The Asia InsurTech Podcast caught up with Manuel San Miguel, a co-founder, and the CEO of Ignatica to talk about some of the changes, both good and bad, that the insurance industry has experienced over the last 18 months. It has been almost that long since we last spoke with Manuel and the world is a very different place.
Michael Waitze
Okay, we’re on. Hi, this is Michael Waitze. And welcome back to the Asia InsurTech Podcast. This is the only podcast in Asia, focused on insurance that gives entrepreneurs, thought leaders and investors a platform to discuss how technology is reshaping the insurance industry in Asia. Today, I’m joined by Manuel San Miguel, a co-founder, and the CEO of Ignatica. Manuel it’s great to have you back on the show. How are you doing?
Manuel San Miguel
I’m doing well. It’s a pleasure to speak with you again, Michael.
Michael Waitze
I went back and checked and the last time you were on the show was January 13th 2020… Which honestly feels like a lifetime ago.
Manuel San Miguel
It has definitely been a lifetime, if not two. It’s amazing to me to just think about how much has happened in the last 18 months, just in the world, in general. And in our life specifically.
Michael Waitze
What do you think are some of the biggest changes you’ve seen in sort of the insurance and InsurTech market since we last spoke almost 18 months ago? And then I want to get to some of the other changes that the world has seen. But what about the market in which you operate?
Manuel San Miguel
Well, it’s been an interesting 18 months to say the least. So obviously, COVID changed the landscape in a number of ways. So and it’s reflected in the InsurTech space, as you’d imagine. Obviously, there were certain industries that were very heavily hit travel, of course, f&b. So InsurTechs, that were focusing on servicing, the insurance needs of those industries suffered heavily, even some of the major incumbents had to really adjust their business models. Folks that have been servicing the insurance industry as a whole had to adjust to the reality of remote work, remote selling, where and when that was possible, and how to make it happen, where and when it wasn’t. So there’s been a lot of challenges, but also a lot of opportunities, I think across the whole insurance industry, just due to COVID. When you add on top of that, the attack on impacts around economic development changes in the pace of economic development, both because of COVID and outside of that as well. So it’s been a it’s been a dramatic, 18 months, I’d have to say,
Michael Waitze
And what do you think has happened? So in other words, has that does that change in the economics? Has it accelerated? Has it slowed down? From your perspective?
Manuel San Miguel
It slowed down at first, because everybody put on the brakes. I think if you look back to April, May, June of last year, I think a lot of insurers across most markets, just put the brakes on anything, because it didn’t know the size and shape of how things were going to pan out. And then over the last half, what you saw was acceleration as folks rush to try and capitalize on opportunities to be able to service the needs of clients and the changing world. And also, I’ve seen a lot of acceleration, especially around new ways of working. So companies in the insurance industry that have traditionally been very heavily paper based, and very hands on operations, both in the front and the back office, now have to adjust to the reality of, you know, folks aren’t coming to work in the office as much so you can’t have a business process that’s based on moving paper from one side of the building to the other. So that has seen an acceleration in trying to define for themselves what digitalization really means, what transformation really means and how they can achieve it.
Michael Waitze
And do you think that’s changed? Right, because it’s a really good point. If I go back and listen to the episode, not just that I did with you, but that I did with a whole bunch of other people back in January, and February of 2020. Again, it seems like a lifetime ago, I’m sure we spent some time talking about digital transformation. And you know, how incumbents are dealing with firms like yours and other firms that are trying to help them. As you said, like not move paper from one side of the office to the other side of the office. When you go now to talk to these companies, or even like in the middle of last year, did you see just a massive change in their attitude about you, we definitely need this stuff. Even though we didn’t think six months ago, we did.
