Startup Solutions

The expansion of the InsurTech market in Canada has escalated in the last decade, and business ideas driving these companies tend to stem from people who see inefficiencies in the market that need new solutions. Actuarial training guides us to see unsolved problems and drive toward solutions, so it’s no wonder that actuaries with entrepreneurial aspirations are among the founders in this space. Two such examples are Trevor Gary, CEO of Micruity Inc., and Andrew Ostro, CEO of PolicyMe.

Gary graduated from McMaster University with a B.S. in applied math and a B.A. in economics. He was a captain on the Marauders football team. After graduation, Gary worked for the pension actuarial area of Deloitte in Toronto. In this role, he understood that 401k-style retirement plans do not offer the security and confidence of traditional defined benefit plans. Given the existence of disparate datasets and no data-sharing standard in the space, Gary started Micruity to help bridge the gap for 401k providers to “pensionize” their plans by adding annuity products. Using the Micruity platform, 401k plans can provide the pension-like guarantees that millions of Americans want. The company’s data routing system currently supports the communication of plan participant and annuity transaction data among life insurers, asset managers and 401k recordkeepers.

Ostro graduated with the highest standing in his class and a B.S. in actuarial science from the University of Western Ontario. He then worked in management consulting while earning his FSA designation at age 23. In this role, he focused on advising executives at large insurance companies on strategy and operations, skills he would lean on when launching PolicyMe in 2018. PolicyMe is a digital life insurance managing general agent (MGA) using relationships with carrier and reinsurance partners to offer Canadians a fully online life insurance buying experience. In addition to distribution, PolicyMe handles the operations of its products throughout the value chain, including underwriting, issuance, payments and policy administration.

This interview discusses these two startups in Canada, including lessons learned, the overall atmosphere and the sense of pride and ownership in developing one’s own company.

What was your motivation to get involved in a startup?

Gary: I’ve always been a problem solver, and I’m a believer in technology’s ability to solve big problems. From my time in actuarial practice, I knew that the decline of the defined benefit pension plan had left a multi-trillion-dollar savings gap for retirees. I also knew that the barrier to closing that gap, to making annuities accessible to everyone, was a problem of scale. It was a problem that I could use technology to solve. Thus, I started Micruity.

Ostro: I have always been attracted to innovation and the notion of doing things better. This naturally led me to look for a role that would allow me to have an impact on changing an industry. While I enjoyed the challenges and structured environment of the corporate world, I found the bureaucracy and restrictions that came with it to be quite limiting at times.

What from your actuarial training/background has helped you most on your journey?

Gary: The actuarial practice I worked in was relatively small five years ago. At that time, I worked on everything: audits, traditional valuation, mergers and acquisitions (M&A) due diligence, pension risk transfer and more. I’ve used these skills several times as an entrepreneur—for example, building financial models for the business, testing the different forms of annuities in portfolios, working through legal documents and creating my own data room. However, the skills I use the most are my analytic and deduction skills. Having the ability to analyze situations and quickly find the best way to approach the solution helps me time and time again.

Ostro: Understanding the pricing and risk aspects of the products has been a major contributor to the success I’ve had at PolicyMe. I’ve always felt that the life insurance industry is unique in that it takes more than just a great entrepreneur to build a successful startup in this space. The financial complexity of the underlying products presents a barrier to entry for most people without an actuarial background. The combination of my training as an actuary and as a consultant has set me up perfectly to build a company in this space.

What do you like best about the startup atmosphere?

Gary: Two things: First is the speed. Things move fast, and if you can keep up, it gives you a leg up on the competition. The second is the bond you have with the team. Early-stage startups are a lot like a sports team. Everyone is on a shared mission not just for success, but for the survival of the company. Every day is game day. Strong startup teams have bonds that are more like a family than coworkers.

Ostro: The sense of ownership is what I like best. It’s easy for every member of our team to directly see the impact of the work they are doing daily. This creates an amazing culture of ownership and responsibility, where everyone truly cares about the success of the company and the value we provide to our customers. Going above and beyond is not the exception at PolicyMe—it is the norm—and that’s an incredible thing to be a part of.

Why has the InsurTech space in Canada been successful in recent years?

Gary: I think the Canadian InsurTech market has realized that to succeed, it needs to drive sales in large global markets—in the United States and overseas. This is also true of the wider Canadian technology ecosystem.

Ostro: It’s tricky to innovate in a space where huge balance sheets typically are required to operate. However, large Canadian insurance companies recently have begun to support the startup community, which has led to mutually beneficial partnerships. This has streamlined the innovation process, as opposed to previously when innovation had to originate from within the insurance companies themselves.

What are the most important lessons you’ve learned?

Gary: The first is to not let perfection be the enemy of good. As an athlete, and as an actuary, perfection is typically top of mind. In startups, the opposite is true. Your solution needs to solve the problem; it doesn’t need to be perfect. There is always another problem to solve next, and you can’t get hung up on perfection. The second lesson is that if you’re going to fail, do it fast. Learn from your mistakes and move on. Working in a startup is like being in a race. It’s almost a situation where if you wait until you feel ready, you are already too late.

Ostro: I’ve learned that the only way to innovate successfully is to put yourself in a situation where it’s possible to fail. Actuaries are trained to minimize risk and hedge every bet possible. While that might make a lot of sense when protecting a balance sheet, it doesn’t work in the tech space. If you try to limit your downside when starting a technology company, you simultaneously limit your upside and potential to succeed.

Any advice for others thinking of taking the startup business route?

Gary: My idea of a “startup” is an exponentially scalable business that almost always requires venture capital to get moving. Founders of these companies typically have an appetite for large amounts of risk. However, there are several other ways to commit to the entrepreneurial journey: start a consulting firm or small business, or join an early-stage startup. All of these paths minimize some of the risk, but they still give individuals the thrill of building something and controlling their own destiny. That’s what it is all about, right?

Ostro: If you like to innovate and are a strategic thinker, put your ideas to the test. You won’t know until you try.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.

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