The Baltics is one of Europe’s most exciting startup regions. So who should be on your watchlist?
It’s a great time to be a Baltic startup.
So far in 2021, Lithuania has seen €277m in investment (compared to just €17.9m in 2020 and €151m in 2019). In 2020 Estonian startups received €115m in capital.
The Baltics have birthed Bolt, the Estonian ride-hailing app, and Vinted, Lithuania’s increasingly popular secondhand clothes marketplace. Other, but exited unicorns include Skype and Wise (previously TransferWise.)
But with only two unicorns, the region has a lot of room for growth — and needs it if it’s going to compete with more established markets.
Fintechs like consumer lender Sun Finance, which recently placed 2nd in the FT1000 with a compound growth rate of 752%, are particularly promising. And thanks to startup-friendly regulations, Lithuania is Europe’s second-largest regulated fintech hub.
While many Baltic startups have also moved out of the small and underpopulated regions to capitalise on more established markets, as usual, this list only includes startups headquartered in Estonia, Latvia and Lithuania.
(P.S The data is from European Startups with valuation estimates from Dealroom. If there is anyone missing from this list, or anything is wrong, please let us know by email at isabella@sifted.eu).
The AI-assisted vehicle verification solution developed by the Estonian technology company DriveX has been implemented by the largest insurance brokerage company in the Baltics – IIZI, which belongs to the GrECo Group. With DriveX, vehicles can be photographed and automatically verified, saving customers’ and employees’ time and money.
“We are pleased to cooperate with the leading insurance brokerage company in the Baltics whose impressive sales volumes of comprehensive policies required more efficient processes. Earlier, the insurer was sent instructions on how to take a picture of the vehicle and the sales employee checked the pictures. From now on, the customer is assisted by an web app that gives the user instructions and feedback through computer vision on whether the images are suitable. The images are no longer checked by an employee, but by DriveX Core — an AI that automates the process. All in all, the customer wins, because the purchase process of the comprehensive policy is faster and you can start driving without any worries, “commented Rauno Sigur, co-founder and CEO of DriveX.
“Satisfied customers are the cornerstone of every company, which is why the main thing for IIZI is to provide quality service, and we also highly value customer feedback to improve services,” said Igor Fedotov, CEO of IIZI Insurance Broker. He added that customers increasingly appreciate the content of insurance and the convenience of the service provided. The company constantly invests in innovation, which is why it differs significantly from other insurance service providers in the market.
“We are still considered a start-up because innovation is a normal part of our culture,” says Fedotov. Over the last six months, IIZI has come up with various unique solutions. The CEO of IIZI adds that it is not reasonable to make all the solutions in-house, which is why it is important to cooperate with experts in their field, such as DriveX, who provide a convenient service to improve customer experience.
DriveX Technologies is a technology company founded in 2019 by Rauno Sigur, Kentti Koppel and Valter Läll. The company, which raised money from well-known business angels at the end of 2020, already cooperates with several leading insurance companies, including ERGO, BTA and Gjensidige.
IIZI Kindlustusmaakler AS is the leading insurance brokerage company in Estonia. More than 150,000 private customers and nearly 25,000 business customers are served annually. Since 2018, IIZI Kindlustusmaakler has been a company of AS GrECo Group. IIZI Group AS employs over 150 people.
For many industries, the last 20 years have been a period of intense change and transformation as they have had to adapt to the digital age. For many large, incumbent businesses in these industries, innovation has taken the form of working closely with the startup community – small, agile businesses harnessing the possibilities of new and emerging technologies to reshape the way problems are solved and our lives are led – to bring fresh eyes and thinking to long-held ideas and practices.
“The most agile corporates have always looked to the startup world for inspiration and innovation, not as competition but as a competitive opportunity,” says Yoram Wijngaarde, founder and CEO of Dealroom.co, a global data platform for intelligence on startups and venture capital. “As we enter a new age of deep tech, with every industry set to be transformed by new technologies like AI, blockchain and quantum, startup engagement will only become more crucial for established firms.”
