Carpe Data provides new data sources to insurers to help them price risk better and reduce fraud. They aim to disrupt the insurance data market by providing data that is cheaper, more predictive and more easily consumable by insurers.
According to Carpe Data, the legacy data currently used by the industry is not only expensive, but also insufficient to assess risk adequately. Carpe Data specialize on new data sources, for example data from social media and internet of things.
The company is currently focused on data augmentation to support commercial insurance underwriting and claims fraud mitigation, although they note there are many other opportunities.
Commercial Insurance Underwriting
Carpe Data’s commercial data product provides three key services:
Form pre-population: Insurers provide the company name and address to Carpe Data, which adds underwriting data (similar to Digital Fineprint)
Verification: the platform takes information provided by the insured and verifies its accuracy. For example, is a bar that claims to shut at 10pm advertising different hours
Predictive scores: providing additional data to support underwriting. For example, the company is looking at the correlation between customer reviews for restaurants and claims.
Claims Fraud Mitigation
Carpe Data’s other focus area is the identification of fraudulent behaviour for workers comp and bodily injury claims. They claim their platform is capable of trawling online data sources and testing whether insurance customers are making valid claims. Max Drucker, Co-founder and CEO gave a recent example: “We had one client fraudulently claiming disability cover. The system spotted him because he’d recently posted his softball batting averages and a job advert offering handyman services!”
The Oxbow Partners view
Carpe Data have had some initial success, partnering with over 20 major US carriers. They have plans to introduce an IoT offering later in 2017 and expand internationally in Q1 2018.
Oxbow Partners generally likes data companies: they are trying to solve real problems and give insurers genuine competitive advantage.
There are two challenges:
Much like Tyche (see recent Bitesize), we are concerned about the lack of barriers to entry in their business model. What is stopping data giants such as LexisNexis investing in their own ‘new data’ platforms?
We see the length of insurers’ sales cycles as an issue for cash and time poor startups. Max acknowledged this but reassured us that the company has “planned a 12-24 month sales cycle into our business planning.”
George oversees projects across strategic, operational and technology topics and spends most of his time working with specialty and reinsurance clients.George joined Oxbow Partners as a consultant following completion of his first-class degree in Economics and Philosophy. On his journey to principal, he has worked on many of Oxbow Partners’ most challenging and high-profile projects. These projects include developing a group-wide strategy for a global reinsurer, completing an end-to-end target operating model review for a leading (re)insurer and developing smart follow strategies for multiple syndicates.You can find George’s writing on his areas of focus on the Oxbow Partners blog, as well as in the trade press.