Sønr CEO Matt Connolly sat down with Luca Schnettler, Co-Founder and Group CEO of Qumata, which uses digital data to calculate the risk of diagnosis for over 800 conditions, along with Extra Mortalities and Morbidities, working with life and health insurers to help create a faster, more customer-centric underwriting journey.
Luca shares more on the data science that powers the company, Qumata’s experience breaking into Asia, and how the company differentiates itself by exploring how consumer activity potentially impacts future risk.
The pair also chat through Qumata’s recent $10m Series A, and what it’s like as a founder to walk the fine line of being realistic whilst dreaming big.
A few highlights from the conversation:
- Qumata is live in the market with several multi-national insurer brands in the US, Europe and APAC
- The company will help underwrite around 1m policies this year, and predict they will reach 3m next year
- The company is currently focusing on expanding its scope in life and health underwriting – it plans to add new insurance products and adding new variables into what they’re able to assess (e.g. financial data, GPS data)
A huge thanks to Luca for his time.
Below is a transcript of the conversation:
Matt Connolly 0:07
Hello and welcome to our Sønr Spotlight Series. Today we are catching up with Luca Schnettler. Have I said that right, Luca?
Luca Schnettler 0:17
Matt Connolly 0:20
Luca is the Co-Founder and CEO of Qumata. Nice to meet you Luca, how you doing?
Luca Schnettler 0:27
Very well, thank you very much for having me. It’s a pleasure to be back having had an interview, I think in 2018, it was right very, very early stage in our journey and great to be back and thank you for having me.
Matt Connolly 0:38
You’re welcome. Yeah, I think it was just after your seed round if I’m right in thinking. So, I feel like the clock sort of ticks by, in fact, what has happened over the last few years, but what has happened certainly from you guys, is you’ve grown into becoming a formidable Insurtech and a pretty formidable business. And you have closed recently your Series A and they are things that I love to talk to you about.
More than that, though, I think when we interviewed you a Healthy Health, and now you’re Qumata, can you give us a little bit more about you and about the business? And for those who don’t know Qumata so well?
Luca Schnettler 1:17
Absolutely. Let me give you a brief introduction. I mean, you’re absolutely right, we used to be Healthy Health. We got consistent feedback that it was one of the world’s worst names conceived, we did sometimes get the positive feedback that it was so bad that it’s stuck in people’s head, so that kind of made me kind of thing must true, let’s not change it. But at some point, I think our Series A investors, hopefully you don’t mind that MMC Ollie, you know, really great investor, they kind of said, jokingly, you know, if you want our money, you have to change your name, right? And then we said, fine, you know, we’ll do it.
So, we changed our name to Qumata, which stands for ‘quantifying human data’, which is I think a little bit more in the area of what we do. And to explain a little bit, what we do is we are really a tool that helps life and health insurers move their underwriting to the 21st century.
Luca Schnettler 2:13
So, whereas traditionally, if you want to buy, you know, a decent amount of sum assured, with a life or health policy, you’d have to go for long questionnaires, medical exams, and so forth and that leads to, you know, long, long, long application times that can really lead to a large drop out from a customer perspective.
And so what we’ve done is we’ve basically, we’ve got a set of API’s that integrate into the insurers back end, and basically allows any customer that applies to one of our customers, or one of the insurance that we work with, that applies to their products through agency channel, the online direct channel, cross selling opportunities, a lot of cases that you can apply to do, but basically, it allows them to skip those traditional underwriting questionnaires and medical exams. And they can instead just share that digital data, which at the very minimum of steps, but it can be heart rate data can be GPS data, it can be various amounts of data that the customer may have, they share that data, and then we basically use that to create a risk profile, including risks of diagnosis for hundreds of medical conditions, as well as extra mortalities, morbidities.
Luca Schnettler 3:15
And to make a long story short, the insurer can then use that risk profile created for that data to price that risk and ultimately, it cuts application times from days to two seconds and increases the conversion rates.
We’ve been growing, we’ve raised that 10 million Series A, we’re now doing around a million policies this year, very active in Asia and Europe and the US, they are our markets. We’re working with some big brands, and now we’re looking to kind of really break out and scale our initial traction app to really change how underwriting is done in the life and health space. That’s the mission.
Matt Connolly 3:52
And if I’m right in thinking you are currently in Dubai, right?
Luca Schnettler 3:56
Right now, yes, I am.
Matt Connolly 3:58
And why is Asia such a big market for you? How did you break into Asia? Because you’re German but living in the UK or is that the home for you? Right? So, the normal separators is the UK market, the European market and then maybe the US is not Asia? So how did you guys have grown so quickly over there?