Manuel San Miguel
I would say that there’s definitely been a strong shift. Very few, unless it was in an industry that suddenly had to reinvent itself. Again, if you were a mostly a travel insurer, and the travel industry went went flat, then that’s, of course, a burning platform. Other market verticals, I think that there’s been a definite push, there’s been a much greater sense of urgency around it, there’s been a greater sense of, of kind of engagement from the top level to say, this is something that we need to be spending time money and attention on not just as an innovation pet project, but as a way of really redefining how we operate and how we service our clients. That said, the flip side of that equation is that, since it’s real for people now, right, there’s also equivalent levels have kind of trepidation and anxiety around, we need to make sure that we get this right. We need to make sure that we don’t disrupt our operation while trying to transform it. And folks are trying to figure out how to really make that happen,
Michael Waitze
Do you get the sense that they feel like there’s just like, what they get one shot at this. In other words, if they digitally transform in a way that’s wrong is maybe the wrong word. But you know what I mean, right? If they go down the wrong path, that coming back and starting over again, just gonna make things a lot harder?
Manuel San Miguel
Well, I think what happens is, you know, the deeper that you go down into the value chain, the higher the stakes are. If you mess up the printing on your website, it’s embarrassing. If you mess up the way that you process, a client’s claim that the way that you calculate their, you know, their interest, their savings, dividends, etc. The stakes are much higher, both from a risk exposure from a regulatory exposure from, you know, really disappointing your clients. So as they start recognizing that transformation means more than just making the engagement layer be more, more captivating. They realize that the stakes are higher. And so far, a lot of the conventional wisdom was the deeper you go into the business, the harder the riskier, the more difficult it is. So really be sure you know what you’re doing before you get into.
Michael Waitze
Yeah, we used to do this a lot when we were implementing new technology in the in the portfolio trading business. And I think it’s kind of the same, in the sense that the sort of front facing trading technology, obviously was important because we were touching the market, but it was more like the back end operations and processing and settlement systems where you’re almost didn’t want to touch it, because you knew they worked, and you knew things were gonna settle. And I feel like there’s an equivalency between that, and maybe the customer admin systems at an insurance company and an insurer tech company where, like you said, you could change the UI and UX, make it more seamless, you know, take some friction away. But if the backend doesn’t work, now you have real problems, because you’ve got 60, 70, maybe 100 years of data in it. Is that fair?
Manuel San Miguel
Oh, absolutely. And and even if you don’t have that long of a history from a data perspective, your exposure from, from a risk of the implications of getting that wrong, can be quite devastating. So understandably, folks are pretty risk averse, around, you know, tackling those kind of those kinds of projects. And the opportunity for us really lies in changing the playing field for that kind of decision. So when when insurers are having to evaluate saying, Listen, what the technologies and the platforms that got us here are not the ones that are going to take us forward where we need to be in the next, you know, 2, 3, 5, 7 years? How do we pivot forward? How do we evaluate the technologies in a way that doesn’t mean that you know, the back of a, of a smile and a nice PowerPoint presentation, we’re not going to put all our eggs in this one basket, and hopefully the best, you know, the choices that they’ve had available to them, to really tackle this part of the value chain differently have been quite limited to be real. So, frankly speaking most of the platforms that handle that kind of core policy management and kind of client administration, policy, administration, accounting, etc. Most of those platforms are kind of, you know, I hate to be unfair, but they’re very, very close to each other and the way that they’re designed, right, so they’re very predictable, they’re also come with the same predictable challenges over time. And they come with the same kind of predictable cost basis over time. So, you know, you see a whole industry around RPA, springing up, to basically say, let’s try to make this you know, a little bit faster and make it be a little bit less painful, without having to actually change it, because we feel that there’s nothing that’s different enough to change into, that’s going to make a significant difference. And that’s really the opportunity that we’ve capitalized on in providing that, that option.
Michael Waitze
But do you think you run it, not you, but do you think one runs into issues if you’re just taking an existing process, and then you just RPA it’s for people who don’t know what RPA is, I presume you mean robotic Process Automation? You just take an existing process and automate it, you may actually, like automate a bad process, if that makes sense.
Manuel San Miguel
You almost always automate a bad process. Now, if it were a good process, if it were good and seamless, and makes sense, you would have already automated and long ago, half of the time is the exception handling the ugly paper process, the one that you have to you know, input form and five different screens. Those are the things that you automate. The with RPA, the challenge that you have is, now whenever you need to change a product or a service, or launch a new product, or a service that touches that, it’s yet another layer two of technology that needs to be analyzed, changed, tested, tested across everything that uses it. So you’re actually adding additional layers of cost and complexity to the business, in order to avoid the kind of the perception of risk of really thinking differently about how these processes are meant to work.
