far?
We are just emerging from changing our first capital partner. The business is stronger for it. It was challenging to navigate, especially in a time when we couldn’t meet our broker partners face to face.
Example of a good result with BZI
We bound our first risk in May 2018. Since that time, we have written more than 180,000 policies, bound more than $200m of premium and seen more than 1 million quotes. We’ve built out from our personal lines offering into Personal Accident and Cyber insurance (both backed by certain underwriters at Lloyd’s) and now SME (backed by Youi). We’ve delivered well in excess of 50 system enhancements, re-built our core technology so that we can scale our PaaS offering and built a core team of 21 brilliant Zebras. We’ve won a couple of awards and got some fantastic industry feedback. The behind the scenes automation of finance, claims, underwriting, analytics, risk management and risk selection processes are an enormous support to the business. We haven’t always got it right, but with the right feedback and a delivery mindset we’ve continued to build the business for the future.
What are the key disruptive forces you see facing the insurance industry?
Aside from a huge regulatory change sweeping through the industry, I’d call out 3 things :
Digital delivery - Customer and brokers want to transact digitally and the carriers that don’t have a cohesive strategy with digital will be left behind. Our APIs for example, will support scaling our business and our partner’s business very quickly. This adaptability will give the right businesses the speed to compete.
Effective use of data – the availability of data to support a business like ours is greater than ever. At Blue Zebra we are very practical about what we do with data – we have a real-time view of performance across a number of dimensions and change the business as the insights emerge. We integrate external data sources to help speed up processes and enhance decisions.
AI and machine learning – we have deployed machine learning to support some of our repeatable business processes. Without that kind of technology we would need at least twice the amount of people that we have at the moment. This will become increasingly important for the industry.
What is your focus now? And for the next couple of years?
We are finalizing our Blue Leopard platform re-build in April this year and we have a couple of initial clients that will benefit from that. We then expect to support more insurance businesses with our PaaS capability.
For our core underwriting agency, we have a full stack of products now available. We are entering a period of stability following our change in underwriter. We have a number of significant announcements due before the middle of this year which will showcase our next phase of growth. I can’t say much more than that right now. We are very excited!
What are the one or two lessons/principles/ you carry with you into everything you do?
I’ve witnessed huge and dramatic changes in the businesses in which I’ve worked over the last 10 years. I’m nauseatingly optimistic and positive, which I think can be important when things are changing quickly.
I really don’t enjoy unnecessary meetings or spinning wheels, so my focus is often on ‘what is the next step, how do we move this forward?’ and making sure that what we spend our time on is adding value or supporting our goal of scaling safely.
Being an actuary by background and also spending some time as a CRO, I’m mindful of mitigating key risks and supporting decisions with data where possible.
Bringing that all together, my key principle is to move towards data-driven decisions, automation of processes and eliminating unnecessary human repetition in our business.
Where do you see yourself in 10 years time?
Hopefully still solving interesting problems with Blue Zebra! I love the people and practical side of a business and I get a real buzz out of joining the dots on building and achieving a strategy with some talented colleagues.
The theme of the last 10 years of my career has been to embrace difficult and different business problems and to have some fun along the way. I’m very fortunate that I genuinely enjoy what I do and I work with some super-talented people. In 10 years I just hope that’s still the case.
How do you balance your personal time and your ‘work’ time?
For 7 years after the birth of my first child I chose to work 4 days a week, spending one extra day a week with my family. My work responsibilities didn’t reduce and I was very lucky that my career kept moving forwards during that time. In fact, it gave me a perspective on family life that means I can now more easily support colleagues with young families.
I’ve been part of building a culture that means we aren’t an organization that judges each other by how much time we are at our office desk …and the lockdowns have only re-enforced that. So, there are some weeks when I take my kids soccer training or go swimming with them after school and my colleagues are supportive of that. I can always catch-up ‘after hours’ and do sometimes need to work late into the night after the kids are in bed.
I play soccer quite a bit – sometimes 3 times a week and love listening to podcasts on everything from Insurtech, entrepreneurship, sports, comedy and statistics.
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