From cross-pollination of ideas to new ways of working, there are benefits for both parties. Wijngaarde says the research and development and commercialization capacity of big firms make these partnerships crucial for startups.
“Europe is home to some of the very best technical talent, leading universities, a maturing startup ecosystem and far-reaching corporates,” he says.
Success in the next generation of technology will require collaboration across all players.
Increasing competitiveness rather than creating competition
While it may seem counterintuitive for a well-established incumbent to support new market entrants and risk creating a potential future competitor, it can be difficult for large companies who have long done things a certain way to change direction or try new things, even if the willingness is there.
Sergiu Negut, Co-founder of Romanian startup FinTech OS
In many cases startups can help their larger counterparts stay relevant and become more competitive, says Sergiu Negut, co-founder of Romanian startup FinTech OS, a member of the Microsoft for Startups program.
For example, some established banks are finding their traditional brick-and-mortar industry challenged by digital-first newcomers, specifically around customer experience and the loyalty gained or lost as a result, according to The Economist Intelligence Unit (EIU), which shows digital banks are seen as offering customers more innovative products and a better overall experience.
Coming from a fintech background themselves, Negut and his co-founders saw an opportunity to help traditional banks navigate the digital transformation, by empowering them to become customer-centric and adopt a data-driven approach. The company assists legacy banks and insurers in accelerating their digital transformation, enabling them to build end-to-end digital products in weeks rather than months. Through open source and ready-to-deploy apps, pre-integrated with Microsoft Azure, organizations can plug into their own systems with little effort, offering access to highly personalized financial journeys and products for customers.
The ideal scenario, for any organization, is the ability to start with a single customer journey and expand with more journeys that are very interconnected.
Such was the case with one large bank in Poland, which he says started with digital onboarding of new-to-bank customers more than two years ago and has since added loan origination on multiple channels and settings, subject matter expert onboarding and now mortgages.
Startups are also often called “disruptors” because in many cases they can accelerate an industry’s evolution, which is often largely influenced by regulation. For example, the open banking initiative, which was meant to drive the creation of myriad new financial products and services by allowing access and control of consumer banking and financial accounts through third-party applications.
Latvian startup Nordigen
Another Microsoft for Startups member, Latvian startup Nordigen, which provides transaction analytics tools to banks and lenders, recently announced it would be the first in Europe to offer a free API to access account information. The move is aimed at minimizing one of the major challenges in realizing the potential of open banking – the often prohibitively expensive cost of accessing banking data in the first place.
For co-founder Rolands Mesters, the logic behind making Nordigen’s primary offering free is simple. Adoption of open banking has been slow; as a technology provider which piggybacks on that adoption, his own company’s growth prospects are stifled by the high price tag attached to potential innovation. By challenging the status quo, Nordigen wants to empower its customers and its competitors to do the same.
“I’m pretty sure that many companies have been thinking about how to leverage the opportunity of open banking,” says Mesters.
Now that we’ve taken a step towards democratizing access to data, I’m sure many will follow the same path in order to stay competitive.
Out with the old
For many organizations, the hesitation to embrace digital transformation and innovate their processes is due to the difficulty of tackling built-in complexity of legacy systems. A new breed of tech startups is addressing this complexity by creating “low code, no code” solutions which don’t require a lot of coding or engineering knowledge to implement – making them easier to adopt, use and maintain.
Rauno Sigur, Chief Executive & Co-founder of DriveX
In the automotive insurance industry, for example, claim management is still a largely manual, laborious and time-consuming process for insurers and claimants. As a result, automotive insurers today are losing billions to fraudulent claims, manual processes and lost sales opportunities. After Rauno Sigur, founder of Estonian startup DriveX Technologies, was in a car accident, his experience afterward changed the way he thought about automotive insurance claims and how car insurance is purchased.
Also a member of the Microsoft for Startups program, DriveX’s technology allows insurers to provide their customers with a simple, user-friendly and rapid tool for uploading good quality and compliant images to support their claim. The web-based tool means drivers can easily access it online without needing to use special applications, particularly when they might be anxious or stressed after an accident. Real time feedback ensures the right images are provided from the scene, ensuring the right level of detail needed for the claim to progress.
