Ascend’s Wynn: Payments insurtech seeing adoption driven by PE push for efficiency

Ascend co-founder and co-CEO Andrew Wynn has said that the influence of private equity money throughout the distribution chain is leading to an efficiency drive among intermediaries, which has played a key role in the take-up of his firm’s payment technology.

Wynn was speaking to The Insurer TV on the sidelines of last month’s InsurTech NY Spring Conference, where he touted his firm’s ability to help retailers, MGAs, and wholesalers shrink costs and boost Ebitda.

Ascend, now in its fourth year of operation, simplifies insurance payments through a range of services that include billing, collections, premium payable disbursement to carriers, commission payments, reconciliation, and accounting for retailers, intermediaries, and also some carriers.

Having had success in retail, the insurtech is now “very focused” on expanding its offering through MGAs and wholesalers.

“As a result of the work we do with retailers, we fund a little under 2,500 MGAs and wholesalers on a regular basis on behalf of those retail agencies,” he commented.

“And so, we have the natural next step, jumping off point to start working with those folks to simplify their accounting, billing and financial operations processes,” Wynn explained.

Drive for efficiency among PE-backed firms influencing broader market

The Ascend CEO said that “inertia” is generally the insurtech’s biggest challenge in driving adoption, with some agencies more comfortable with maintaining the status quo of how things “have always been done”.

He also said the growing influence of PE money in the sector is helping to drive change as investors seek to drive returns and boost valuations.

“PE money is this sort of genesis of this, 'Hey, let's tighten our belts a little bit and get a little bit more efficient and we can't just accept that status quo'-type thinking,” Wynn said.

The Ascend co-CEO made the point that agency firms don’t need to take PE money to be affected by its influence in the space.

He added that Ascend also sees as its competition various forms of agency management systems that partially offer some comparable services.

“We pride ourselves on doing just insurance, billing, collections and accounting automation, and doing that really, really well. We're not a generic [payments company],” he said, explaining that rather than offering its services across industries, it is dedicated to the insurance industry.

“We do more than just accounting, and so, we're complementary to a lot of products, but we also kind of rub at the edge of them too. And so, we do have some competition there, whether that's from policy admin systems or agency management systems that have payments – but less so of an issue there,” he explained.

Premium financing activity “surprising” given high interest rates

Ascend’s platform also aims to encompass “all the financial tasks that exist inside an insurance” business, and has services that extend to premium finance.

“‘[We offer] payments, billing, accounting and one of those is sometimes premium financing. And as a platform, we want to be a full turnkey solution for folks to be able to do all of these things in one place,” Wynn explained.

“And premium financing has, frankly, been growing as a part of our business because of the hard market,” he commented.

Wynn said that despite higher interest rates, Ascend has seen its premium finance originations growing.

“It has been surprising to us. We would have expected that to taper off as interest rates have gone up,” the Ascend co-founder said.

“It's an important way for folks to secure the coverage that they need [that] they might not be able to afford. But I think as both the market softens, eventually, hopefully, and rates come down, that will be less saturated,” he said.

Hard market, flight to E&S acting as tailwinds

Wynn said another tailwind for his firm has been hard market conditions that have driven more business into the E&S channel, which has brought additional complexity to how agents handle payments.

“They've never had to deal with some of the complexities associated with that, one of which is often billing an agency bill. So, a lot of those folks have started using us,” he explained, while saying adoption is also up amongst big established retailers.

“The growth of the surplus lines market is tailwind [number] one, and tailwind [number] two is all of these retail businesses, and now we're starting to see this in MGAs and wholesalers as well, [which] are really under the gun to improve their operational efficiency” amid high capital costs, he said.

“Folks are looking for ways to use technology or just find ways to reduce costs, especially aspects of their business that are core, they're really important,” he continued, acknowledging that payments is not generally a “core competency” among retailers.

“We're ultimately automating an administrative function that's typically done by people and we allow folks to reduce that burden,” Wynn explained.

Watch the full interview with Ascend’s co-founder and co-CEO Andrew Wynn to hear more on: