Blockchain and AI-driven start-up AllDigital Specialty has hired Eric Micheals from Hiscox USA as CUO and COO as it builds out a twin-track offering as an MGA and technology as a service (TaaS) provider, The Insurer can reveal.

Eric Micheals and Athula Alwis

Micheals had been with Hiscox USA for a decade and was most recently CUO for the US operations of the London-based insurer. He joined Hiscox USA in New York in 2009 from AIG, where he had held various underwriting roles.

The high-profile hire for the insurtech start-up comes as it successfully completed testing of its prototype platform with brokers and insurers.

The firm also secured an early seed round of fundraising in the summer that was oversubscribed.

AllDigital and its CEO Athula Alwis is now beginning talks with potential venture capital and insurance sector investors for a Series Seed round that will support the next phase of development ahead of a planned launch of the MGA platform in April 2020.

The Insurer previously reported that the start-up has developed an AI module and teamed up with a blockchain vendor to build a private permissioned blockchain infrastructure.

Its aim is to create a low touch/no touch specialty insurance platform that will deliver an average expense ratio of 25 percent, compared to 35 to 40 percent including commissions that is typical in the commercial insurance sector.

It is also using machine learning based techniques to develop underwriting tools and analytics to drive better risk selection and pricing as it pursues lower loss costs.

The initial plan was to bring the platform to market in the form of an MGA that would begin by targeting private company and not-for-profit company management liability insurance solutions for SME insureds.

Products would be offered via AllDigital’s online platform to brokers.

But after testing with three national brokers and two A+ rated carriers, it emerged that one of the insurers was interested in utilizing the platform as a TaaS rather than partnering with the proposed MGA as a capacity provider.

It would license the blockchain and AI service built by AllDigital for a fee.

Separate revenue stream

The interest has led the start-up to shift its strategy as it looks to leverage the technology it is building for the MGA platform as a TaaS that it can offer to multiple carriers as a separate revenue stream.

AllDigital expects to be able to make the TaaS offering available ahead of the scheduled April launch of its MGA platform.

The start-up is also thought to be in early talks with other potential carrier partners to support the MGA.

Wholesaler AmWINS – one of the brokers testing the prototype – provided positive feedback on the initiative.

Professional lines broking executive Trey Waldrep commented: “If the platform is executed and distributed properly with the right carrier and broker partners, the tech has the ability to disrupt and create new efficiencies in the SME space.”

AllDigital is currently in the process of improving its AI system. 

Initially the process involved training a model based on a synthetic dataset which depicted the hard constraints. 

The second level of training will see it factor in the experience of its underwriting team led by new hire Micheals, who is also responsible for overseeing underwriting guidelines for the platform.

The platform aims to rapidly speed up the process of underwriting, quoting and binding business, lowering the cost for insurers and brokers.