New arrangement could signal the future for insurance technology
RSA pet insurance brand Pets Plus Us has started a new form of pay-as-you-go technology deal with Aquarium Software.
The standard software business model in insurance is for the technology firm to charge a large up-front fee for the software, then charge an extra fee for each person using the product.
But under the new model, known as a transactional revenue scheme, RSA will pay a small fee up front and then only pay for the software if it uses it.
Aquarium sales and marketing director Mark Colonnese said: “Instead of charging a huge fee up front and then charging for each user, we’re only interested in charging for the volume of policies sold or renewed, or claims processed through the system. That way, unless our software really works for our clients they are free to look elsewhere or stay with their legacy platform with the vast majority of their capital intact.
“We only earn if our clients are successful - we get paid when our clients get paid and this makes us deeply motivated to deliver a solution that really works. But it also means our clients do not get trapped on outdated platforms. We have to keep one step ahead of the game, continually re-investing in our solution, to ensure ongoing client throughput that generates cash for us.”
RSA Pet Insurance managing director Randy Valpy said: “We picked Aquarium after sifting through several rival technology companies globally. Some were too expensive, others based on technologies that have a questionable lifespan.
“Once we had done our due diligence and confirmed Aquarium were a suitable and stable partner with which to do business, the decision was clear: with Aquarium we would free up spend for marketing and only pay Aquarium revenues if our business grew at the rate we hoped. With the other offers on the table, the marketing budget would have to be dramatically curtailed and we would still end up paying a major chunk of cash regardless of the success of the technology or indeed our own new business venture.”