Michael Waitze
Yeah, which in a way feels to me like counterproductive. Again, just getting back to the stuff that we did in the portfolio trading business, what we tried to do is eliminate a whole bunch of old processes automate things anyway. So that everything can be more efficient, and we created less friction, but you make a really good point, if you’re not doing that. And if you’re raising the cost or keeping the cost the same, it’s almost slightly counterproductive in a way.
Manuel San Miguel
it is, I think the trade off that you have, and it’s a trade off that to be fair number of people are comfortable with is you are increasing throughput, and increasing volume and predictability. And if you automate certain processes, or around certain product lines that maybe don’t change that much, or that often. It is a, you know, it is a calculus that that a lot of people are comfortable making. The challenge is when you now come into some of both the challenges and the opportunities that we saw over the last 18 months, where you have an opportunity to now really rethink the whole thing. From a process perspective, from a servicing perspective, now, what became a bit of a life jacket is now becoming a bit of a sea anchor, because that much more that you need to change and manage as you move forward to try and evolve the business.
Michael Waitze
So you mentioned earlier that work has changed, right? Has it changed a lot at a Ignatica? And has your team become more distributed? Or was it always like that from the beginning anyway?
Manuel San Miguel
we were we were slightly distributed. we’ve, we’ve obviously grown quite a bit over the last, the last 18 months. A lot of our of our development kind of back office is based is based in India. And that has grown. We’ve got some some additional operations kicking off in Southeast Asia and in Europe. So that has grown to become a little bit more distributed. Some of the impact to us to be frank has been really, fairly recently, as the spikes in India came up a number of of our team and or their their loved ones have been impacted and affected directly by COVID. So that’s something that as an organization, we’ve worked very hard to try and support them and and make sure that we could keep the lights on but also take care of the people who take care of us of course.
Michael Waitze
Yeah, I mean, it’s been really India has been a really difficult problem, right? And in this region where a lot of this sort of tech and tech outsourcing just tech development is based. It’s not just Ignatica, it’s a ton of other companies that have had to deal with those types of problems. It’s been hard for everybody, right? And our heart goes out to all those people for sure. What is it like in Hong, you’re in Hong Kong, right? What is it like in Hong Kong now? Like, I haven’t heard any noise? Are people getting vaccinated? Are things opening back up again, have there been spikes?
Manuel San Miguel
We’ve had a couple of waves but but honestly, when you compare it to the rates of both infection and impact that you see across the rest of the world Hong Kong has, is I think, managed that really quite successfully. Even when we’ve had, you know, a massive wave where you start seeing lockdowns, that impact really just closing times in certain venues, you know, restaurant gyms, etc. and recommendations around portions of people working remotely. The reality is you’re seeing, you know, at peak levels, sometimes, you know, 50 100 cases a day, and then it pretty quickly starts petering down to a fairly low level. So within Hong Kong, I think life now has has kind of settled on a particular pace of, of normal vaccination rates are starting to climb over there a little bit sluggish. To begin with, I think the the largest challenge is really around travel. There’s still obviously significant amounts of kind of quarantine on the way in. And that impacts the ability for for folks to actually do some, some travel in and out whether it is to China or to other territories.
Michael Waitze
Yeah, I mean, again, I’m remembering back in January 2020, when we spoke for the first time, and it just feels like a complete time of innocence and calm before the storm. Like there was no way we could have known what was going to happen and the havoc that was going to be reached globally by COVID-19.
Manuel San Miguel
Absolutely. And you know, that has, has far reaching implications. And we’ll continue to have them in people how they organize their businesses, how they think about, you know, establishing relationships, servicing relationships, commercial relationships, it’s just a lot of stuff that we took for granted the ability to say, Hey, I’m going to jump on a plane, and in a few hours, I’ll be down in Singapore, I’ll be in Bangkok or in Tokyo. Well, doesn’t quite work that way anymore.
Michael Waitze
I mean, it’s so strange, right? So for someone like I am, I moved to Tokyo in February of 1990. And I was probably on a plane five or six times a year for 30 years in a row and for the last 18 months, nothing is really nothing. And that’s very strange for me, and I feel like you’ve probably had the same experience. Yeah,
Manuel San Miguel
This is the longest that I’ve been in a single city in my certainly my adult life. But I go a little bit far back.
