In our 7th edition of the TechExec series, we chat to Jörg Renger, Managing Director at Faktor Zehn, a digital insurance technology business.
Greg: Your start was somewhat less commercially driven than other tech vendors. Tell me about how it all began?
Jörg: Back in 2005, when Faktor Zehn started, most insurers, certainly in Germany, were building their own tech. The founders, working in software and consulting companies (msg and Feilmeier, Junker & Co., today msg life) at the time, realised that the product engine was a commodity and insurers were building them from scratch themselves and solutions on the market were not very innovative. So one of the founders wrote a core product engine (Faktor-IPS) and provided it open source to the market to stop people rebuilding it each time.
If you go to https://www.faktorzehn.org/ you can download it yourself for free.
Whilst the code was open source the founders would use that as the starting point for their own development projects with clients – so not all altruistic.
Greg: At what point did the business move away from bespoke builds to becoming product-based?
Jörg: The shift to product-based happened in 2012. We realised the market wanted more and more to have off-the-shelf tools. We took the open-source core and built the product around that core.
We also merged with ConVista in 2012, a c. 700 people IT consulting firm. We realised that full-stack insurance system failures happened in the delivery project. So having an implementation partner with scale and expertise was critical for us.
Greg: What makes you different to other technology vendors?
Jörg: There are three reasons. Firstly, the architecture of our Suite itself. It is based upon our Open Source Core containing a powerful product and modelling engine which allows quick and flexible creation of insurance product/services across all domains. Also, our modelling engine means we can create bespoke APIs for clients. Fixed APIs are all good and well but typically it’s the other systems that we integrate into that are more restrictive. Our flexibility allows us to work around this challenge. This is essential in the current market as we routinely see at least 20 interfaces in core insurance transformation projects which have to be connected.
We also put a lot of effort into the flexibility of our model. For example, UBI, with its integrations into say telematics, is native in our platform, not a workaround.
We also believe our approach to helping clients manage data and workflow relating to business partners is different. Our Business Partner component is designed to work together with existing partner systems either as the primary system notifying others or a downstream partner receiving messages from the primary partner system. Furthermore, often the need for a Business Partner component with a small footprint arises to provide a lightweight approach for holding data of prospects, agents or collaboration partners e.g. as part of a sales or claim process. A central, company-wide business partner component or a CRM system may not be flexible enough for such requirements. Here, our Faktor Zehn-IBP provides the solution, which is easy to implement and maintain.
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Second, the modularity of our platform. Our underlying components, whilst closely integrated, can easily be taken standalone. We are completely flexible. You can take policy stand alone or with our business partner module or quotation system or claims system. This helps us be more flexible and cost effective as well as integrate well in the existing landscape of our customers.
Third, ease of doing business with us. It is very important that we are easy to work with and we believe we can deliver more quickly than others. For example, we helped the direct insurer Bavaria Direkt introduce their innovative new product E-Scooter within 3 months within our policy admin solution. Another big proof of quality from our point of view is successful migrations. Here we have migrated, with our customer DEVK, more than 3 million policies to date to Faktor-IPM, our policy management solution.
Ultimately what sets us apart is our constant focus on the underlying architecture of our product. We want anything we build to be flexible enough to last for 30 years at least. This might not be the ‘sexiest’ thing but in our opinion, it’s the key!
Greg: What future plans do you have for Faktor Zehn?
Jörg: Obviously we are continuously enhancing our suite. We have a user group of customers that meets annually and we tell them our future plans and collect their views on what really matters. More specifically we have just this June launched our business partner system which is an exciting step for us. We are also expanding the lines of business that our claims platform supports, for example, property.
We are also pushing into new markets. Our platform is natively designed to support different technology systems and multiple currencies and languages, and we’re already running on both Azure and AWS, so we’re already fully prepared for scaling into new markets. Benelux and Nordics are a big push currently.
The Oxbow Partners view
Faktor Zehn is an attractive solution to the classic problem of having to choose between proven experience and modern flexibility when selecting an insurance software system. This vendor has both a solid track record and state-of-the-art, API-first technology. Its well-designed software can accommodate any product definition and apply any set of business rules an insurer may require.
Based on my own experience enlisting Faktor Zehn for a motor insurance product, I discovered that the vendor’s greatest strength is the way it partners with its clients to deliver fast and successful implementations. The professionalism, expertise, and efficiency of its delivery team are truly impressive. When choosing among vendors, it can be easy to overlook ease-of-working as a selection criterion, despite how crucial this quality is to the success of the project. Faktor Zehn’s approach and execution are second to none.
The company is most knowledgeable in motor insurance in the German-speaking region. For other lines of business and other geographic markets that may be new to Faktor Zehn, expect a slight learning curve. However, the rare strength of both the team and the core software should usually outweigh any concern over a possible learning curve. I expect to see this vendor continue to gain traction in the years ahead.
by Chris Scollo, Consulting CTO