Listen to Adam Richards and Andy Stevenson talk to Matthew at InsTech London about how Albany Group's risk and intelligence software helps with supply chain management and improving operational resilience.
Adam, you and your fellow co-founder, Stewart Griffiths, were formerly in the Royal Marines. What took you into insurance?
AR: We went into the security sector and it led on to doing investigation work around fraud. The reality was we needed to grow, and we decided to go down the route of building technology. We thought it would be easy, ended up near financial ruin a couple of times, but we made it work and have built a team around us.
Through that process, you came across Andy, who was Director of Claims at Hiscox at that point. How did the relationship with Hiscox develop?
AR: We built an original technology platform called Aura, which we utilised during our investigation work. Hiscox Insurance was a long-standing client of ours and used Aura for fraud investigations. We were then approached by Hiscox in 2014 as they wanted a product to manage their supply chain, starting with claims. We built an original product called Hisconect. There's also another version, which is ours, called Conect. We built on that product, reengineered it last year, and continue to work on it.
Andy, what was it that gave you the motivation to work more closely with Albany Group?
AS: They were developing some smart technology and I liked their approach. The military background Adam and Stewart have gives them a real sense of discipline and a way of doing things where everything has its place. Everything's engineered and there isn't much room for luxury. They had tight budgets and needed to have a real laser focus on delivering the technology. I could see they were capable of doing that.
What kind of supply chain problems did you see as a client? Were there solutions on the market that weren’t good enough?
AS: The big problem was underinvestment in the space. Even now, if I ask a CEO where automating supply chain management and risk management for supply chains is on their list of priorities, it wouldn’t make the top 10. In 2015, most of the investment was still going into distribution channel policy and admin systems. Lots of companies were working off spreadsheets and emails. There wasn’t an off the shelf product that we could use easily.
Albany is also working with Brit and QBE. What can you tell us about your work with other clients?
AR: We’re working with several more syndicates in the Lloyds market. Also, Tesco is another great client of ours, as well as several other large insurers in the domestic market.
The company hasn’t taken external funding. What was the thinking behind that decision?
AR: It wasn't a strategic decision to be bootstrapped. We had a fairly successful business and utilised the profits from our investigation work to fund the initial development of the technology. There was an opportunity to take funding, but we had to create something people wanted to buy before going out into the market. Asking people to put their money at risk before we put our own money at risk didn't seem like the natural approach. We were happy being in charge of our destiny.
Adam, you’ve previously described Albany Group as “a camel, not a unicorn”. Can you give us some perspective on that statement?
AR: That's a promotion because I used to refer to us as cockroaches because we could essentially survive a nuclear winter. I've promoted us now to the camel, which is essentially about us having a cautious approach and building up reserves so we can survive any drought. If we're looking at a potential recession after the pandemic, there could be a significant funding drought and we'll survive because we've built up reserves over the good times. Every technology solution we create is customer-focused and we only move forward with r&d if it's based off specific feedback from clients.
One of the areas companies use your Conect platform for is to help with resilience. What's your definition of resilience?
AS: Resilience is the ability to recover quickly. To do that, there has to be a plan and some knowledge. It's difficult to bounce back when a company is making it up as they go along.
There are still teams operating in this space with cobbled-together systems, spreadsheets and post-it notes. They may have survived like that so far but surviving one pandemic doesn't necessarily mean they will survive two. Managing a supply chain requires proper planning, insight and technology to ensure there is the resilience and ability to bounce back. That's where Conect steps in and allows clients to see right through their supply chain. It provides the knowledge and allows companies to make smart informed choices based on data and insights. If a tool can help a company do that, they’re more likely to be able to build that into their business processes.
For people that aren't familiar with claims and supply chains, what kind of data is involved? How does it integrate into other systems?
AS: What I see in developing supply chains is a lot of information exchange, typically through processes like requests for information or due diligence processes. There’s a lot of admin and burden on both sides of a negotiation agreement to process information. What Conect does is find the information that already exists. Companies ask for things like financial information for the last five years, which exists in the public domain, and Conect helps clients find and share that information. Once it is shared with one organisation, Conect helps to share it with others.
What about connecting into existing systems? Can Albany hook into those or does a client use Conect as a standalone system?
AS: Our technology allows integration to be done very simply through APIs and we’re a Microsoft Azure cloud technology stack. The barriers tend to be the older legacy systems that some insurers use. We work with them to solve that but it's very easy with our technology.
