Behind CXA’s difficult journey to launching its ambitious insurtech platform

Like many others that have taken the same road, Singapore insurtech startup CXA Group is finding that it isn’t easy to transform itself into a technology company.

Scaling its insurance brokerage business into a technology-led, software-as-a-service (SaaS) platform required a hefty investment, but the challenges haven’t stopped at spending.

Rosaline Chow Koo, founder and CEO of CXA. Photo credit: Tech in Asia.

The increasing demands of its new platform have placed pressure on its cash flow and forced the company to retrench staff, according to some employees. Last week, Tech in Asia reported layoffs at the startup, a move that was necessary to keep its business “trim,” according to founder and CEO Rosaline Chow Koo.

“What we got rid of were either non-performers or roles that were automated, or were made redundant with this new model,” Koo tells Tech in Asia. “As a startup, you don’t have that much money for extra fat.”

The job cuts come amid fundraising efforts and negotiations with current investors. The new funds will help sustain CXA’s operations before the platform’s launch, which is expected sometime this month or in April.

“Many of our existing investors – either from series A, B, or our US$25 million round – are topping up right now,” Koo says. “We need more money because we have 150 tech people now. It’s an evolution of our business.”

While Koo had announced that CXA was looking to raise a fresh US$50 million round last September, she clarifies that this current fundraising is part of an earlier tranche of investment.

Becoming a tech company

Koo set up CXA in 2013 after a stint at Mercer Marsh Benefits, using US$5 million of her life savings. “I was in this industry for eight years and I ran 14 countries,” the chief executive explained in a 2014 interview.

Photo credit: CXA Group

She observed that companies faced similar issues around corporate health insurance, irrespective of geography.

“Companies’ insurance benefits are rising exponentially fast, yet employees don’t understand insurance. At the same time, every employee’s health is getting worse, but because healthcare and insurance are so paper-intensive and there are so many different vendors in the supply chain, HR has way too much work,” Koo said at the time.

For years, CXA was dependent on a brokerage team that went door to door to acquire new clients, but its new software-led platform has the potential to change that. Large banks and insurers that have signed long-term contracts with the startup will instantly give it access to the “hundreds of thousands” of corporate clients.

An expensive platform

A hiring spree

Operational setbacks