Mediaplanet So, you’re the co-founder of an HR technology company, but what does HR have to do with FinTech?

Elijah Moore: HR certainly doesn’t come to mind when most people think of FinTech. But when you look at the major systems that the HR function is built upon — like group insurance, payroll and group retirement management — you start to see that financial technology is actually at the centre of the HR universe.

MP What is happening at the intersection of HR and FinTech that is interesting to you?

EM: What’s happening is a new tech-centric business model is enabling startup companies to fundamentally change a big, established market. Disruption is an over-used term, but what is happening is market disruption in its truest sense.

The markets for payroll, insurance and HR management are colliding, which is causing a fundamental shift in the way businesses are buying HR services and group financial products. New US companies like Zenefits, Gusto, Namely and Maxwell Health are making it hard for established HR, payroll, and group benefits providers to compete using business models that have worked for the last 30 years.

New technologies and innovative revenue models have allowed start-ups to provide amazing HR products for businesses at a very low cost. These new products make it easier and cheaper for businesses to manage HR and provide benefits for their employees. This is great for businesses because their administrative burden is reduced, and it’s great for employees because their access to healthcare through company-sponsored benefits is improved.

We started Collage in order to lead this type of change for the Canadian market. We set out to re-invent the way Canadian businesses manage HR and group benefits, and along the way we think we have the opportunity to build the future distribution model for group financial products as well.

MP Collage is focused on HR and group insurance, but what other opportunities for innovation exist in the insurance space more broadly?

EM:The insurance industry has been a victim of stagnation for the last 50 years, but we have arrived at a point where start-ups and technology are starting to accelerate progress in an industry that needed an outside push.

The insurance industry is really not built to innovate. At its core, insurance is about pricing risk — and the lower the risk the better. Most insurance products are underwritten by an insurance carrier and then sold or distributed by a broker. Neither insurance carriers nor brokers are well positioned to implement new technologies.  Add in the fact that insurance is highly regulated, capital intensive and profitable in its current state, and you can understand why technology has been a bit slow to infiltrate the insurance value chain. 

Over the last few years, the insurance tech financing markets have been really heating up, specifically in the US. There are some awesome new companies doing some interesting things across the entire insurance ecosystem. 

Big data is a common thread among new insurance tech start-ups. If you really think about it, insurance underwriting is one of the original applications of big data in human history. In this vein I think that there are huge opportunities when it comes to improving how insurers make use of data – both in terms of collecting new data through wearable or mobile technologies, and through analyzing these new data in order to make risk pricing more fair and accurate.

I’m also intrigued by the creation of entirely new, tech-driven insurers like Oscar Health in the U.S. Starting a new insurance carrier is difficult, and it requires a lot of capital; however, I think if properly executed the start-up insurance carrier can be a powerful force for change in the traditionally conservative insurance industry.

MP How is Canada doing?

EM: We are lucky as Canadians to have access to an amazing financial system. However, we are undoubtedly slower to innovate than our U.S. counterparts. This slower pace is a common thread across financial technology as a whole, but it runs doubly true for insurance. There just haven’t been a lot of companies that have managed to push insurance tech forward in the Canadian market.

It is going to take a coordinated effort in order to fix this gap in innovation. Entrepreneurs need to take initiative, providers of capital need to open their wallets, and insurance carriers need to be co-operative and open to new ways of doing business.

Canadian insurance tech may be in its infancy, but we are extremely excited about the future of our market.