Another feature of Conect is documentation. Audit trails are increasingly critical, so how does that fit into the overall workflow?
AR: The process of onboarding and maintaining a regulated relationship with a third party needs to be a complete trial from start to finish. Conect documents that relationship from the very start, so the minute a client onboards a customer into the system they're able to look at all the documentation attached to that third party. Financials, company structure, any documentation that needs to go back and forth. It allows them to have a complete audit trail that an internal C-Suite and external regulators can monitor as well.
You mentioned third-party risk, but you also refer to fourth-party risk. What does that mean from a practical point of view?
AR: It's one thing to monitor a third party, so any company that interacts with you directly, but it's inherently more difficult to look at a fourth and fifth and sixth party risk. A good example is a building firm that a company would instruct directly. That building firm might have another fourth party subcontracted on a specific project for them. Underneath that there could be a fifth and a sixth with their own contracted individuals and it's inherently difficult to see the relationship. If a company has proper oversight of third parties and potentially fourth parties, they’re in a greater position to monitor the chain.
The Albany Group website talks about the speed gun effect. Can you explain more about that?
AR: Part of Conect is about monitoring performance. When a third party company feels they're being properly managed and there's proper oversight of the services provided, their performance goes up. We call it the speed gun effect because when a driver sees a speed gun, you slow down.
AS: There’s a second aspect to that which is it acts as an alert. If you have a speed gun set up and suddenly at three o'clock in the morning, lots of drivers are setting it off, it tells you that something's happening. That's a little bit of what Conect does. If there’s an alert because lots of conditions are being tripped, that's something a client can react to very quickly.
Is there the potential to recognise those signals and warn other insurance companies using your systems who maybe haven’t seen the issue?
AR: We've created a Conect community for all of our customers to interact every quarter. We feed information back up through the chain if we see potential hotspots or problems, or a specific issue with one or two suppliers. We're trying to take our intel background and utilise it to reduce risk, improve resilience, and provide a wider service. Each new customer means that the network expands and the opportunity to identify potential issues becomes greater.
Is your approach for building software switching towards no-code solutions?
AR: Absolutely. The original product was very code-heavy, and every change had to be done in the back end. It was inherently slow, expensive, and just wasn't practical. We rebuilt the technology from the ground up at the start of 2019 and released it earlier in 2020 into a complete no-code environment. I don’t think any new technology solution should have a heavy code base at the back, it should be a no-code environment. It gives the end-user the ability to completely configure everything within the platform, down to the most basic things like titles and names of different parts of the system.
What’s your advice for companies at an earlier stage than Albany and looking for technology partners?
AR: It's changed a lot since we were initially looking for technology companies. Employing people comes with a lot of expenditure and inherent risk as well. Things have moved on and there are lots of fantastic outsource technology firms, including some fantastic companies in Eastern Europe helping to create technology quickly and affordably. If I was to do it all again, I would seriously look at that option.
That said, I like having, to use a military term, the command and control of it. I'm in charge of the people around me and if we need something done quickly, we're working as one unit, or at most with a third party. Sometimes third parties might have other priorities, and it normally comes down to whoever's paying them the most. There are risks on both sides, but there are really good opportunities now to work with other companies.
What have you got coming up next that people should watch out for?
AR: We've got big plans for the rest of the year and a massive technology roadmap. We're working heavily on more workflow and more Enterprise Management Incentives (EMI)
data. The Conect communities are helping influence that roadmap as well. Earlier in the year, we set up an office in Gibraltar and we're setting up an office in Sydney later in the year. We've got our first major US insurer going onto the platform, which is fantastic. We've only really ever worked in the UK and continental Europe. Stewart and I are also going to be taking some of the profits from the business and putting it towards homeless veterans. That's going to become an official charity to the side of the business and will be up and running later in the year.
AS: We have another product that we are in the process of delivering to make it easier for new entrants into the insurance market. For example, if a construction firm wants to understand how to do work for insurance companies, we're going to make that very easy for them. We will provide a way of onboarding them into the market so insurers can find them. The product will reduce the frictional costs of operating in the insurance market and improve opportunities for competition.
We’re delighted to have Albany Group as a corporate member of InsTech London. What was behind the decision to join us?
AR: I've been coming to your events for quite a while now and have seen the huge growth you've had. The amount of people that you get into a room each time you do an event is fantastic. For us, it was a no brainer to be involved.