“Studies have shown that investing as little as $1 into pre-inspection technologies or services saved companies on average $34 in fraudulent claims,” says Sigur, who estimates up to 70% of damages can be assessed viewing an image remotely, jumpstarting various background processes such as planning labor and ordering vehicle parts.
Using such image recognition technology, people can react to accidents in a matter of days, not weeks.
“Ultimately, their car gets repaired faster, and the claim is solved. But the processes currently in place are still largely manual, even in a digitally forward country like Estonia, let alone elsewhere.”
By working in close collaboration with startups who are often ahead of the curve in a rapidly evolving digital environment, well-established businesses can build on the value they have already created in their operating models, while still taking advantage of innovative new solutions and practices far more quickly and effectively than if they were starting from scratch or going it alone, Sigur says. In turn, these partnerships can open doors for startups to sizeable opportunities for growth and development that they might not otherwise have access to, creating the very best kind of virtuous cycle for both side.
BTA Baltic Insurance Company AAS (BTA) in cooperation with an Estonian start-up DriveX starts to offer an innovative, artificial intelligence based solution to its customers in the Baltic States, which will allow the customers to record their vehicle’s condition during the insurance policy procurement process faster, in a more comfortable and safer way.
This solution has already been launched in Estonia and is 100% operational and used by BTA Estonian branch customers, purchasing CASCO insurance policy, and now it has been gradually offered to BTA insurance policy buyers also in Latvia. Very soon this innovative service will be made available to BTA customers in Lithuania as well.
“The solution is based on a unique technology, developed and streamlined by a start-up in Estonia. DriveX is an artificial intelligence based vehicle photo submission and recognition tool, which will be particularly handy to those BTA customers, purchasing a CASCO policy. Previously we requested our customers to come to BTA Customer Business Centres or arranged a certain place and time for our specialists to come and register the actual condition of a vehicle. But now – BTA specialist will only send a link and the customer will be able to capture images at a convenient time and place, just following steps prompted by the system, which will then automatically imported into BTA’s system and added to the policy of the respective customer! Just as simple, and responsible at the same time, as we can thus take care of the safety and health or our customers and our specialists, making no concessions regarding the high quality and speed of our customer service,” emphasizes Oskars Hartmanis, Deputy Chairman of BTA Management Board.
From the pictures taken by the customer, DriveX will capture the vehicle’s licence plate, vehicle’s visuals, check the quality of the pictures, and register the date and time of this process. Besides, the customer will have a clear guidance – what and how needs to be photographed. Thus, with the DriveX solution, the customer will spare time and money, while BTA will be able to provide modern and fast service, which also protects against potential fraud.
“The process that we used by now was considerably and increasingly getting out of date, and especially now, when we face a variety of safety precautions, we had to find a solution that would be technologically advanced, user-friendly, comfortable and reliable. I am delighted that BTA in cooperation with DriveX used this opportunity and proved yet again that we are an innovation-focused company in the insurance market. BTA works on a daily basis to create new, advanced solutions, which make the daily life of our customers, our specialists and cooperation partners faster and simpler,” says O.Hartmanis.
About BTA BTA Baltic Insurance Company is one of the leading insurance companies in the Baltics, offering the broadest range of non-life insurance services in Latvia, Lithuania and Estonia. BTA employs more than 1,000 employees in the Baltics. The largest shareholder of BTA is Vienna Insurance Group AG with close to 200 years of experience in the insurance business. With about 50 companies in 30 countries and more than 25,000 employees, Vienna Insurance Group is a clear market leader in its Central and Eastern European markets, and takes care of more than 22 million customers. Vienna Insurance Group is the best-rated company of ATX, the leading index of Vienna Stock Exchange (since 1994) with a rating of A+ with stable outlook from Standard & Poor’s; its share is also listed on the Prague Stock Exchange. Vienna Insurance Group works in close partnership with Erste Group – the largest retail bank in CEE.
