Exclusive: QBE expands Converge partnership with $5 million strategic investment

By Michael Loney March 3 - (The Insurer) - Converge Insurance has received a $5 million investment from QBE Ventures, with the cyber insurtech’s CEO telling this publication that it will also likely look to close a Series B funding round this year. This strategic funding from the venture development and investment arm of QBE Insurance Group will be allocated towards enhancing Converge’s technology infrastructure, optimising its claims process and further expanding underwriting capabilities in line with the insurtech’s expanded appetite for companies up to $1 billion in revenue. The move builds on the partnership between QBE and Converge that was launched in August 2023, with the Australian insurer acting as program manager to the MGA’s ConvergeElements primary and excess product for companies with up to $100 million in revenue and ConvergeConnect primary product for companies with up to $750 million in revenue. Commenting on the new investment, QBE global head of cyber Serene Davis said in a statement that Converge “has demonstrated a unique ability to blend underwriting expertise with a world-class data model and nimble platform, and we see this investment as an opportunity to deepen our collaboration and help drive sustainable growth in the cyber insurance space”. The news of the new equity investment follows Converge announcing earlier this month that it had secured underwriting capacity from Obsidian Insurance Group that enables the cyber MGA to expand its offerings to companies with up to $1 billion of revenue. New York-based insurtech Converge in August 2023 secured $15 million in Series A funding from Forgepoint Capital. Speaking to this publication about the new investment from QBE, Converge CEO Tom Kang said it is a demonstration of the partnership and QBE’s “vested interest in growing with us”. “It does allow us to continue to invest in automation and AI related to risk selection and the proprietary modelling that we’re doing,” he said. “We’re also in conversations with them about international expansion so that’s another area of interest.” The initial $100 million parameter for the ConvergeElements offering hrough the QBE partnership had since been expanded to $500 million in revenue. “Now with this investment from QBE Ventures, it’s further strengthening that partnership, and demonstrates an alignment in the way that we see the cyber market, the necessary advancements and innovation we need to make in cyber insurance generally, but also our performance even through a relatively soft market over the last two years,” Kang said. Converge told this publication that its 2024 gross written premium was in the “strong double-digit millions” and that it is expecting a 3x increase in 2025. In addition, its headcount increased 111% from 18 to 38 full-time employees, while it quadrupled its partnerships, including ties with RT Specialty, Dataprise, Stellar Cyber, Risk Cooperative and Limit, among others. Looking ahead, Kang also said that “we are looking at a Series B in 2025 so that will be an area of focus for us going forward”. Before Converge, Kang worked as North American head of cyber, tech and media at Allianz Global Corporate & Specialty, and has also held roles at Willis Towers Watson, The Hartford and Ace. Kang said that Converge is in some ways a reaction to the first wave of insurtechs that were tech first but perhaps were not as focused on underwriting. “From my perspective, yes, you need the technology in the platform, but at the end of the day you’re still in the business of insurance and so you have to do the insurance really well,” he said. Discussing market conditions, Kang said that there were some “green shoots” in the middle of last year that suggested rates would potentially firm up, but those “have quickly gone away” and the market continues to remain soft. “Part of it is there are new entrants coming in, from MGA, insurtech and just new traditional markets trying to enter different segments of the market. So I do think it’ll remain soft throughout 2025,” he said. Kang continued: “That said, industry wide we are continuing to see ransomware events. So we think this is a natural cycle in any insurance line of business. From my perspective, these cycles on average last about three to four years. And so I think we’ll be in the soft market period for about the same amount of time, and then it will start firming up and coming out of that.” Kang noted that a lot of insurtechs built their cyber portfolios during the hard market, and now need to figure out how to be successful in a soft market. “Because we’re underwriters with lots of experience underwriting throughout every market cycle, we’re very confident about what we’re doing in the soft market, which will set us up for success in the hard market,” he said. “I do think 2025 will present an opportunity for a lot of insurtechs like us to either thrive and/or fail on their own merits, because it’s a very competitive marketplace currently.”