Michael Waitze
Yeah, same here. I think since the time I got on a plane to go to Kyoto to do my study abroad. This is which was when I was like, 19, or something or 20. So it’s been 30 something 35 years, right? This is the longest that I’ve not been on a plane. Indeed, indeed. Very strange. Look, let’s um, I want to know, if you’ve implemented any sort of data strategies were like 18 months. And so last time, we talked a ton of stuff has changed. Did you know Yeah, using artificial intelligence and machine learning and all the data and stuff that you’re gathering? What do you do with all that stuff?
Manuel San Miguel
So funny, you should mention that data is actually a key part of our of our strategy, and is a key product offering that we’re that we’re bringing to market now through our Data Cloud. So last time, we spoke, we spoke a lot about how part of our platform which, you know, part of our SaaS suite of tools, which is really around how you are defining building, launching the the actual the insurance products are kind of our admin suite, which is how you’re actually managing the policies, the complexities, the rule sets, transactions, accounting, finance, IFRS17, all that stuff. The third kind of big pillar, as we move kind of deeper into the backend is really our Data Cloud, where we’ve kind of taken all of the data that you process not only from a product perspective, transactionally, but also making it available for all of the other external data sources that our clients are managing, and then putting it in so we can start applying advanced analytics, machine learning models, tools, etc. that help us provide insights back into the insurers around things like you know, product performance, what they’re doing in terms of their, you know, their risk models, real time monitoring on how products are behaving so they can dynamically adjust. premium rates conditions, make sure that you are keeping your model assumptions on track instead of having to wait for you know, months if not quarters to get that data because it’s siloed in the traditional legacy systems, we’re able to basically free that data from those silos and present it out in a way that the that the insurance can now capitalize on that data as an operational asset. And that has been, has been quite successful for us actually.
Michael Waitze
So does that mean you’ve built your own sort of ml ops infrastructure, and now you have a big data analysis and data science team as well.
Manuel San Miguel
So we have all of our data infrastructure and the data engineering around, you know, ingestion, consumption, and etc. And we now have a lot of key partnerships that are not only bringing the data science that we’re applying as part of, you know, building out our standard set of tool sets. But they’re also providing all of the the actuarial background and the actuarial perspective around the product and risk analysis. So things like being able to work with an insurer and say, Hey, this is what your you know, your product performance is looking like, it looks like your forces selling, you know, under the underwriting limits, you can take a whole bunch of this demographic and actually upsell them, no underwriting required to higher limits, you know, things like that, being able to understand where the product profitability models are going, understanding, you know, if there are products on the on the shelf that you should have, but you don’t because they’re out in market is something that would fit their, kind of their, their normal risk profile, and they have the right market for it, but they just haven’t developed it. So all of that kind of analysis are things that we’re able to provide out. So that’s been, that’s been an interesting and interesting advantage for us. Because we’re also starting to work with folks on developing fraud models that are looking at transaction patterns across, you know, across the whole data set, because we have the kind of fully provenance data stream around all of the financial transactions. Really, the challenge that a lot of the machine learning models and machine learning projects that we see have is in the consistency, the steady input and the quality of the data that you’re that you’re feeding the model. So you can be operationalized. One of the kind of advantages of our platform and how we handle transactional data, is that we’re able to feed a steady real time stream into the platform to feed those models. So that’s been that’s been quite exciting for us.
Michael Waitze
And as that’s, it’s fascinating, right? And as you expand into other markets, right, we’re maybe the sort of history of data is not as robust as it is in, let’s say, Hong Kong. But as you move into other markets, are you finding the necessity to use what I’ll call sort of alternative sources of data, you know, like the way people use their cell phones, or pay their cell phone bills and stuff like that?
