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“Often, …  you have a conversation with [entrepreneurs] and they'll start by saying, 'Could you just explain what this has got to do with insurance?' You have to explain that we're looking at a 10 year horizon. We're not asking: 'Are you going to go into insurance in the next two years?' We’re thinking about year three to year ten and what you might be able to do.”

Matthew Jones is a Principal at Anthemis, an early stage fintech- and insurtech-focused VC firm with offices in London, New York, and Geneva. With a background in insurance and reinsurance having worked at Swiss Re, Jones brings insider knowledge to a complex and labyrinthine industry, helping founders navigate the politics and long sales cycles of large insurance companies. 

At Anthemis, Jones leads their insurtech efforts with Ruth Foxe Blader – focusing not only on the core insurance challengers out there, but thinking strategically and innovatively, identifying adjacent solutions that can help insurance companies de-risk their practices. Jones currently sits on the board of Flock, OnSiteIQ, and Humanising Autonomy. He also observes Demex, Joshin, and Stable

In this interview, we discuss:

  • How Jones’s insurance background helps him and founders navigate the industry
  • Anthemis’s thesis-driven insurtech investment approach
  • First and second tier insurance companies
  • Anthemis’s insurtech investments: Kettle and Flock
  • Anthesis’s insurtech-adjacent investments: OnSiteIQ and Humanising Autonomy

Enjoy!

How did you end up at Anthemis and why insurance?

I joined Anthemis in early 2017 from the reinsurance company Swiss Re. I never grew up desperately wanting to be in insurance or reinsurance but somehow ended up there. I really wanted to do something a little bit different. With reinsurance being at the capital markets end of the insurance value chain, I thought that was particularly interesting. I applied, I think it was the last day, even the last hour of the last day that the job was open. And the rest is history. 

I started in the London office, working on structured reinsurance –– that is, providing large capital management driven reinsurance to listed insurance companies in the UK. I moved over to the head office in Switzerland working on strategy and corporate development. I came back to London to work on a series of innovation related topics like behavioral economics, customer experience, analytics and data and technology. There, I was getting an exposure to insurtech that was gaining momentum. I got a call from Anthemis to say they were looking for someone that had been in insurance long enough to know how it pieced together but hadn't yet gone native. I managed to convince them I hadn't yet gone native and have been here ever since. 

Tell me a bit more about what Anthemis stands for and what you look for in insurtech investments?

Anthemis invests in early stage startups that represent the future of financial services. We break up financial services into about seven different areas, like personal banking, corporate banking, wealth management, payments, insurance, etc. Insurance is just one sector of financial services that we actively invest in. We have 100 portfolio companies that we've invested in globally. 

On the insurance side, our investment thesis is really broad. Yes, we invest in new insurance companies. We will happily look at all lines of business –– property, casualty, specialty, life and health, reinsurance. And we'll look at all parts of the value chain because we ultimately believe that there are opportunities for improvement in efficiency from distribution, so from brokers and MGAs, to data and underwriting businesses and core systems technology at the back end. 

In addition to new insurance companies, we also invest in a series of other industries that we call adjacencies. These are other industries that are particularly exciting and where we believe it's possible to build a tech business that is going to have an impact on financial services, or in my case, insurance. Examples of those include things like energy, agriculture, mobility, health, prop tech. They're all areas that have got enormous applicability to many parts of financial services and insurance. Often, whether it's speaking to other investors, or whether it's speaking to entrepreneurs, we have a conversation with them and they'll start by saying, “Could you just explain what this has got to do with insurance?” You have to explain that we're looking at a 10 year horizon. We're not asking “Are you going to go into insurance in the next two years?” We’re thinking about year three to year ten and what you might be able to do. 

There are a couple of examples in our portfolio. Humanising Autonomy being a great example of a company that is applying their technology, and really getting to the heart of safety, or OnSiteIQ, using their technology in construction, targeting the very specific customer base of construction owners and developers. That data set and that technology has got enormous applicability to the insurance industry and risk management generally. 

I'm particularly curious about your perspective having been on the inside of one of these insurance companies and now you're on the outside. What do you perceive to be some of the main differences?

Having been on the inside, it’s given me an understanding and an appreciation of the challenges of innovating within an insurance company. And all of the challenges that are inherent with it: being a large organization, the process, politics, and strategy that has been set two years ago and it's got three years left to run. People are probably too quick to criticize insurance companies and too quick to laugh at them and point fingers and say, “They suck and they're too slow and so on.” I just don't think that's always fair. What I am able to bring having been on the inside is a perspective for our portfolio companies to help them navigate what it's like to work with an insurance company, navigate that sales cycle, help them understand who they should be talking to within an organization. And honestly, sometimes to help them understand who to avoid. 

It sounds like you believe incumbent or legacy providers do have a willingness to adopt new technologies.

You can segment the market into different types of companies that are new that are likely to survive or not. You have the large multinational players like AXA and Allianz –– they have incredibly strong brands, very strong capital base. 

The second group are those that fall in the second tier –– these are slightly smaller insurance companies that don’t operate nationwide who after a couple of poor years, in terms of customer acquisition and underwriting, can suddenly become subscale and unprofitable. Just because you've had a good few years from an underwriting perspective doesn't necessarily mean that that's going to continue into the future. 

That kind of second tier of companies split into two groups. You have one group that is really embracing innovation and technology, and those are typically the kind of firms that are small enough to make very quick decisions, but also big enough to be able to commit resources to technology projects, or implementing something or a partnership. 

Then you've got the other side who maybe don't feel like they're quite big enough to be able to get involved with some of the best companies or don't necessarily have a fully thought through strategy, who are maybe hoping to work with some consultants at some point. At the bottom of the market are really small players, the ones that are quite traditional and old fashioned in their thinking. Some of those will go out of business as we see certain lines digitize over the next 10-20 years. Some of them simply won't be able to keep up. And some of them will naturally be subsumed by incumbents or potentially even technology startups that want to be able to bring underwriting capabilities in-house.

How have you seen the current global pandemic affect the insurtech market? 

On the enabler side, we've definitely seen some interesting accelerations. So OnSiteIQ would, again, be a great example. This desire to remotely monitor a construction site is a great example of a technology that has just flown over the last six months in particular, and those guys have just had two record quarters in a row. At the beginning, you saw Microsoft say “We had two years of digital transformation in two months.” I think that was something we did observe here and there, across the market, and I think that's going to continue. 

Why don't we talk about OnSiteIQ and the types of adjacencies Anthemis invests in? What does OnSiteIQ do and how it fits into the insurance landscape.

We first met the CEO of OnSiteIQ at the end of 2017. We initially led the company seed round in 2018. OnSiteIQ enables construction owners and developers to see what is happening on a construction site in a 360 degree view. It's almost like a Google street view, but for the inside of your construction site. You have an everlasting database of how the building was constructed, exactly where all the wiring is, where the plumbing is. You're able to log on from anywhere in the world and see what has happened.

If you're an owner or a developer of a construction site, you have been entirely reliant upon the general contractor to report progress and issues that arise at the construction site. And, what do you know, general contractors are a bit reluctant to tell the complete truth about what's happening on a construction site. 

When we got to know the company, we realized that there was a part of insurance that in many ways hasn't been touched yet, which is this idea of risk engineering. Risk engineering is the practice of visiting construction sites and identifying any potential issues that might be emerging and addressing them (e.g. cables falling down the wall). It might be that people aren't wearing hard hats. It might be that there are various other kinds of health and safety issues that are on the construction site. So now, instead of an insurance company having to pick and choose which construction sites they send someone to, it's going to be possible for an insurance company to log on, just the same as the owner or developer, and see in real time what's happening and make recommendations remotely. And ultimately, the idea is that that kind of data set can also be used for underwriting. So at the point at which an insurance company receives a submission, they're able to go and have a look at the site, see how well safety is being adhered to, and price a policy accordingly.   

Construction monitoring risk doesn't come to the top of head for most people when they hear insurance. Where do you get these ideas?  

Well, first off, we found OnSiteIQ. At Anthemis, we are thesis-driven investors. We develop a perspective on where we think certain lines of business or certain parts of the value chain are trending. 

