Investment in Applied Systems is not a sign of disruption to come and “testament to the independent agent being strong”.
Capital G, part of Google’s Alphabet group, has stated that it has invested in Applied Systems thanks to the strength of broker distribution.
It was announced on Tuesday (16 October) that the minority investment company has taken a stake in software house Applied Systems.
Capital G representative, Jesse Wedler, said the move is “testament to the independent agent being strong”.
Asked if the deal was a vote of confidence in the broker market, he continued: “Our investment will only do well if independent agents do well. We are voting with our feet.
“If we thought it [broker distribution] would disrupt any time soon we would not be investing.
“We think the broker market has nice stability for the foreseeable future.”
French expanded the point and noted that Applied also would not have invested in the UK if it had concerns about the broker chain.
“What we saw in the UK was a market that was aged. We wanted to bring better choice and tech to the brokers and we think this [the deal] accelerates that.”
There has been discussion in the market for some time about how tech giants such as Amazon or Google might disrupt the insurance market.
For Capital G the investment is a long term one and there is now set shelf life for the deal.
“We are approaching markets where we can add value and we look for great teams delivering great technology and value.
“Applied was an instant match for us,” Wedler noted.
Capital G does not yet have any other investment in insurance technology. Wedler explained that the business would not invest in any company in direct competition with Applied but was interested in other forms of insurance technology.
Reid French stated that Applied stood out for a number of reasons: “Most of the software houses are focused on one geographical market. Applied is in the UK, the US and Canada. We have scale and scale does matter.”
Wedler added: “Applied is not a start-up. We were impressed by how early in the game Applied started to look at the cloud. It made Applied stand out.”
The pair did not say where the partnership could take Applied in terms of new technology adoption with both stating that it is “too early to say” but rolling workshops for Applied staff on machine learning are already in the diary.
French commented: “It is a good ally to have because of all the areas of technology that Google touches.”
Wedler added: “We are excited too and there are a lot of ideas.”
Addressing insurance technology as a whole Wedler advised he could see a lot of similarities with the banking sector. He did remark that insurance can be slower to adopt tech than other areas.
“We have not made as many investments into financial services because we have not seen people innovate as quickly as we would like,” Wedler admitted.
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