Luca Schnettler 4:20
I think there are multiple reasons. I mean, I would say probably strategically speaking, we have a couple of priorities. I think the UK market is one where required advanced as well and want to really scale up as well. Asia is an interesting one. I mean, I feel insurers in Asia are a bit more willing to move on data. And that may be, and I’m putting out to your guests, but from my observations, I think there are a couple of reasons.
The first thing is, from a just a perspective of, data and data availability and ability to share data. It’s quite centralised, you know, especially when you look at markets like China where you have a platform like WeChat, which has WeChat steps, right? And it’s, you know, used by 1 billion people, you just integrate with that you have data availability straightaway and on top of that, it is much more accepted that digitalisation in the markets are much more accepted.
Luca Schnettler 5:21
We feel like, you know, there’s this classic story in China, right? Where you look at finance, right? You used to have, like, you know, everything in cash, and in the West move to plastic and credit cards, right. And China completely skipped that, and just went straight to mobile payments, and so forth. And I think that, to some extent, replicates itself as well with digital data, which is great for us, because there’s a lot of availability.
And then on top of that, it’s a great market for us in general, because obviously, just from a macro level, right, you have, you know, a rising middle class, you know, what is the middle class do, they buy insurance, right? And we charge by customers applying to insurance for us having that rising middle class buying insurance. This is a huge market; we can tap in and one that we want to be we on for arrival.
Matt Connolly 6:06
Yeah, super cool. And tell me about your business a little bit more. So, I’m simplifying things a little bit too much here, I’m sure. So, there’s one side that you’re pulling in a whole bunch of different data sources and then the other part is a risk engine. And I’m sure there’s a whole lot more complexity to that., right? And in terms of where they are, from the kind of the journey in terms of the engineers and the tech team that you’ve had to build, where’s the focus been? Is it one side versus the other? Are there other sides that I’ve missed off, in my very simplified version of what you guys get up to? Where’s the difficulty? Where the challenges? Where’s the magic that you guys bring to the party? Because I appreciate it’s a relatively unique offering in terms of market, but where’s the attention spent?
Luca Schnettler 6:54
I’d say we’re very data science led business, so I’ve been extremely lucky to have hired some really amazing team and obviously, not just in our data team, but specifically also in our data team, with our head of data at Cobo and our wider team that works with him. Now, our core IP is our algorithm, an algorithm is based on huge datasets that we’ve collected and got access to throughout the world. Now, this algorithm has this unique ability to take data such as steps and take heart rate and others. And from just this minimal information, predict your morbidity and mortality risks.
And, so far that just hasn’t been replicated. And a lot of the companies are trying a lot of the reinsurance are building similar models, but I believe, our vast access to data, and I would also say our ability to have picked up a lot of the low hanging fruits in terms of claims really allowed us to kind of build that leading position I the life and health data driven underwriting, having said all of that, of course, now it’s time to really scale that up, because most underwriting is stolen for paper and for medical exams.
But I think having that advantage on data, having an amazing data science team that really can drive up that uniqueness of our proposition has been core to our success. And then of course our IT, and our design team and so forth have really been led to, you know, have converted that data science advantage into really an implementable product that is easily implemented with insurance and speaks also to the consumer that ultimately has to share their data.
Matt Connolly 8:44
Have you been able to do any kind of quant analysis? I’m sure you must have had to, in terms of the bringing of your technology, your algorithm into a client relationship versus what was there previously, for these guys? Can you see a marked improvement in terms of accuracy in terms of performance with your stuff? Is that there yet? Or is that kind of next stage.
Luca Schnettler 9:15
No, it’s definitely there. So, let me give you a bit of an explanation of where we’re at and what our achievements have been and what are challenges coming up now. To simplify, I think we’re now at a stage where we’ve proven out our product, we’ve done many, many POCs. Now, I’ll explain a little bit how that, because I think the accuracy point that you touched on is very important, and I’ll explain that in a minute. So, we’ve proven that and we’re now life in the market, you know, with several large multinational insurer brands that you will have heard of in the market, in the US, in Europe, including the UK and in AsiaPac.
We’re underwriting around a million policies this year and we predict to run free million roughly next year. So, we’re definitely already at some scale but I think, now we’ve proven that product works, we’ve proven that there’s benefits, increasing conversion rates and one of our direct marketing examples, we’ve increased conversion rates by 300%, just by cutting out that underwriting Fritsch.
Luca Schnettler 10:17
And now the challenge really is breaking that initial success into a wide scale, you know, rollout and picking up market share, and really showing the wider market that this is now really where the future is heading. Because one thing about insurance, right, it is a very risk adverse, slow-moving industry. And so that’s really the crux of it now to really build on that initial success and make it a widespread model of underwriting. And I guess, just to touch a little bit upon how specifically our value add has been there and the accuracy point, I think, right now, when we go out to pitch to insurance, you know, personally, I believe the biggest benefit of our solution will be our better risk selection, our traditional underwriting has a great risk selection, but I think it focuses a lot on current and past risks, and it may not have included yet the risks of how your activity, potentially influences your future risks.
