Zywave M&A heats up with RateFactory buy

Insurance tech benefits provider Zywave is keeping its promise of more M&A with the acquisition of RateFactory, a small group rating engine that is directly linked to insurance carrier quoting systems.

This is the second acquisition by Zwave since October, when it bought the benefits consulting company Code SixFour. The benefits space has seen a wave of acquisitions over the last couple of years with deals such as USI Insurance Services acquiring Wells Fargo Insurance and brokerage Brown & Brown acquiring the employee benefits consultant Hays Companies.

After Zywave’s acquisition of CodeSixFour, the company told Employee Benefits Adviser in October that there will be more consolidation in the company’s future and for the industry as a whole.

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“It’s a dual win,” says Tim Cunningham, M&A expert and founder of OPTIS Partners. “RateFactory gets a bigger distribution platform and Zywave has got a new revenue source.

On the traditional employee benefit broker side there is not as much small consolidation as there had been on the heels of ACA, Cunningham adds. At the time a lot of the smaller firms came to the realization that unless they had a lot of value add and other tools they wouldn’t survive.

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As part of the agreement between Zywave and RateFactory all of the latter company’s customers and employees will become Zywave’s customers and employees. RateFactory co-founder and CEO Steve Kutina will work to expand Zywave’s partnerships with insurance carriers. Zywave will incorporate RateFactory’s small group quoting into its product suite, including integration with the Code SixFour digital plan marketing presentation software and within Zywave’s sales cloud.

“There’s been a pretty seismic change in small group over the last couple of years,” says Steve Kutina, co-founder of RateFactory. “ACA is still out there, it is still dominant and in force but level funded plans are now hitting the small group market pretty darn hard and brokers now need a solution.”

By offering RateFactory’s accurate, multi-line small group quoting Zywave says it will be able to provide brokers a unique solution, while also positioning itself for the “next phase of quoting,” Zywave CEO Jason Liu said in a statement.

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