Bitesize InsurTech: Cognotekt
April 21, 2017 Chris Sandilands
Cognotekt automate insurance processes using artificial intelligence.
Founded in 2013 by Jobst Landgrebe, an applied mathematician by training and management consultant by profession, Cognotekt is currently focused on automating personal lines claims in the German market. Other processes are in the pipeline – but Jobst notes that appetite for claims is highest.
Arguably in line with the German Mittelstand tradition, Cognotekt has not raised any VC funding, but is already doing EUR2.5m of recurring revenue.
What does Cognotekt do?
Cognotekt writes software to recreate processes currently carried out by humans. Possibly reflecting his consulting background, implementations start with a period of “listening”, where developers (literally) watch how existing staff perform processes. They then build software to automate these process.
Where is Cognotekt applied?
Cognotekt’s most established product is currently for German (motor) windscreen claims. Cognotekt’s systems are developing a deep understanding of different claims types and building a “reference bill” for each. When an actual claim is found to deviate from the reference bill, a flag is raised.
The business is now moving into motor physical damage claims and disability insurance claims (all in Germany).
Does it work?
The platform is currently live with a number of German insurers. They claim (but we have, as ever, not validated) that their technology can reduce the combined ratio by 15-20 points; approximately 5 points via labour efficiencies and another 10-15 points via improved claims cost management and fraud detection.
Jobst points out that some German insurers check claims more thoroughly than others – some merely check for coverage but then pay the claim amount without significant validation. These insurers clearly have much to gain from an intelligent claims validation solution.
The Oxbow Partners view
We are impressed by the Cognotekt proposition. It would appear that this company has two advantages over many others in the market. First, it is more advanced than many AI startups and more than just an idea. Second, we like the “listen-first” approach.
We pointed out in a previous Bitesize on Emerge Analytics (link) that the challenge for many early stage, innovative technology companies will be getting their technology implemented and adopted by companies. Technology is not just a “procure-and-you’re-done” exercise – note that many software houses have implementation partners like the Big 4 and Accenture.
Given that these partnerships are not available to most startups, we feel that having resource in house to “listen” to clients’ existing processes will help insurers work with Cognotekt.