Luca Schnettler 11:21
However, that is an especially in a protection space, a long-term argument, right? Because you have to see the claims coming in, so instead of that what we’re currently really pitching to get into, to get integrated within our insurers and what has helped us to get integrate with our clients is to say, okay, look, the low hanging fruit benefit of our solutions is cutting out friction in your process, so that you can basically make sales much quicker so your agents can set make sales much quicker, so you can have better marketing opportunities, at no cost to accuracy, which is the key point? And then in the future, potentially, you have a great awakening and CMA and your risks selection, your loss ratio has improved, and that’s great.
And then we have a secondary benefit, but in the short term, we really focus on increasing conversion rates through cutting friction, and not having less accuracy. So, then you may ask, okay, but how do we prove that we don’t have less accuracy? And usually what we’ve done, and we’ve done this now with many, many insurers and reinsurance across the globe, which is we usually run a kind of a pilot POC before we go into production with the client.
Luca Schnettler 12:31
And that usually, as you know, you have a couple of 1000 people that go through both for the same person, both for traditional underwriting, and few markets underwriting and then basically look at the cases that traditional underwriting has declined, what has Qumata rated them for, and usually, we have 95% plus match rates on those and that then gives the insurer enough confidence to say, Okay, it’s not going to get us a worse loss ratio than traditional underwriting, it’s going to be at the worst case the same, potentially, it’s going to be even better, but at the worst case, it’s the same. So that means if we implement now not going to have any loss ratio impact, however, our conversion rates are going to go up, and potentially in a couple of year’s time, we’ll wake up and see, it hasn’t even just been as good as traditional grades, maybe even better. And that’s kind of where we’re coming at the moment and where we’re trying to scale.
Matt Connolly 13:17
Right. Super cool. I love that. And a quick question within that. How long does a POC like that take for you guys?
Luca Schnettler 13:25
That’s a good question. I think it’s decreasing. Initially, probably it was 8 to 12 months because when we’re doing our first pilot, right? Because we didn’t know what was going to happen. Did the product work? All of this kind of stuff. I mean, I know our first POC was very tense. But now you know, we stand from the eight or nine of them now and we know what to do now. Usually now it’s a two-to-three-month process. We’ve really cut down our sales cycles and usually what happens now is you know, we get introduced to a client, one or two months getting them you know, comfortable everything, two or three months POC then two to three months contract negotiations and so forth. Then they are usually rolled out.
There are some ways we have some great reinsurance backing now as well. I mean, we’ve just announced our partnership with SCORE, we’ve got a couple of other cool ones coming on board now and that helps because the reinsurer approves your model especially in a market like the UK where 90% is reinsurer, so then for some products right so then if the reinsurer backs it no need for a POC in some extent because they’re taking all the financial risk.
Matt Connolly 14:33
Yeah, understood. And then let’s come back to the MMC guys coming on board. So amazing investor. Great round, congratulations on that. And with that money, what do you guys up to, what’s the plan? Global domination? More of the same?
Luca Schnettler 14:50
I think I mean, that’s the goal, right? I mean, ultimately, I really found that this is because I want to build something bigger. I’m having a lot of fun building what I’m building, but, we’re still, you know, is a small company in the grand scheme of things. And yes, we’ve raised that. I remember, you know, as funny because, you know, when I started the business, right? I just came from Germany, I didn’t have any network, I never worked. I never worked in insurance, I never worked anywhere, really. And I remember, we got our first angel investment for £10,000, and I was like, wow, this is like, so much money, like, Oh, my God.
Luca Schnettler 15:32
And I think if someone told me, three years later you have raised 10 million. That’s unbelievable amount of money. Right? And it is a lot of money. But I think now, the bigger you grow, the more you also start to think, oh, damn, but, my friend, Steven from Bought By Many just raised, 300 million, right? I want to build a company up to this level, and I have no doubt once you’re there, then you think, oh, but damn, whatever their market cap is 30, 40 billion, right? So, you want to get, it’s always that process and for me, I really want to build that big business. So, coming back to what we’re going to use the money for, the goal is to get to that sort of level of success. But we obviously have to be realistic that everything goes in steps.
Matt Connolly 16:25
Let me just get you that which level of success you’re talking about. You’re talking AXA level of success, Bought by Many?
