Why insurance has to go completely digital: the SE2 story

Technology changes the way insurance claims and assets are managed.

YourStory caught up with SE2, a US-based tech firm that has $100 billion assets in administration and $20 billion in claims. Chirag Buch serves as the Managing Partner of SE2 Digital Service LLP.

Apart from heading the India SE2 operations, he is responsible for setting up the business services team and technology and innovation centre and creating long-term value for SE2 US and Eldridge Industries Corporation. He talks about SE2 changing the way the insurance industry uses technology to get closer to its customers.

Edited excerpts from the interview.

YourStory [YS]: How is SE2 handling the COVID-19 crisis?

Chirag Buch [CB]: There is no doubt that we, as a country — in fact, the whole world — are amidst a crisis and finding ways to flatten the curve. The situation is constantly evolving, and so are we at SE2. To this point, we have done well, from the beginning of lockdown up till now.

Early during Lockdown 1.0, we seamlessly adapted to the changing situation. We put in place a business continuity plan to swiftly shift all our operations, processes and communications to suit the work-from-home (WFH) regime.

We have been able to enable 95 percent of our people to be able to WFH. This was made possible by purchasing laptops, WiFi and dongles, and ensuring that we are able to get these across to our associates at their homes.

We were continuously monitoring the on-ground situation and adapting to the new normal. And that set a positive tone that continued to serve us well in Lockdown 2.0 and now in Lockdown 3.0 as well. The teams in India continued to ensure that we were able to deliver 100 percent of our client commitments in the time of crisis.

Moreover, from a business perspective, we are continuing to hire based on our business plans. We have been able to successfully e-onboard candidates and enabled WFH for them, during the lockdown, which showcases our resilience, preparedness, and contingency planning at SE2 India. I would also like to add that we will have campus recruits starting work in the next few weeks and we would be honouring all the offers that have been made by us.

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YS: What is your company aiming to solve?

CB: The insurance sector is ripe for innovation and disruption. As insurers continue to tackle both challenges and opportunities with respect to the digital evolution, SE2 is helping them future-proof their businesses and navigate this transformation with a digital first approach.

SE2 delivers new product launch solutions, platform-led transformations, and third-party administration services for life insurance and annuities carriers. Born of insurance and bred on innovation, SE2 Aurum, a fully integrated, flexible, end-to-end platform, enables insurance companies to leapfrog into the digital age, enter new markets through new distribution channels, and create new operating models.

SE2 Digital Service LLP aka SE2 India commenced operations in India in March 2019 in Gurugram. We currently have approximately 550 plus staff in Gurugram supporting Business Process management for SE2’s top clients.

Our technology and innovation centre was set up in August 2019 and has about 50 plus strong workforce responsible for comprehensive technology and innovative solutions in Life and Annuities platforms. Pune initially is a Business Continuity site for our operations teams.

By the end of 2020, Pune will be 100+ strong and we will totally be approximately 1000+ staff in India within the next couple of years.

YS: Can you tell us about your business and industry ecosystem in India? How are different companies solving different needs? And about the scenario in B2B and B2C?

CB: Insurance is a fast-paced industry in terms of the adoption of digital technologies. One significant catalyst is the advent of widespread and affordable internet connectivity worldwide that has enabled the sale and service of insurance products completely digitally. Consumers are demanding more personalised, tailored products, and we are seeing an unprecedented shift in the relationship between the insurer and the insured.

To serve this demand, traditional insurance carriers are often not fully capable. Much of the struggle comes from the antiquated backend legacy architectures. Without an agile, flexible architecture in place, many insurers struggle with launching products fast enough to capture new customers with these preferences and end up losing market share.

To jumpstart their efforts, many companies are looking for a partner that can provide the entire digital experience. And this is where the role of InsureTechs becomes really critical.

After the FinTechs, it is InsureTechs that are looking to disrupt this industry with cutting-edge technology to simplify insurance for the insurance carrier, their sales force, and the end-customers. Making innovation readily available and adoption seamless, InsureTechs such as SE2 are working at a much-advanced level and are proving to be a cost-effective partner for any insurance carrier looking to leapfrog into their digitisation journey.

YS: How does your product work? What did you build your tech on?

CB: SE2 Aurum, our end-to-end platform is the industry’s first fully-digital technology platform built from the ground up specifically to support the unique requirements of life and annuity insurance carriers. With a digital model, and optimised operational model, the platform is designed to increase speed, reduce complexity, create cost efficiencies, and improve the customer experience throughout the policy lifecycle.

Our client’s inputs help us allocate funding to various initiatives.