A huge part of my role is to spend a considerable amount of time with people in the industry and understand what's on their mind, what are they spending time trying to solve? Who are they working with? And where are their pain points? And by doing that, you develop an understanding and an appreciation of where the next investment opportunities might lie. 

In the case of remote construction site monitoring, we approach things from a risk management lens. We were looking at other lines of business and observing how technology was being used to manage risk after something had been underwritten. In auto, for example, you have telematics so on a regular basis, you're able to see almost in real time where the vehicle is, what time of day and so on. In home, you have things like smart fire alarms and smart devices that are able to provide an insurance company with an insight as to what's happening. 

When you look across some different lines of business, you can kind of begin to see what the parallel might be. We felt like in the construction line, and in liability lines, generally, there was an opportunity for technology beyond the underwriting stage, to really continue to understand what's happening. I think one of the challenges is that in many lines of business, you do the underwriting, you have this static view of a risk. But risk is dynamic, and risk changes on a very regular basis, whether it's hourly or daily. That's something that we thought we wanted to dig into. We spoke to a handful of companies in that space and felt like OnSiteIQ was the best one. 

How does Humanising Autonomy fit into your insurtech thesis?

Humanising Autonomy provides advanced pedestrian intent detection technology and is developing technology that will make the interactions between humans and robots safer. They want to be able to make that interaction less risky. Humanising Autonomy is getting to the core of the inherent risk in, for example, autonomous vehicles. If you embed humanizing autonomous technology into an autonomous vehicle, it’s fundamentally a safer vehicle because you’re deploying a technology that makes the vehicle itself more intelligent about what is happening around it. Now if you do that, you get to the heart of insurability. You get to actually deploy that technology faster than you otherwise would if you didn't have humanizing autonomous technology. And so they are therefore making it both safer and accelerating the adoption of new technologies, which, in theory, should make life better for the person that's using the technology, or interacting with the robots, and people around as well. And ultimately, insurance companies that pay out fewer claims, because the technology is more sophisticated.

Let’s talk about one of Anthemis’s more “traditional” insurtech investments, Kettle.

Ultimately, I think we believe that wildfire risk is not so well understood. What we've backed in the form of Kettle is a startup that really believes in the power of using high resolution data, augmented with machine learning technology, to be able to understand both ignition and contagion in a wildfire. What attracted us to this company was a first rate team that blended both a deep understanding of the insurance industry with a deep understanding of the potential of technology, and a really interesting go-to market in that they’re operating at the reinsurance layer. Rather than going from house to house and selling an insurance policy to an individual that needs to be convinced about what they're doing, and rather than relying on a very specific kind of modeling of that specific property in that particular part of town, Kettle is providing reinsurance to insurers who've got a portfolio of properties. Those properties might all be in one area or might be in a broad area. They use their technology to underwrite that risk. That technology has got applicability well beyond wildfire. It could go into things like flooding or cyber or even pandemics because you've got this kind of ignition and contagion type of style of peril. I’m very pleased to be involved in that company and helping them get to market in the next few weeks.

You sit on the board of Flock – Drones are one of the major emerging insurance lines. Why Flock over other drone insurance startups? 

Drones have been a very interesting line of business in which to experiment with real-time pricing, meaning the opportunity to cover a specific risk, in a specific place, at a specific time. The team at Flock blends deep technology and product design expertise with an understanding of the insurance industry. Their initial product has been a great success in the UK and their underlying technology (and learnings) have significant applicability to other lines, which the team is now bringing to life.

Are there any corporate VC or incubation programs on your radar that you think are doing a really good job?

It takes an ecosystem to enable an insurtech startup to flourish: InsTech London, Plug & Play, the Global Insurance Accelerator, InsurTech NY and so many more are all playing truly critical roles in fostering the insurtech community –– in their local areas and globally, too. Behind each of them are individuals who are passionate about improving the insurance industry, and I feel lucky to know and work with them all. 

Thanks, Matthew! What’s the best way for people to reach you?

For sure! People can reach me via my LinkedIn or they can reach me at my first name at anthemis dot com.