Global fintech Q3'18 report. Fintech 250. This week in insurance tech.
As we look ahead, one of the digital ecosystems that looks to become more relevant for insurers over time is payroll/HR software.
Not only are macro trends like rising interest rates and a tight labor market driving more SMBs toward software vendors — the value of payroll data aggregated on these platforms is growing.
Consider new product rollouts that are a direct result of aggregating and unlocking payroll data, such as Gusto’s Flexible Pay feature that launched earlier this year:
“The key to this new feature has been Gusto’s increasing data about small businesses. Gusto…has comprehensive access to its customers’ financial and payroll data. With integrations to time sheet services and proper risk modeling, Gusto is able to predict exactly what salary a worker has already earned, and can front the money at minimum risk to itself.”
The growing number of businesses moving toward cloud SaaS solutions for HR and payroll automation has implications for both P&C and benefits providers. Consider that service bureau Paychex (which is being challenged by software vendors) just started breaking out “PEO and insurance services” revenues separately in its financial results, and today ranks as the 20th largest US insurance agency per Insurance Business.
On the benefits side, a number of newer cloud payroll/HR software platforms also now operate insurance agencies or PEOs. More recently, we’ve started to see more one-off partnerships between cloud payroll/HR software platforms and carriers. Last week, Canadian HR, benefits, and payroll platform Rise People announced a partnership with and equity investment from Sun Life Financial, which includes a complete integration with Sun Life to launch in Q1 2019.
On the P&C side, we’ve seen platforms in the US like Gusto, Square, and Intuit partner with agency AP Intego to integrate pay-as-you-go workers’ comp. In doing so, software platforms are looking to sell more products to create additional levers for retention. Purpose-built API integrations allow each platform to present such offerings in different ways.
Today’s SMBs now have a plethora of reliable, integrated HR/payroll software options. But as software becomes more important for payroll, it’ll be interesting to see how relationships between such platforms, agencies, and insurers (or their startup challengers) evolve as tech integrations improve and political leaps are taken.
Global fintech Q3’18 report
We put out some new figures on global investment to VC-backed fintech companies today. While early-stage fintech deals are declining, fintech mega-rounds continue to flourish.
We’ve seen more insurers bringing up telematics on earnings calls this year including new pilots and commercial opportunities. We’ll dig into these and more on the telematics front in a longer analysis next week. Stay tuned.