A technology that makes selling vehicle insurance policies and solving claims more effective has been funded by angel investors from Estonian unicorns and a customer.
DriveX’s image capturing uses computer vision to inspect vehicles. Automating vehicle verification processes makes selling vehicle insurance policies and solving claims after damages faster and more convenient. The company, established in 2019, has been funded by well known angel investors with a background from Estonian unicorns Skype, Transferwise and Bolt. Additionally, former Prime Minister of Estonia Taavi Rõivas, Lemonade Stand, insurtech expert Risto Rossar and Silberauto participated in the round.
Focusing on product development and foreign markets
According to DriveX founder and CEO Rauno Sigur, the investment is primarily used in product development, expanding the team and entering new markets. “Several large insurance carriers and brokers from Europe, Americas and Asia have contacted us. That’s a very good sign, considering that our marketing budget has been only a couple of hundred euros. The product speaks for itself. We just signed a distribution agreement with Syncier, an Allianz-Microsoft company that will fuel our business development immensely,”.
The company estimates that close to a billion motor insurance policies are sold and several hundred million accidents all over the world happen each year globally. Sigur comments that it’s very important to look at which processes can be augmented with AI and which decisions can be made automatically. “DriveX assists consumers and employees with completing tasks related to images that took too much time before. This also means that people can put their time into more value-added activities”.
Carglass accelerates growth
Carglass is a trademark owned by Belron Corporation, which is represented by Windrox in Estonia. Carglass Estonia representatives Rainer Virve and Sven Freiberg are certain that digitization in the insurance sector is in its full force: “We realized rather quickly that we want to offer an even faster and more convenient service to our customers. We have noticed the same tendency with our long-term partners, insurance companies.”, Virve commented.
Freiberg added that Carglass is the market leader in Estonia and abroad, thus oriented towards innovation. “Belron Corporation has high ambition in their 35 countries. Estonia is known as a digital nation and surely we are a role model in the group in terms of what can be achieved with DriveX technology,” Freiberg added.
Insurance sector is the first step
“The insurance world in digitization is in a similar position where e-commerce was about 10 years ago”, Sigur noted. He also said that the company will focus on the insurance sector for the upcoming few years since it is such a wide business sector. In addition to insurance carriers, there are tens of thousands of insurance brokers, claim management companies, other insurtechs and more. Looking at business as a whole, passenger cars is a niche with large potential, given that similar services are needed by mobility companies, car dealers, workshops and other businesses.
DriveX Technologies is an Estonian technology company that was founded in 2019 by Rauno Sigur, Kentti Koppel and Valter Läll. DriveX customers are leading insurers across the Baltics, including the market leader ERGO Insurance SE.
Estonian InsurTech startup DriveX has signed cooperation agreements with three insurance giants of the region, enjoying a privilege to choose smart investors only and starts expanding into foreign markets.
After completing the Porsche Open Innovation Hackathon in May 2019, somebody reversed into Rauno’s car in a parking lot. He experienced first-hand how archaic and frustrating it was to go through an insurance claim. Working for the well-known last-mile technology company Cleveron at the time, he formed an idea to use AI for remote vehicle inspections that would ultimately get people back on the road much faster.
Since 2019, DriveX has started working with the leading companies in the Baltic region – ERGO, Gjensidige, Carglass and more. Just recently, DriveX announced another partnership with the largest insurance corporation in Central and Eastern Europe – Vienna Insurance Group. DriveX saves costs, reduces fraud risk and provides a better, digital customer experience for insurers.
In December 2020, DriveX announced its pre-seed funding with well-known angels from Estonian unicorns Bolt, Wise (former TransferWise) and Skype, including the former Prime Minister of Estonia Taavi Rõivas.
Why is vehicle inspection a thing in insurance?
Rauno Sigur, CEO and co-founder of DriveX: Insurers have two business silos – sales and claims. Their success in business is largely determined in how much they are paying out to customers, but also how fluently the process went. In most cases, handling a claim is the only serious connection point for most consumers with their insurer. That’s where they decide if they will continue being a loyal and happy client or not.
