Another foray into the insurance industry
Google is dipping its toe back into the insurance industry with its latest announcement. Applied Systems, the insurance agency management system for independent agencies, is now a part of the CapitalG family. According to a company announcement, CapitalG, or the growth equity investment fund of Google’s Alphabet, has taken a minority stake in the company.
Under the terms of the agreement, affiliates of Hellman & Friedman will retain a majority ownership in Applied, with CapitalG, JMI Equity and Stone Point Capital, all becoming minority investors. The transaction is scheduled to close in the the third quarter of 2018. Further terms of the transaction were not disclosed.
“Applied Systems is a pioneer in the insurance industry, transforming the way insurers, agents and customers do business in the cloud,” explained Gene Frantz of CapitalG on the fund’s decision to invest in Applied. “We are excited to partner with Applied in support of its rapid growth and best-in-class technology. We look forward to bringing some of the world’s leading experts at Google and Alphabet to drive innovation within the global insurance ecosystem.”
Applied System’s impressive growth over the past five years
Applied has seen unparalleled growth over the past five years. Founded in 1983 and acquired by the private equity investment firm Hellman & Freidman in 2013, Applied has grown to become the world’s largest provider of agency and brokerage management systems.
In addition to more than doubling its size and revenue over the past five years, the company has also expanded globally and now claims a presence in the United States, Canada, the United Kingdom, and the Republic of Ireland along with over 1,600 employees. The company says with the backing of Google’s CapitalG, the company can now even further expand both its reach and technical expertise within the global insurance landscape.
“We are pleased to have CapitalG join Applied’s investor base given their deep software experience,” said Reid French, chief executive officer, Applied Systems. “We also welcome the technical expertise and resources that CapitalG brings through its connection with Google and look forward to their partnership as we continue to deliver innovation to the insurance industry in support of our growing customer base.”
Sameer Narang, Partner at Hellman & Friedman, added, “We are excited to welcome CapitalG as a strategic partner. CapitalG’s investment is a testament to Applied’s track record of innovation and its outlook for continued product leadership. CapitalG uniquely positions Applied to take advantage of tremendous growth opportunities by further accelerating several product initiatives for the benefit of Applied’s customers and the insurance industry.”
So what does this all mean?
Overall, this announcement should be taken as a good sign for the independent insurance agency system. Note, no mention of disruption or competition, but rather driving innovation by “…further accelerating several product initiatives for the benefit of Applied’s customers and the insurance industry.”
Perhaps after surveying the insurance landscape with its Google Compare endeavor, Google has realized that it does not need to reinvent the insurance wheel, just help to make it better.
This evidenced by the fact that Google is making an investment into one of the leading insurance agency management systems. According to Applied, 99% of Best Practice agencies use an Applied System, with over 50% of all P&C electronic transactions being conducted via Applied applications. By giving Applied access to “the world’s leading experts at Google and Alphabet” the end result could bring tremendous opportunity to agents and agencies (who use Applied) in the types of products and processes that this collaboration may produce.
More importantly, Google is not acquiring Applied Systems thereby gaining access to all of its customer data to use for its own personal gain. It is taking a minority stake in Applied, in addition to providing Applied access to all of Google’s capabilities. “CapitalG’s investment will bring Applied access to Google expertise across artificial intelligence, machine learning, and digital marketing.”
It appears that the goal of CapitalG’s investment is to provide greater capabilities and efficiency to the insurance industry as it already exists, and that will ideally give agents new tools and products to provide an even higher level of specialized customer service to its insureds. As such, this announcement looks like a vote of confidence for the integral role that the independent agency system plays within the insurance industry.
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