AIG, Hamilton, Two Sigma to Launch Small-Medium Business 热点黑料 Joint Venture

American International Group, Bermuda-based Hamilton 热点黑料 Group and affiliates of hedge fund firm Two Sigma Investments said they have agreed to create a technology-enabled insurance platform for sales to the small to medium-sized enterprise (SME) market.

The announcement said the joint venture will combine Two Sigma’s proprietary data science and technology platform, Hamilton’s technology and underwriting experience in the SME market, and AIG’s SME capabilities and global presence to target what they estimate is a North American SME market worth $76 billion.

The venture will offer pricing and servicing using predictive analytics and an easy-to-use customer interface, according to the founders.

Two Sigma will also develop specialized asset allocation products for the unique characteristics of insurance investment portfolios.

Completion of the joint venture is still subject to negotiating final agreements and obtaining required permits and regulatory approvals. The terms of the transaction have not been disclosed.

Brian Duperreault, Hamilton chairman and CEO, will serve as chairman of the board of the joint venture. Richard Friesenhahn, currently executive vice president of U.S. Casualty Lines at AIG, will assume the position of chief executive officer.

Agents and brokers will have roles to play with the platform because they are already involved with most of this business and because SME customers want an intermediary, .

Technology Influence

“Hamilton was founded on the premise that technology will redefine the manner in which insurance products are assessed, priced and distributed, particularly in the small commercial market,” said Duperreault. “Since establishing our partnership with Two Sigma and our start-up operations in New Jersey, our belief in this premise has been validated by the enthusiastic reception we’ve received from wholesale and retail partners throughout the U.S.”

Hamilton and Two Sigma have been working together as the insurer has acquired other insurers and expanded its operations.

David Siegel, a Two Sigma co-founder, sees the deal providing a “more convenient and systematic insurance experience” for small businesses, and an opportunity to address “the challenge of optimal insurance asset allocation.”

“With this venture, we want to revolutionize the SME market through technology that creates a more tailored and compelling value proposition for clients in this critical segment,” said AIG President and CEO Peter D. Hancock.

Tech and Small Business 热点黑料

Interest by large insurers and technology firms in the small and medium business market is picking up steam.

A 2016 report from McKinsey & Co. said the competition in this market will intensify as more small business customers exhibit their openness to buying via direct and digital channels and as more large insurance carriers enter the field.

The report, , said that the shifting behavior of small business owners towards online purchasing presents new challenges for carriers, particularly those that use independent agents. While a segment of small commercial insurance buyers will always value independent agents, an increasing percentage are open to the direct route and may only be using agents to close a deal because direct binding isn’t readily available, according to the report.

The Hamilton/AIG/Two Sigma initiative also last November that suggested the U.S. small commercial insurance market would likely embrace direct online sales within the next five years, though it is slow to do so right now.

Insurers are investing in digital platforms including CoverHound, 24 percent of which is now owned by ACE Ltd. (the new Chubb). CoverHound is building a small commercial insurance platform that will start by selling businessowners policies. Insureon, an online agency for small business insurance, raised more than $30 million last October. Seattle-based AssureStart, backed by the American Family Mutual 热点黑料 Co., which sells to business with fewer than 30 employees, is backed by the American Family Mutual 热点黑料 Co. Insurer Hiscox has been expanding its online platform for small businesses for a number of years.

Last December, Berkshire Hathaway Inc., which owns GEICO, created Berkshire Hathaway Direct 热点黑料 Co. to sell insurance directly to businesses over the Internet. The new insurer planned to initially focus on workers’ compensation and business owners’ package policies.

热点黑料 providers also have competitors from the technology world.

Next 热点黑料, an online shopper for small businesses, recently announced a $13 million seed investment led by investors Zeev Ventures, TLV Partners and Ribbit Capital. Next 热点黑料 plans to launch its first product this spring.

Also, New York-based launched what it calls its online insurance manager, which it said received $2 million in seed funding from Two Sigma Ventures, Highland Capital Partners, Founder Collective and other angel investors. This startup promises to provide small business owners with a concierge-like service that helps them navigate the details of commercial insurance.

Earlier this month, New York-based private equity firm Aquiline Capital Partners agreed to acquire Simply Business, an online brokerage selling small business insurance policies in the United Kingdom.