Coming back to sales, then insurers want to understand what they are insuring exactly, since it is their business to take calculated risks. Insurance fraud is a huge issue – companies are paying out billions of euros that they shouldn’t. Essentially, the most common situation is where dishonest people are trying to add damages to their car after an accident, hoping that insurers don’t notice. And that’s the key reason insurers are doing pre-inspections when they sell casco or full comprehensive motor insurance.
In claims, it’s all about receiving trustworthy, high quality information as fast as possible. Naturally, the goal is to summarize what happened to the car and jumpstarting the claim process. At its core, the customer’s satisfaction depends on the processing speed and transparency of the insurer. If we get into a car accident, we want to get everything fixed as soon as possible and use our car again.
AI seems to be a buzz word nowadays. What does your product do exactly?
Couldn’t agree more! First, we realized that AI is indeed complicated and expensive to develop. We only use it for solving problems in which other solutions cannot.
In DriveX, image capturing is simple, yet standardised. You can only take images in real time and it is taken, our AI analyses it in a few seconds. If necessary, the application provides feedback to the user what needs to be changed – perhaps the number plate wasn’t visible, or the image was blurry. For the record, you cannot upload a picture of your cute dog. We know if there’s a car on the picture and various other aspects.
Insurers receive only relevant pictures that can be used in automating decisions – to activate a policy, to review damages and more. Furthermore, we report how the verification process went – was everything completed in a safe manner, creating more transparency if users are honest or not.
There are a gazillion apps out there. Is than an obstacle or a supporting force for you?
Apps are indeed a part of our life now but more importantly: consumers want frictionless experiences. Most people purchase insurance once or twice per year and luckily, accidents happen less often, perhaps once in 5 years. For those reasons, people don’t want apps in their phone for something they use so rarely.
We believe in progressive web apps – after receiving a link from the insurance company, our verification takes place in the web browser. No app download or installation required. We have also built ways how the solution can be customized according to the insurer’s needs, which is paramount in creating excellent customer journeys.
How innovative is the insurance sector? Are they embracing technology and digitization?
An extensive study has shown that 6 out of 10 consumers would switch their insurance provider to get a better and digital experience. Those high expectations in consumer behaviour are influenced by ecommerce and the like, pressuring in the insurance industry to innovate as well.
It is true that insurance may be conservative as a sector but that’s because it is heavily regulated. Innovation must be thought through entirely and partner companies must be crystal clear about the value proposition but also risks. What I like about working with the insurance industry is the entry barrier – not every startup is able to overcome it. But once you’re in, you’re in for good.
Insurers have understood that it’s not worth it to reinvent the wheel, they want to focus on their core business. The majority of companies want to find a trustworthy technology partner, purchase modules „off the shelf“ and thus they provide value for customers and employees much faster. Software as a Service and also Insurance as a Service will be very dominant in the coming years, combining many service providers and technologies into one winning product.
What’s your next move?
We are building towards automation in insurance sales and claims step by step. Actually, up to 50% of common vehicle damages such as dents, scratches or windshield cracks can be assessed viewing only photos. This creates great opportunities to provide a touchless and digital process in claim management. People can save their time doing inspections remotely. Given the COVID-19 situation, remote solutions also help us to be safe and healthy.
In only one year, we have managed to capture the majority of the Estonian insurance market. We are quickly expanding to new markets and already having first conversations with insurers from Germany, Poland and Scandinavia. Fortunately, we have found great talent to join our team. The market opportunity is huge since the insurance vertical consists of carriers, agents, brokers, car dealerships, other insurtechs and more.
What about raising funds?
Funds are indeed important, and we were fortunate to choose smart money in the last round. I can comment that interest from investors is fairly high – every week a new investor writes us. Estonian startups are well known for being capital efficient. We have what we need for more than a year, since our customers are generating significant revenue for us already. We definitely prefer insurtech and AI related hands-on investors that could help us in new large markets.
