An investment by a Silicon Valley private equity firm and its Canadian partner is propelling a major expansion of London-based Davies into the U.S. insurance services sector, including claims management.
Davies has acquired 17 insurance-related businesses since HGGC of Palo Alto, Calif. bought a majority stake in the business in 2017. The smorgasbord included seven firms in the United States. The U.S. expansion started with Frontier Adjusters in Independence, Ohio in September 2019. Davies added Alternative Service Concepts in Nashville, Tenn. one month later.
Davies has also broadened its technical acumen in the U.S. with the purchase of an actuarial firm, an audit, subrogation and claims management consultant and a disability management provider.
HGGC said when it invested in Davies that it is “championing the insurance industry as a sector that could greatly improve from technology upgrades,” according to a report in Mergers & Acquisitions.
More is coming. HGGC announced Thursday that it and minority owner Alberta Investment Management Corp. are increasing their investment in Davies to continue the global expansion. The amount of the investment was not disclosed.
HGGC said in a press release that Davies grew revenues by 49% in 2019 and has added 150 new accounts to its platform in the past year.
“We’re excited to invest further in Davies as it revolutionizes a complex, highly regulated industry,” stated James Ridout, a director of the AIMCo private equity group. “The team continues to identify great additions that bring a similarly disruptive, technology enabled mindsight across the insurance services world.”
Davies U.S. expansion includes the purchase of:
- TriPlus Services, a long-term care third-party administrator based in Hopkinton, Mass., announced on Sept. 21.
- Johnson Claim Service, a third-party administrator specializing in transportation claims based in Tulsa, Okla., on Nov. 2.
- Wakely Actuarial, a compliance, risk management and actuarial services provided based in Palm Harbor, Fla., on Dec. 17.
- Northshore International Insurance Services, which provides audit, claims management and subrogation management services from a headquarters in Danvers, Mass., on Jan. 4.
- Disability Management Services, a third-party administrator based in Springfield, Mass., on Jan. 7.
Davies appointed one of its London-based executives, Matthew Button, as chief executive officer for U.S. claims last July.
Button said in an interview with the Claims Journal that Davies’ has provided services to the Lloyds’ of London market since its founding in 1968 and is continuing that relationship as it grows its U.S. operations. He said the firm’s use of technology and the people it hires to operate that equipment are factors most likely to make it stand out among its competitors.
He said Davies is focused on employee culture and client service.
“We call ourselves a technology-enabled business rather than a claims-technology business,” he said.
“We combine our specialist teams with our technology offerings to provide efficient solutions to our clients,” he continued later, elaborating in an email. “We do however, have a growing part of our business which is offering pure technology solutions where our clients require it.”
The corporate culture that Button referenced includes annual “disruptive thinking innovation labs” where teams of employees brainstorm new ideas and compete to participate in a trip to the Silicon Valley, where they can pitch new insurtech solutions to a panel of tech executives.
Davies was an early adapter of technological solutions for the claims business in the U.K., deploying drones, photo-estimates and an app that allows claimants to communicate directly with desk adjusters.
Kath Mainon, chief executive officer of Davies Claim Solutions, said in a promotional video that Davies is using technology to accomplish routine tasks such as reading medical reports and validating documents. She said the goal is “instant validation through data enrichment.”
Davies’ expansion into the United States continues a consolidation of the claims-management sector that started a decade ago, said Jonathan Held, CEO of JS Held, a New York-based engineering consulting firm.
While interesting, Davies growth in the U.S. won’t likely transform the property and casualty claims marketplace, Held said. He said five firms will continue to dominate: Sedgwick, Crawford & Co., Charles Taylor, McLaren’s and Engle Martin.
“Davies, from a U.S. standpoint, is probably under the radar screen,” he said. He said other developments, such as Sedgwick’s purchase of Cunningham Lindsey in 2018 and York Risk Services in 2019 had a greater impact on the sector — while also continuing the general trend toward consolidation.
“Davies is obviously seeking to be global firm and the United States is a natural part of that,” Held said.
About the photo: This screen shot taken from a promotional video shows Davies employees participating in virtual reality training.
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