TechExec: Amrit Santhirasenan, Co-Founder and CEO at hyperexponential
July 5, 2021 James Tribe
In our latest TechExec interview James Tribe, Content Manager for Magellan™, caught up with Amrit Santhirasenan, Co-Founder and CEO at hyperexponential. They discuss how hx’s analytical SaaS platform can compete with Excel, whether there is a sustained desire for transformation at Lloyd’s, and how hx intend to use the funding from their recent $18m round.
James: Tell us a bit about hyperexponential for those who may not know you.
Amrit: hyperexponential, or hx, is an analytical tech company serving specialty insurance companies, especially in the London Market. Apart from a small number of consultative services, the vast majority of our business comes from our analytical SaaS platform, called ReNew.
Simply put, ReNew allows actuaries to build modern, connective analytical models. It’s specifically designed to equip actuaries for the many challenges of modelling specialty risk. Actuaries can analyse complex and arbitrary data from images and photos to handwritten notes and engineers’ reports; pull in and utilise data science tools and techniques; and plug in third-party data sources, all in days rather than months. Users can create a model to change prices every hour if they want to – the system can update as fast as the market is changing.
At the same time, ReNew automates everything not related to pricing. It removes the pain points and blockers actuaries currently experience while building models. With ReNew, there’s no need to call IT to update models, put time and energy into ensuring spreadsheet compliance, manage version control and so on.
In short, hx gives actuaries the flexible tools they need to model specialty insurance lines and takes away many of the distractions and blockers that are currently baked into daily processes.
James: What drove you to set up hx?
Amrit: My co-founder Michael and I both come from actuarial backgrounds in specialty insurance. I formerly worked as Head of Pricing & Analytics at Tokio Marine Kiln. It was there that the idea for hx came about – after spending lots of time and money trying to find the pricing software to do what hx does, we realised it simply wasn’t out there back in 2017. At the same time, everyone already knew that the status quo of using Excel spreadsheets for actuarial was not a long-term viable solution. We very quickly closed several flagship deals and thus were profitable from the beginning, despite relatively low investment (relative to revenue). This early success really validated that no other platforms were doing what hx can.
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James: It’s no secret that Excel is still the major competitor for pricing systems. How does hx’s modelling software improve on the spreadsheet?
Amrit: As noted above, the key advantages are in automation, flexible analysis, and above all connectivity.
In specialty, the datasets are messier and (obviously) lower volume than in high-volume lines. Therefore, speciality pricing models need to connect into a huge range of data sources in all kinds of formats. As a result, there’s no formula complex enough to make a great specialty pricing model. You need to think in terms of a ‘recipe’ (pricing model) with ‘ingredients’ (data sources) that you can easily add in and experiment with. It’s impossible to effectively implement this approach to pricing when working from spreadsheets. With hx you can engineer a complete change in mindset. We have clients who are building multiple complex models per month, making dozens of changes to each model between build and going live.
Another advantage is that we unify pricing within ReNew as its own part of the value chain, rather than a fragmented process split across underwriters, actuaries and IT. With spreadsheet pricing models, this fragmented approach generates enormous amounts of unnecessary work and go-between, all of which is removed or automated within ReNew.
The spreadsheet model is also a nightmare for regulatory compliance. There are businesses that spend millions making their ‘free’ excel sheets compliant.
James: Why do you think the London Market has been resistant to change for the past 20 years, and why is this changing now?
Amrit: The simple answer is that the London Market has made a lot of money for the past 20 years using spreadsheets, and this is not happening anymore. From negative interest rate bonds to Covid-19, a range of factors means that the market needs to perform more efficiently now. The emergence of new InsurTech carriers and MGAs, who have come into existence without the burden of legacy tech, is a further catalyst for change.
Overall, I think there has been a shift in mindset that will drive real transformation at Lloyd’s over the next few years. There seems to be a genuine, sustained desire not to lose the momentum of change after the pandemic.
James: Incidentally, hx have just announced the closure of an $18m funding round. How do you intend to use the funding you’ve raised?
Amrit: Having grown organically so far, we will use the money raised in this funding round to accelerate our growth trajectory. We intend to scale up our product and engineering teams in order to expand the functionality of the Renew platform and to explore new applications of our platform across the sector. We will also build out a commercial team for the first time, having so far generated strong revenues without dedicated sales staff.
The Oxbow Partners View
At the end of our interview, Amit had a final word of advice for potential hx customers: “Please don’t just build your old spreadsheet pricing model again in our system!” Amit’s advice is apt – we too have observed an almost instinctive tendency for buyers to default to what they know, simply upgrading their current processes with new tech, rather than imagining new, transformed processes. On the other hand, new technology can feel risky. While the cost-benefits of, for example, a new piece of RPA tech can be measured in hours, the value-add of future-focused innovations such as specialty pricing platforms can be harder to quantify in exact terms.
On the other hand, everyone knows that Lloyd’s needs to innovate, and pricing platforms such as hx are finally allowing for creativity and innovation in specialty pricing, which has long been restricted by spreadsheets, manual processes and a fragmented software landscape within Lloyd’s. Hx are perfectly positioned to take advantage of the wave of interest in tech transformation in Lloyd’s. This is not only due to the pandemic, but as Amit notes, to the drip-feed of digital-only insurers such as the follow-only syndicate Ki Insurance, and recently Canopius’ algorithmic MGA VAVE. Tech-centric pricing and modelling is becoming mainstream.
To find out more about hyperexponential’s clients & capabilities, see the latest company news and discover similar vendors, visit their profile on Magellan™ here.