6 out of 10 clients would change their insurance company to have a more digital experience. The 73% would opt for an insurer that uses AI to process claims faster. These are the main conclusions of the international survey conducted by Solera among more than 1,500 consumers and 500 insurers.
The survey reveals how important it is for insurers, workshops, and distribution networks of original equipment manufacturers (OEMs) to adopt AI and incorporate it into their businesses. Something that will be essential for these companies in the short term, since, according to the Solera survey, more than 70% of consumers prefer automated management for a matter of trust.
In addition, most have previous experience in the use of technology in car claims and repairs, as 56% have already sent a part online and 51% have used digital technology to check the status of the file. All this as a result of the irruption of the ‘millennials’ in this sector, totally familiar with the new information technologies.
The pandemic makes technology crucial
Before the arrival of Covid-19, the use of cutting-edge technologies, especially those that avoided contact between people, was considered one more complement. Now, in many cases, it is crucial that companies provide customers with contactless interactions.
If we consider the pandemic as the driver of digital transformation, the main catalysts for vehicle insurers have been growth strategies (36%), employee safety and teleworking (34%), and the demand for digital experiences by part of customers (33%).
“This survey highlights something that Solera has known for a long time: automated processes have the potential to increase customer satisfaction and even promote customer loyalty,” explains Evan Davies, Solera’s chief technology officer.
insurers to speed up casco sales and claims handlingMGAs and brokers to comply with insurance companies’ requirements
Many insurtech start-ups offer insurers, MGAs, and brokers the chance to avoid IT nightmares and integrate their modular technology hassle-free. One of the game changers is DriveX. They are innovating insurance and mobility industries with AI-assisted vehicle verification. By applying data-driven technologies to define and transfer information about vehicle features, e.g. visual defects, number plate, mileage, etc., DriveX creates transparency and minimises the risk of fraudulent verification. We had a chat with Rauno Sigur, CEO and Co-founder of DriveX, to find out what’s the secret sauce to their success.
Could you tell us about your background? How did it encourage you to found DriveX?
I was working at Cleveron where my responsibilities were business development and export. Through my contacts, I heard about the Porsche hackathon. It seemed like an exciting project and I put together a team of my friends to participate. We presented a cool idea of personalising driving experience and made it to the semi-final. But we thought, what’s next? As we started meeting with Estonian mobility companies and gathered feedback, we realised that one of their main problems was how to verify the vehicle’s condition before and after usage. Actually, a personal story motivated us to act. While I was driving my Japanese partners to a business meeting at Cleveron, my car got hit in a parking lot. That messed up our entire day! I wanted to get my car fixed in the official dealership. I realised how much paperwork and bureaucracy it caused, how slow and archaic the process was, and how little information I had about its progress. I wondered if things are so confusing in Estonia, what could the situation be like in other countries? Starting from that, we focused on insurance companies and how to help them with quick and paperless vehicle verification. Today, our technology is empowering casco sales and we are beginning to improve efficiency in claims handling.
Please explain in the simplest way possible what does DriveX do? What problems are you solving?
Our solution enables you to self-inspect your car and instantly share this information with your insurance provider. Thanks to that, your casco policy will be activated much faster or your claims handling cycle will be shorter. The idea is that the quicker an insurance provider gets accurate information about the car, the faster the process will roll. Eventually, both end-users and insurers will win in time and money. Our mission is to make insurance providers’ life easier by addressing problems like efficiency, risk management, and user experience. Insurers should recognise and assess risks accompanied by the lack or poor quality of vehicle photos. Accurate information enables to minimise risks and make aware decisions. It also boosts efficiency since the process is automated and doesn’t require employee intervention. Our solution is easy to integrate and use, so we deliver great user experience when it comes to pleasing a new generation of consumers with high expectations.
The insurance industry is known for its high entry barriers. How did you break these down?
