A fast-growing Ottawa software company that helps some of North America’s largest insurance firms deliver employee benefits like health and dental coverage has been acquired by a U.S. insurtech powerhouse.
New Jersey-based Majesco announced last week it closed a deal to purchase Global IQX, a local company that streamlines the process of underwriting and selling group benefits packages. Terms were not disclosed.
Now at 70 employees, Global IQX sells its proprietary cloud-based software to some of the insurance industry’s biggest names, including Beneva, Canada Life, Manulife Financial, Liberty Health and RBC Insurance. Half of its 16 customers are based in Canada, while the rest operate in the U.S.
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Founder and CEO Mike de Waal said the deal will give his firm a stronger foothold south of the border.
More than 350 insurance providers use Majesco’s software to manage tasks such as administering insurance packages, handling claims and tracking employee absences. The company has more than 1,900 employees and plans to boost its headcount by at least 200 in the coming months as part of a major expansion push, with many of those hires expected to be in Canada as the firm looks to expand its footprint across the continent.
“We’re excited to have a bigger brother. We’ve been growing leaps and bounds here in Ottawa, so it’ll give us resources that we can (use to) scale a little quicker.”
“We’re excited to have a bigger brother,” de Waal told Techopia on Tuesday. “We’ve been growing leaps and bounds here in Ottawa, so it’ll give us resources that we can (use to) scale a little quicker.”
While the nation’s capital isn’t exactly known as an insurtech hotbed, Global IQX has become a major success story since the technology behind it was born two decades ago.
The firm took root when de Waal – a former computer programmer who eventually got into the insurance business as an underwriter at Manulife – watched colleagues thumbing through thick binders full of customer employee data to calculate quotes for benefits packages like health, dental, life and disability coverage.
In 2002, he launched ConnectInsure, a web-based portal that streamlined marketing, quoting and proposal-generating functions for group insurance providers.
Among the first of its kind in North America, the platform crunched employee data, churned out quotes and compared rates in seconds, automating what had been a laborious process that required underwriters to input information manually. Soon, more than a dozen customers were using the software.
The firm eventually morphed into Global IQX. Meanwhile, the software evolved, incorporating artificial intelligence to help automate all aspects of writing group employee benefits policies, from generating quotes to handling renewals.
De Waal says Global IQX – which was mostly bootstrapped with some funding from angels and a convertible debenture from Videotron’s Chagnon family – has been “highly profitable” for years.
It took a significant leap forward about three and a half years ago, when it shifted to a subscription model that allowed smaller firms that didn’t have big data centres of their own to tap into its cloud-based technology.
Since then, Global IQX’s revenues have been rising at a steady clip of about 30 per cent annually, while its before-tax earnings have increased about 20 per cent a year. In the past year alone, the company has hired 18 new employees, but, said de Waal, “we still need a lot more” to get where he wants to be.
“It’s a 20-year overnight success story,” he added with a chuckle.
Much of that growth stems from the sheer size of Global IQX’s contracts, which are usually in the multimillion-dollar range. And, de Waal adds, it’s “very rare” for the company to lose a client, meaning those growing recurring revenues keep rolling in year after year.
But deals of that magnitude don’t happen overnight. It often takes the firm up to three years to woo and officially sign a new client, a lengthy cycle that limits Global IQX’s growth potential.
“It’s not like we’re selling widgets,” de Waal said. “It’s quite a long process.”
With Majesco’s sales and marketing muscle now in Global IQX’s corner, he’s predicting that growth curve will steepen. De Waal said the firm’s headcount will probably double over the next 12 months as it makes deeper inroads in the U.S. market.
“We just keep banging on doors,” he said.