Diving In: Announcing Our Investment In Splash
As many in our network know, we at Asymmetric have regularly invested in rollup
EvolutionIQ Joins CCC Intelligent Solutions!
We’re proud to share that EvolutionIQ, one of our Fund I portfolio companies, has been acquired by CCC Intelligent Solutions (NASDAQ: CCCS). This marks a major milestone in EvolutionIQ’s journey to transform insurance claims and a meaningful outcome for Fund I performance and liquidity.
EvolutionIQ provides an AI, machine learning-driven insurance claims guidance platform. Its mission is to drive better claim outcomes for claimants and carriers, helping get hundreds of thousands of injured Americans back to work and their productive lives. The company targets customers across disability, workers compensation, and commercial casualty insurance lines at carriers and third party administrators (TPAs). Its models leverage historical structured and unstructured (i.e., call notes, emails, etc) data in conjunction with 3rd party, proprietary data sets (i.e., medical history, etc) to produce predictive insights and triaging on every claim.
At the time of our investment, EvolutionIQ was a market thesis and team-driven bet made significantly in advance of the current AI wave. We found that insurance carriers were finding it difficult to rely on continuous premium hikes to drive profitability because of the stream of new capacity entering the market in the form of insurtech players, MGAs/MGUs, and carriers. Meanwhile, claims costs and volume increases have been accelerating over the last decade thanks to social inflation1 - whereby claims costs rise as a result of increasing litigation, broader definitions of liability, more plaintiff-friendly legal decisions, and larger payout rewards. Drivers include negatively evolving public perception of corporate behavior, changing demographics, increasing influence and transparency of social media, growing for-profit litigation industry, and new litigation tactics as well as tort reform rollbacks. For example, the average settlement amount in 2020 was $55 million, which represented a 15% increase over the prior nine-year average2. There was also a 300% increase in the frequency of $20 million+ verdict payouts in 2019 vs. the annual averages between 2001 to 20103.
Despite being the largest cost driver, making up ~70% of GWP4, claims costs were historically written off as an unavoidable line item after an underwriting decision was made. In a challenging environment where carriers are limited on the pricing front and being squeezed by inflationary claims costs, we held conviction that a more proactive approach to managing and mitigating claims costs was inevitable. With AI’s ability to synthesize unstructured and structured data to provide insights, now was the time for a vertically focused AI-driven claims solution. Carriers would be forced to finally look inwards to optimize their single biggest line item in order to stay competitive in an increasingly crowded market. We identified EvolutionIQ as having the greatest potential given the strength of the founding team, its platform and GTM momentum.
Since our initial investment in March 2022, we’ve watched EvolutionIQ grow to impact over $10 billion in claims value annually and count 7 of the top 15 U.S. disability carriers as part of its customer base. Their momentum has been nothing short of remarkable.
Now, as part of CCC, EvolutionIQ is poised to accelerate its mission. With CCC’s scale, resources, and commitment to innovation, the team will be able to broaden its reach and deliver even greater value to insurers, policyholders, and claimants alike. Importantly, the co-founders and full EvolutionIQ team will continue leading the company forward as part of this next chapter.
A huge congratulations to the entire EvolutionIQ team on this incredible achievement. We’re honored to have been part of your journey and look forward to watching the impact you’ll continue to have on the insurance ecosystem.
Read more about the announcement here.
Footnotes:
1 Insurance Information Institute (Social Inflation 2021)
2 Cornerstone Research, Securities Class Action Settlements, March 18, 2021
3 Wall Street Journal, The Specter Of Social Inflation Haunts Insurers, December 27, 2019
4 Insurance Information Institute (2020)