I see three key factors affecting that: competence, continuity, and trust. Building trustworthy relationships with conservative insurance companies is a challenge. We’ve managed to overcome that by having a clearly stated vision and, on the other hand, carefully listening to the market’s needs. Success lies in fast and clever execution, and customers like our ability to perform. Our motto is “Innovate what matters”. Entry barriers are a true blessing in disguise, but once you have defeated them, it feels amazing!
What value do you create for your target industries: insurance and mobility-as-a-service sector?
The main value created by DriveX is the possibility to acquire reliable, high-quality information about the vehicle’s condition. Insurers can cut costs thanks to increased efficiency, but also mitigate the risk of fraudulent cases by making knowledgeable decisions based on accurate data. End-users will win in the speed and transparency of decision-making. We deliver transparency and trust. To this day, obtaining, storing, and using trustworthy information about a vehicle’s condition at a certain point in time is complicated for insurance providers. For mobility companies, the challenge is to ensure customers’ peace of mind. With transparent and documented processes, they will know who and when damaged the car and innocent customers won’t suffer.
What makes your technology unique? Are you worried about competitors copying your concept?
The technology is special since it gives instant feedback to end-users after capturing the vehicle. Our system runs different verifications on the background, e.g. number plate and VIN code check, as well as verifying whether there is a car in the photo at all. Plus, additional proprietary checks. Ensuring photo quality is the most important asset since it guarantees that further decisions are made on the right basis and faster. It is always possible to try to copy technology, but that’s more complicated than it sounds. Insurance companies have tried to solve similar challenges on their own, but they have either given up or asked for help, since it is not their core business. Our product becomes more complex in time, we rely on profound analysis and constant iterations. It’s a sequence of improvements – we have improved our technology based on continuous customer communication and feedback, and our roadmap is really ambitious.
How have you applied AI in your Smart Scan technology?
First of all, DriveX guides the user to take photos in a simple, yet standardised method. Only real-time images can be used. Having captured the vehicle, the photo will instantly be uploaded to the cloud where our system analyses its match to certain criteria. That’s what we call the AI and performing proprietary checks. Our next target is to start identifying damages, e.g. distinguishing scratches or dents in the photo. The most important goal is to guarantee the photo quality – that the distance is correct, the vehicle is properly in frame, etc. In the future, we want to be able to identify the physical appearance of a vehicle, i.e. whether it’s covered in mud or snow. There is room for additional layers of complexity to raise accuracy.
Speaking of implementation, do insurers need to integrate your product into their systems? If so, how have you solved that difficult challenge?
Our goal is to offer the simplest integration and the easiest user experience on the market. Our technology is a module that can easily be integrated into existing systems. You can actually give it a go without having to integrate anything. You can just sign up and receive information, i.e. photos and reports, by e-mail. The next stage is full integration between DriveX’s and the company’s system, where the information and photos are transferred automatically. This enables full automation and takes the need for human interference to a minimum. For example, insurers can connect a vehicle’s policy number with our scanning result and have correct photos and information updated in their database.
Insurance is an industry with long sales cycles. What’s your secret to closing good deals fast?
First, understanding the real value that we provide. Second, we act as consultants for insurers who want to become digital. I suppose that our strength is the ability to fully understand their business processes and goals. Since the industry is conservative, we think along with our customers on how to innovate step-by-step. Of course, having good relations with customers is paramount. We keep them in a constant communication loop about our plans and value their feedback. A substantial part of our journey is customer engagement in product development, which keeps them excited. Surprisingly for us, the power of word-of-mouth is strong, and our Estonian customers recommend us to their partners. I can’t thank them enough and say how much we appreciate it!
What’s your ambition in changing the industry? Where do you see DriveX in 3 or 5 years?
Our goal for 2021 is to enter new markets in Scandinavia, Central and Western Europe since our generic product is suitable for these markets. Regarding product development, the plan is to add extra layers, like photo quality verification or identification of damages, to create more value. A future trend is insuring self-driving cars and I believe that vehicle data will shape the pricing models. In addition, car manufacturers are getting smarter and eventually cars will start transmitting driving-related information or accident details via cloud solutions. This long-term view is our mission – to provide comprehensive data about the vehicle to interested parties, either insurers or mobility service providers.