Manuel San Miguel
That’s actually interesting you mentioned that we’ve, we’ve worked on that with, with companies that are using that kind of data for alternative underwriting and then risk modeling. So when you have large sections of the population that are unbanked, or that, that you just don’t have the large datasets, we’re working with a couple of other companies that are again, part of our part of our family from some of our investors, where we’ve managed to create a little bit of an ecosystem play, where they’re really focusing on how to do certain levels of underwriting, specifically focusing on things like cell phone use buying patterns for folks that are, again, un or underbanked. And creating some alternative data set models to say, this is how we get at for underwriting and also in terms of claims processing as well. How are you using different kinds of data to understand you know, the potential for fraud risk in certain markets, and be able to flag certain claim submissions to be automatically processed, or some that need to be reviewed a little bit more? Yeah. But those are kind of interesting model.
Michael Waitze
Yeah, just fascinate what happens with some of these alternative sources of data. Do you want to talk at all about and this is a little bit of old news, but new to me. You wanna talk a little bit about the significance of this DauBao and EasiTech and sort of Ignatica Alliance?
Manuel San Miguel
Sure, I mean, it’s a it’s like I said, it’s something that we’ve been working on for a while. It was kind of interesting. When we, we connected with them, especially through through EasiTech and which is their international expansion into into home. Kong and then from there and Southeast Asia. So they’re obviously a very large player within Mainland China that they provide both brokerage services, as well as technology to supporting brokers. And they reached out to us for a number of opportunities, especially in Hong Kong for insurance companies that were looking for access to the mainland Chinese visitor market, which is a significant segment, especially for life insurers in Hong Kong. The DauBao technology, allowed them to source and, and start servicing some clients within Mainland China and connect them to insurers here, they wanted the ability to be able to say, hey, from a broker perspective, we want to provide all of the quotation services, we want to provide some servicing straight digitally, there’s an opportunity here for synergy with the broker tools and the product creation and policy administration tools, let’s actually start approaching insurers, both within the mainland and outside as a bit of a joint proposition. So that has been really interesting because it gave us a different set of inroads into the broker market. And it has opened up a lot of connections with carriers within Mainland China, for us to be able to service them directly.
Michael Waitze
Yeah, and it just, it just falls into this category that I like to call no one succeeds alone. Do you know what I mean? So to help, it never hurts to have like some great alliances going. I want to ask you, this is, um, it’s a little off topic. But I noticed that you also I think you went through a program at China accelerator? What was that? What was that? Like? Actually? I mean, the SOS V, the China accelerator. It’s kind of like this big infrastructure. I don’t know that many people that have been through it. I’m curious what your experience was like, and was it in person? Or was it virtual for you guys?
Manuel San Miguel
Well, normally, the program is meant to be in person in Shanghai, obviously, thanks to COVID this was a, it was virtual. But it’s actually a really, really positive experience. You know, as you go through the kind of the startup journey, there are a number of opportunities and and you have a number of temptations around whether to join accelerator programs, what value do they really add, when you have a very experienced management team? Is that really going to, to add value to your life? Or is it just another thing. In some cases, is actually tied to investment. So someone say I’ll invest with you, as long as you go through this particular kind of program, so forth. So we’ve been approached by a number of accelerators, both within Asia and actually out of New York, in Europe as well. And we had basically decided not to participate in a number of them. When we met the folks from China accelerator, were actually quite impressed with the team were impressed with the network. We were very impressed with their network of mentors, which to be honest, was actually a really key element of the program was a connection with a lot of individuals from multiple industries, but a lot of them that were very relevant to us, that had very keen insights and helping us everything from organizational structure, growth strategies, just introduction to you know, key players across multiple markets, and introduction, even to a lot of a big investor network. So they were actually very, very supportive. They were excellent to work with, and they were quite challenging and making sure that we had actually thought through what are the go to market strategy the product placement are our business models, how we were approaching our growth plans, and our scale up plans, how we were approaching our fundraising strategy. So they were really quite, quite influential in helping us get to kind of the next step and prepare for major fundraising, which we were quite successful at, in closing or early April this year.
Michael Waitze
Yeah, I want to get to the fundraising in a second, but I just want to comment on the accelerator programs. And I think, in my mind, a great accelerator program is like a great university professor, the really great ones challenge you, and it’s hard when you’re going through it, but when you’re done, you’ve actually learned something and accomplished something. So fair enough.
