Transparency and Lower Costs Push European Insurers to Adopt Digital Solutions

There’s no question the impact of the pandemic has driven many insurers to rapidly adapt to unforeseen disruption. But while some firms have been able to embrace digital solutions and stay ahead of competitors, legacy infrastructure has held some back from achieving that goal.

Helping these firms is core to the mission of London-based payment and treasury management platform Vitesse, as it works with insurers, ranging from small companies to high-profile businesses, to transform often outdated payment processes through digitization since it launched in 2014.

“We deal with lots of insurers within what we term the London market. We’ve contracted over 70% of the insurers within the Lloyds of London market, so we’ve shown that the product has a fit,” Phillip McGriskin, the firm’s CEO and founder, told PYMNTS in an interview.

Read more: InsurTech Firm Vitesse Closes on $26M in Series B Funding

In a bid of confidence in the company, Vitesse recently announced a $26 million Series B funding round, which McGriskin credited largely to the practical benefits the service brings to clients, including offering transparency and control of their transactions, as well as the strong return on investment and improved customer services that are attracting more businesses to its platform.

With over $4 trillion in claims being settled annually in the insurance sector, the potential market for Vitesse is substantial, especially as insurers are increasingly looking for ways to digitize their operations, McGriskin said, adding that in close to a year, the company has increased payments value processed by 109% and the client funds under management by 127%.

Different Markets, Unique Challenges

Increasing the firm’s customer base will require expansion into a range of new markets and deepening penetration into the regions it already operates within, McGriskin went on to say.

And in such a highly regulated industry where each country and region has its own unique regulatory environment, coupled with the added layer of regulatory burden events like Brexit have created, Vitesse has placed great importance on ensuring that all the right licenses are obtained.

“Brexit did create the need for another regulation, which we got. In Europe you can get a regulatory license that carries throughout Europe, but you can’t really get a regulatory license that carries throughout the U.S. — the US is a more complicated market,” he added.

Even in regions like Europe and the U.S., payment habits can be extremely diverse, with McGriskin noting that the U.S. is probably a less complicated market than Europe when it comes to payment habits.

“The regulatory situation in Europe is probably clearer cut but it requires a big upfront cost to comply and the US slightly more difficult on the regulatory front and little bit more standard on the payment front,” he further explained.

Overcoming Challenges

As companies operating in the insurance sector can often be relatively slow to fully incorporate new technologies, Vitesse has faced challenges in getting firms to move quickly when it comes to embracing digital innovation.

“Insurance companies have seen the need to change but there’s a lot of legacy technology within the insurance industry, McGriskin pointed out. “There is still some quite stunted growth, so educating our prospective customer base on the benefits of these payment types is a challenge.”

However, now that Vitesse has spent years operating within the market and getting to know key players, its reputation has grown, and insurers are gaining a clear understanding of the tangible benefits offered by the FinTech firm.

Competition too, is heating up in the industry, but McGriskin expressed confidence in the edge Vitesse has over newer market entrants with little experience and relationships in the industry, who will need time to meet the stringent industry requirements, leading insurers to turn to more established players like Vitesse.

“I think there’s room for a lot of us to play in this market. We’ve spent a lot of time working slowly with the market to let them know we have done everything that they requested to make sure that we fit within their requirements,” he concluded.