Toronto-based insurance technology (insurtech) startup Finaeo Inc. has raised more than $2 million toward its effort to build an online tool that would replace the role of managing general agencies (MGAs) with a digital “marketplace,” the company announced Tuesday. Finaeo has closed its seed round, which is oversubscribed at $2.25 million.

The project to automate the MGA function is an expansion of the firm’s recently launched product, a front-end management software program for life insurance advisors, called Finaeo.

The insurtech firm’s overall goal is to digitize administrative processes for insurance advisors, enabling them to spend more time with their clients.

“Today, the challenge for advisors is that they have this very archaic supply chain that they have to work through,” said Aly Dhalla, CEO and co-founder of Finaeo, in an interview with Investment Executive. “We think there’s a better way to be an intermediary and replace some of the legacy that’s in the supply chain today.”

Finaeo launched the beta version of its software last year, and has since been working with advisors to tweak and improve the system. The mobile-friendly software combines a customer relationship management (CRM) system with a digital assistant to help advisors organize their day and manage client meetings. For example, Finaeo helps advisors prepare for meetings by providing a review of relevant details about the client, and following a meeting, advisors can use the app to audio-dictate their notes and schedule follow-up tasks.

“It’s really that workflow around the meeting experience, where all of the administrative burden usually comes from,” Dhalla said. “We wanted to streamline that process for them.”

The company’s next goal is to expand the software to include a “marketplace,” which advisors would be able to use to generate insurance quotes and submit business directly to the carriers. That would eliminate the need for advisors to funnel paperwork through an MGA in order to submit business to the carriers, Dhalla said.

“That [MGA] intermediary layer is effectively the advisor’s bottleneck to delivering great, timely service to their customers,” he said. “We’re trying to build the connective tissue that removes that burden of the intermediary layer and connects the policyholder and the advisor directly to the supplier on a digital marketplace. So, you can get a quote and buy a policy all in one place.”

The marketplace would save both time and administrative work for advisors, Dhalla added. “It’s going to remove weeks of labour and time for them once it’s digitized from end to end.”

At a time when consumers are demanding faster service and a growing number of insurance carriers are selling products directly to consumers, advisors need to find ways of improving efficiency, Dhalla said. Rather than feeling threatened by technology, he added, advisors should embrace it.

“I think technology is a great way to augment people’s reality and augment the way that they do their job,” Dhalla said. “But it does not have to replace people.”

Finaeo’s seed round was led by Toronto-based venture capital firm Impression Ventures, which focuses on investing in fintech companies.

“This is an industry ripe for innovation,” said Christian Lassonde, founder and managing partner of Impression Ventures, in a statement. “Finaeo is disrupting the insurance supply chain by digitizing and automating the end-to-end process, making it more transparent and efficient to purchase insurance.” Lassonde will be joining Finaeo’s board of directors.

The funds raised will be used to bring on the engineering talent required to continue development of the core platform and marketplace.

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