With solutions like DriveX, you can step up the game by increasing efficiency and speed in casco sales and claims handling, as well as by improving user experience. Instead of building software for addressing specific problems, you can integrate the technology that automatically delivers reliable and high-quality information about the vehicle. This fosters aware decision-making, better risk assessment, and decreases fraudulent cases and costs. Soon Insly’s customers can start using DriveX’s integration for seamless vehicle verification. We will keep you posted on the updates!
Estonian startup DriveX could save car insurance companies billions.
Insurance may not be the most glamorous of industries, but it can be lucrative, especially for those able to offer novel solutions to long-standing issues.
That’s what Estonian startup DriveX Technologies is trying to do for the automotive insurance industry, where it’s estimated that insurers lose billions of euros each year to fraudulent claims, as well as to convoluted manual processes and lost sales opportunities.
“There are a lot of VCs in Estonia who are doing similar types of businesses in other verticals.”
The problem with fraud, and it’s a huge issue, is insurance companies don’t even know how much they are paying out that they shouldn’t have paid. It’s really a hidden question,” says Rauno Sigur, DriveX’s chief executive and cofounder.
DriveX has a straightforward pitch to prospective customers: with us you can create a remote vehicle verification that will save you cost, time and also increase trustworthiness.
This is particularly important for rental or leasing companies, which need to continually check the condition of vehicles coming into and out of their lots.
AI for fraud detection
Whereas in the past insurance claimants could upload their choice of images of scratched doors and broken windows, with little guarantee of their quality or trustworthiness, DriveX is focused on automating the process, beginning with pre-inspection.
“We identified the need to pre-inspect the vehicles when they sell the motor insurance policies, so we have developed an [AI] solution where they can get images of the cars in real time,” says Sigur, who cites a two-year-old study from the US that found that investing $1 into pre-inspection technologies or services saved companies on average $34 in fraudulent claims.
While automated vehicle inspection booths already exist, they’re expensive and focused on very detailed inspections. DriveX’s aim is to offer a quick, easy yet trustworthy alternative, using little more than a standard smartphone. Through DriveX, insurance companies send out an SMS to the policy buyer, who follows specific instructions on what images to submit through the app, which also notes the time and location. “There’s a standard set of pictures that are needed,” says Sigur. “The image is sent in near real-time to [DriveX’s AI] and we check the number plate, what position the car is in, how much time it took the user, where they were located etc,” he adds. DriveX can then generate a report of the car’s visual defects, as well as data like a car’s mileage.
Rauno experienced first-hand the convoluted and largely manual process involved in making an insurance claim when another driver reversed into his car last year. “That’s when it really clicked, because if a digital nation such as Estonia is so old-fashioned in that sense, how bad is it for other countries?” he says.
At the same time, insurance as a sector is highly conservative, partly because it is highly regulated. “They have a high entry barrier. There are not many early stage startups that can actually get over that hurdle. We’ve managed that based on trust,” he says.
The fact that their technology is also available on Microsoft Azure Marketplace also gives the company a certain stamp of approval, Sigur adds.
Even so, the company is trying not to oversell its product, and is being realistic on how much manual labour it can save companies, though it expects that to grow steadily over time. “We sell our technology as AI-assisted, which means there’s a certain extent of manual operations,” he says.
E-stonian roots
While there are other companies operating in the space — Sigur points to UK-based Tractable, which is developing complex AI to understand damages to cars and real estate, as well as Snapsheet in the US and Bdeo in Spain — Sigur believes that DriveX benefits strongly from its Estonian roots.
The country is often seen as a pioneer when it comes to digital solutions, and has a strong track record, producing tech giants like Skype, TransferWise and Bolt.
“I think the difference between them [our rivals] and us is that Estonian startups really try to be effective and build step-by-step with customers,” he says. DriveX has so far bootstrapped, but is working towards an angel round, with a seed round likely in the next 18 months.
Still, Estonia’s small population means that DriveX must look outside its borders to really grow.
