QBE Insurance Group (QBE) has announced that QBE Ventures has closed an investment into Cytora, a three-year-old London-based start-up that uses artificial intelligence (AI) and open source data to help commercial insurers lower loss ratios, grow premiums and improve expense ratios.
In addition, QBE has entered into a commercial use agreement for the Cytora product. In 2018, the Cytora Risk Engine will be deployed across QBE property and casualty lines.
The Cytora Risk Engine, driven by machine learning algorithms, combines an insurer’s internal data on a specific cover with external information from a broad spectrum of sources. This generates a risk score, which provides enhanced insight into expected claims activity on the whole portfolio and also at an individual risk level.
The system helps to identify patterns of good and bad risks over time. These insights enable insurers to achieve improved loss ratios and premium growth while delivering more accurate and fair prices to customers.
Mr Richard Pryce, CEO, QBE European Operations, said: “Combining external information with our own internal intelligence gives a more complete view of a risk which in turn enables QBE to provide protection to our customers at a fairer price that reflects the true level of exposure. The partnership with Cytora enables us to accelerate the adoption of advanced analytics in our business and complements the expertise we have been developing in-house.
“Cytora’s technology has broader application beyond risk scoring and will enable us to identify attractive areas that match our risk appetite and expertise but where we are currently underrepresented. This will assist us to focus our efforts on the customer relationships where we can add greatest value.”
Mr Ted Stuckey of QBE Ventures said: “This is the second significant partnership QBE has made since setting up QBE Ventures earlier this year and demonstrates our commitment to engaging globally with start-ups from both an investment and commercial perspective.”
The first partnership announced at the end of October was with RiskGenius, a machine learning platform for analysing policy wordings.
QBE Ventures' investment is part of a GBP4.4 million (US$5.9 million) funding round for Cytora with other investors including Starr Global Holding, Cambridge Innovation Capital, Cambridge Enterprise, Parkwalk Advisors, and an array of angel investors.
Cytora has been working selectively for the past year with a consortium of commercial insurers to embed its technology. These insurers, including QBE, XL Catlin, and Starr, have gained early access to Cytora’s Risk Engine prior to the technology becoming available to the wider market.
QBE Insurance, listed on the Australian Securities Exchange, is one of the top 20 global insurance and reinsurance companies as measured by net earned premium and has operations in 37 countries. QBE Ventures is the venture capital arm of QBE Insurance.