Luca Schnettler 16:32
Well, I mean, my prediction is that Stephen Gould will build the next acts of pet insurance, and then probably go on. So, look, I think dreaming Vegas is a requirement, right? Dreaming big, but being realistic at the same time, which is, I think that the fine line, you’re always trading as an intrapreneur. Right? But yes, I mean, if you ask me, what’s the goal? I mean, it’s the IPO and build a multi billion-dollar business. Now of course, you know, there’s always things that happen in the future. And I think you know, I like to be realistic about things and to say that you never know, you know, opportunities that may come across the line. But if you’re talking about the mission, and the real goal that we want to build, it’s really to get to that stage and to have sit down at the end and say, we’ve really made it, we’ve really built something from the ground up that creates value for customers. That’s ultimately what’s it all about. Right?
Matt Connolly 17:26
Love it. And so, a question within that, and feel free to evade the answer to this one. I can see how the business will grow from customer base, and geographies, just in terms of size, and so the population of people using your product, etc, like that. But what about the product itself? What’s the roadmap for you guys as a product business? So, where’s that going to go? So, you know, we spoke last two three years ago, from there to here it is, I’m sure a big evolution in the business, not only from, you know, who you’re working with, and the markets that you’re operating within, but also from a product perspective, that’d be really interesting to know what the future of the product looks like, as well.
Luca Schnettler 18:11
Yeah, absolutely. And actually, I’d like to tie that question back in with the last one, which is around what are we actually going to use the money for? Because I think it’s a really interesting one now. I have a strong belief that one of the things that can and again, I don’t have much, I don’t have any experience building a business, right? But I try to be around as many successful entrepreneurs as I can to learn from them. And one of the key things that I have heard a lot is one of the, you know, key risks, I guess, is spreading yourself too thinly, and trying to do too much with too little resources. Because you know, you think you’re too big, you can do any. Right? So, in terms of product, right, again, coming back, where do we want to be yes, we want to be a $30 billion listed company. But we do appreciate that we’re not there yet. Right? And what we could do as a $30 billion listed company in terms of products, which is very different to what we can do now, having raised 15 million,.
Luca Schnettler 19:13
So, in terms of product development, I think right now, I was splitting in two topics. I would sayright now, it’s like the immediate roadmap and that what’s the vision? What’s the company that we want to be in five year’s time? I think right now it’s really about expanding our scope in the niche that we’ve built ourselves. So right now, we’re obviously underwriting, that niche of life and health underwriting, and we started off just doing life mortality, products. And so, one of the product developments that we’ve just done is, you know, we’ve expanded into also being able to underwrite CI, you know, medical products health, a couple more kind of accelerated products that we didn’t do before and kind of thinking about morbidity risk more than just mortality risk. Now, in the next few months, we’re also going to add disability to that and a few other things.
Luca Schnettler 20:05
So that’s kind of the immediate product development roadmap, that is adding new insurance products, and adding new variables into what we’re able to assess, for example, using financial data to predict risk is something that we’re looking at GPS data is something because we have a couple of telco partnerships that can facilitate that. But in the future, I really think we can build something that is really a kind of a go to platform for risk analysis, through data that is held digitally. And that can expand much further than just the life and health space, right? That could go further than just insurance in a way, right? But I think there’s companies now like Verisk, and others start doing that just with traditional data, right? With questionnaires, and so forth. And we really want to be the company has that sort of scale, like various, that’s what their solution, but just base it on digital data. And I think you can really build a quite a cool ecosystem that can then grow itself and be in a really competitive position. Because for all of that data, it’s very hard to lose that competitive edge. I guess that’s kind of where the vision that we’re going in, but right now, we need to be realistic that we’ve got this money, but we need to execute on what’s in front of us now. And not get so distracted about where we want to be in five years, of course, that needs to be informed and what we do now, but we need to really execute on the project that we have on hand now and the demand that we’re facing right now.
Matt Connolly 21:46
I love it, I can hear the two sides of the entrepreneur just both of them speaking. So go big, go big, go big, focus, focus, focus. Good for you. That sounds great. And there’s a whole load more stuff that I’d love to dive in and understand your back journey a little bit more, the entrepreneur and but honestly, I think what we’ve covered today has been enlightening and I think as an interview, I’m hoping we can catch up again, maybe in a month or maybe a couple of months’ time and keep chatting. But for now, Luca, I just want to say a huge thank you and congrats on the success of Qumata to date. Congrats on the journey that you can from not having run a business to where you guys are at today. And we’re going to watch with absolute joy to see where you take this business because I think it’s going to be a great success.
Luca Schnettler 22:36
Thank you very much, it’s been really lovely chatting to you. And yeah, let’s keep this going. Let’s catch up in a few months’ time and see where we’ve come from then. But yeah, thank you very much to your whole team for inviting me and looking forward to it.