Manuel San Miguel
Absolutely. And to be fair, you know, especially from the management team, we’re all on the other side of long careers and enterprises, long careers as intrapreneurs etc. So you come within it with a certain level of “Oh, yeah, I know how to do that.” But the reality is that being challenged and being sure, yeah, I know, you know this, but you haven’t done it. So get on with it. And having someone to actually keep you honest around those things was incredibly valuable for us. And help us recognize that, you know, all the things that we say we know in our heads are, how they should be, but we just haven’t gotten around to it. We need to have an organization, a team and a structure that helps us get on with it. And they were great at pushing us off.
Michael Waitze
Yeah, it’s a pretty incredible team. And I will admit this in public as well. There are certain things I thought I knew three years ago, but after having just like, been through the building of my own business, I didn’t know anything.
Manuel San Miguel
Yeah, it’s a it’s, it’s a growth opportunity. For sure.
Michael Waitze
Let’s talk about the capital raise, and then I’ll let you go. You announced I believe in April of this year. A pre-series A funding of $7 million, which is a lot of money. And from a killer group of investors. Yeah. Including SOSV. Again, a great team. I think that whole that whole infrastructure, there is really good. What was that process like? And was it made more challenging by COVID?
Manuel San Miguel
It was made more challenging by COVID in the sense that the way you’re connecting with the different VCs, well, you know, before you would be able to meet people in person could give tours of the office and meet the team. Now, essentially, you’re trying to convince someone to give you money over the internet. So it’s a little bit of a different positioning, a lot of the kind of the the normal kind of fundraising, events, networking, etc. You know, you’re doing there’s also virtual events and zoom calls, which creates this kind of slightly different atmosphere. The process itself to be very, very honest with exhausting. Yeah, for sure. But, but it was, but it was also great. We were We were very lucky to work with a very professional set of of investors and, and do leads, even with some of the VCs that we’d have to turn away, because we were we were quite heavily oversubscribed, for for around good stuff. So yeah, it’s a great problem to have. But, but nevertheless, there was a lot of interest for some, from some really great investor groups that were to this day, even though they were not part of the round, they’re actually still reaching out, still making connection being a device and saying, Hey, we’re keeping an eye on you guys. We wouldn’t want to be part of your, of your stage. So, so that was great. And again, the team at China accelerator, NASA was the was, was great in helping us prepare for that. Our leading investor at the Lincoln capital, wonderful to work with. Very, very demanding as you’d expect, but, but wonderful to work with. And we were pretty lucky in being able to, you know, in spite of COVID, you know, year end, Chinese New Year, all that stuff going in making sure that that first, that first quarter, we were able to really close the funding campaign quite successfully.
Michael Waitze
I like to ask people if they feel like there’s more pressure on them prior to raising that, or excuse me after they raise then prior just because now it’s real. Do you know what I mean? There’s no more aspiration now. It’s just like execution? Yeah,
Manuel San Miguel
Absolutely. And, you know, you think that Oh, finally, we, we finished fundraising, now we can get on with it. Right? The reality is that you start preparing for and you start planning and you start deriving what you’re doing for your next round. About two weeks after you close the first one. Exactly. So just Yeah, not so much. But, but it is great, because again, the same way as, as you mentioned before, the good accelerator programs, the good investors are actually now well literally invested in your success. So there’s more pressure, but there’s also a lot more support. They are challenging and have high expectations, but they are opening doors and providing support, they are providing resources. So in a way you feel that you have now an even larger kind of support machine that’s really looking to drive things forward. So that’s also been Of course, a wonderful positive to the whole thing.
Michael Waitze
Yeah, in a way it feels like before you raise money that you’re kind of operating in a vacuum and that, you know, on the extreme, nobody cares at all what you’re doing. And then after you raise, it’s like, Why does everybody care so much?
Manuel San Miguel
Yeah, it’s a funny thing. There were a lot of people that I hadn’t heard from in a long time that certainly came out of the woodworks but that’s also part of the nature of the beast.
Michael Waitze
Absolutely. Look, I don’t want to keep you any longer. This was an awesome conversation, and it was great catching up with you. And let’s do this again sooner rather than later. It was my pleasure Manuel San Miguel, a co-founder and the CEO of Ignatica. This was awesome.
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