To keep pace with changing technology, SE2 self-funded a major modernisation and digitisation effort of SE2 Aurum. The budget for this effort was around $85 million and the initiative was launched in 2016.

We call the modernisation our 10x10 strategy – we have scaled the infrastructure in preparation for 10x growth – and advanced the technology 10 years ahead of the industry. 

YS: How did you win your first client and your first pay cheque?

CB: SE2 was formed through the modernisation of a 125-year-old insurance company’s service and technology platform and so its first operations and technology associates became SE2’s first employees. SE2 incorporated in 2005 as a subsidiary of insurance company Security Benefit Life.

Later that year, SE2 signed its first external client, a Tier-I financial services company, that acquired a block of about 350,000 life and annuity policies.

YS: How much have you invested in your company?

CB: In setting up India operations, our initial investment in the infrastructure, technology, facilities has been to the tune of over $3.2million(Rs 25 crore). Our annual spend is over $10million. (approx. Rs 70 crore)

YS: How is the company funded?

CB: In 2017, through a series of transactions, SE2 became part of the Eldridge Industries family. Eldridge Industries grows diversified businesses with a focus on insurance and fintech, credit, real estate, sports and media, consumer, and technology.

In particular, the firm seeks to build and grow businesses led by proven management teams that have demonstrated leadership and experience to scale an enterprise.

The funding to set up SE2 in India came through an inward remittance from SE2 LLC in the US and they are our 100 percent shareholder.

YS: What difficulties have you faced in building this business?

CB: Since SE2’s inception, the company has been on a high-growth trajectory and as the business continued to expand, there arose a need for an overhaul of the platform with the lofty goal to support 10x growth.

In 2019, SE2 completed this large transformation programme that saw the investment of over $80 million in modernising the SE2 Aurum platform that opened up the architecture and enabled scaling the platform for 10x growth while staying 10 years ahead from a technology perspective.

Another challenge has been pivoting towards a unified culture with an extremely high-growth company that has grown organically and inorganically with associates joining and centres opening across geographies.

Mark Schultis, CEO at SE2, has been leading multiple integrated programmes throughout the organisation focussed on embedding customer centricity in the company’s DNA.

YS: What is your business and revenue model?

CB: SE2 uniquely combines its insurance heritage, end-to-end administration capabilities, expertise in large-scale business transformations, and a purpose-built leading edge technology platform to future-proof life and annuity insurance carrier business.

The result is a next-generation technology platform and digitised operations that enable insurers to launch products rapidly, shift to a variable cost model and improve efficiencies while dramatically improving the customers’ experience.

SE2 continues to grow rapidly in the Life business with its multi-award winning Digital Life platform that is a leader in the digital business enabling carriers to give their end-customers and distributors an experience they have come to expect. SE2 typically charges clients per policy for conversions into its platform and for other ongoing transactions.

Our set-up in Gurugram offers operational support to SE2’s top clients and Pune provides the technology and innovative capabilities to them, thereby providing a full spectrum of services like modernising and further digitising the SE2 Aurum platform, supporting conversion from the client legacy systems onto our platform and providing operational support on an on-going basis.

Pune is also a Business Continuity site for our operations teams.

YS: What are your plans for the next 18 months?

CB: Our goal is to deliver the best-in-class technology and services with integrity, innovation and accountability to our customers, support new transitions from operations and pilot transitions from Eldridge companies, and develop SE2 India as Centre of Excellence for SE2 and its affiliates.

YS: Tell us something about your clients.

CB: SE2 has a long experience and deep expertise in life and annuity insurance. We understand the daily regulatory, cost and competitive pressures insurance carriers face. That’s why 25 of the top insurance brands in the world have entrusted SE2 to digitise their operations and administration including Nassau Re, USAA, Security Benefit, and Kuvare Holdings, amongst others.

SE2 has launched over 120 new insurance products on the SE2 Aurum platform, handles over 180,000 new business applications a year, processes $20 billion in premiums annually, and has $100 billion-plus of assets under administration. Additionally, they have completed more than 30 conversions, supports over 1.5 million distribution entities, and is the largest administrator of variable annuities in the US.

Our current focus is only to support the more mature markets in North America. However, our platform is capable to service insurance companies across geographies including India.

YS: What is the USP/value proposition?

CB: We are a hyper-focussed life and annuity insurance service provider focussed entirely on US life and annuity carriers. In comparison, our competitors are primarily technology vendors where the administration is neither their core competency, nor their core business.

SE2 leads the industry in building, launching and servicing new business quickly and efficiently. Half of our clients are launching new businesses with SE2. On average, every 12 months SE2 helps launch 10 to 15 new products. Our time to market is between two to five months depending on product complexity.