Second, customers expect a one-stop-shop. We anticipate these
trends will continue and even accelerate. Small vendors or niche
players will find it difficult to be competitive and keep pace with
innovation. Sapiens’ own M&A growth strategy is centered
on three key factors: growing our customer base, expanding
geographically and adding complementary solutions to our
portfolio—all while we ensure our continued high quality of
services and product delivery.
MIKE JACKOWSKI: I believe the
pace will continue. We are going to
see a steady trend of new interests
and an increase in private equity
and venture capital in the overall
landscape. There has been a lot of
noise around insurtech and I think
it’s based on the increasing trend of
carriers replacing their legacy technology and applying technology to
drive more effective business results.
In terms of our thinking at
Duck Creek, we are focused on
acquiring solutions within the insurtech space that we think will complement our core solutions.
We are looking for solutions that are value-add to our customers
and to the industry as a whole. One thing different about our
strategy is we are not looking at other core platform solutions by
way of acquisition. We believe we have the most configurable and
agile platform in the industry, which is applicable to carriers of
nearly any size. Some of our competitors are acquiring somewhat duplicative solutions in the policy administration space
because they perhaps have gaps in supporting specific product
lines or have struggled to scale their solution down to smaller or
mid-market carriers. We believe our solution can span the gaps
so you are going to see us focus our energy on technology that
optimizes outcomes through digital, data and enhanced channel
capabilities. That’s why we acquired companies like Agencyport
and Yodil; it’s the direction we will
continue to pursue.
JEFFREY GLAZER: In my office,
I have what I call a checkerboard.
Every square on the board has a
different function in the P&C space
that can benefit from technology.
Our goal is to make sure we have
at least one asset—and in many
cases more—to deal with every box
on the checkerboard. While some
companies are acquiring direct
competitors, Insurity will continue
to buy more niches to fill out the checkerboard. A few years ago
it was more about buying competitors and growing your market
share in that fashion. We’ve moved beyond that point now. When
we look to acquire, we are looking for solutions that help address
market needs, bring value to our customers, and enhance our
functionality. I’m confident we’ll buy three or four more compa-
nies in the next few years, but they likely won’t be straight policy,
billing, or claims companies. They’ll be companies that offer spe-
cific capabilities that fit into our flow and fill the checkerboard.
KETAN MEHTA: I absolutely
believe the market will be consolidated. We have too many core
systems players in the market.
I also believe there will be an
insurtech-type company that will
become part of the larger players
and that will spur more activity.
ED OSSIE: We think the pace
will absolutely continue, although
the number of targets will be
interesting. The number of firms
coming through insurtech continues to increase, but that will create more of an investment
opportunity than an acquisition.
ITA: Does being a publicly traded company
make it easier to acquire companies?
RYU: It helps a lot. We have something I think is unique for
our sector—access to capital markets. We have a balance sheet
approaching $700 million in cash with no debt. On top of that,
we are able to use our equity as a currency. In an acquisition
context it would be possible to use that as a currency in employee compensation. That’s hugely valuable because talent likes to
be rewarded in a way that is difficult to do for a private company. It’s a competitive advantage.
ITA: At our recent conference, ITA LIVE, a speakers said, “We don’t think our company will disrupt the big players in the industry. We want to
work with those players to fill the gaps.” Do you
view insurtech startups in the same way?
AL-DOR: Insurtech is driving the insurance market to a new
place—something that only young, small, and innovative companies can do in a traditional market. We distinguish between two
kinds of insurtech—those start-ups trying to disrupt the carrier
model (like P2P insurance); and those helping to propel the digital
transformation of this industry. The first types will be able to fill