Get the Guide: Getting Started with SMB Insurance

From accidents to theft to lawsuits, there are plenty of scenarios that could result in unexpected costs for a small to medium business (SMB). Insurance is a vital tool for SMBs to protect themselves and their employees from potentially serious financial losses.  However, with so many kinds of SMB insurance products on the market, it’s not always clear which types a certain business may need. In this blog, we will outline four useful insurance products and explain which kinds of companies would most benefit from having them.  With Invalid Link of businesses having an online presence, and many businesses storing sensitive customer and company data in internet-accessible databases, cyber insurance has never been more relevant or necessary. As the world becomes even more digital, the volume, sophistication, and frequency of cybercrime are rising, and the need for cyber protection is growing in equal measure.  When a company experiences an attack on its digital property, the cost can be devastating. In 2021, the average cost of a data breach hit Invalid Link, and on average, it takes a minimum of Invalid Link for SMBs to pay off the cost of a data breach. Commercial cyber insurance is a product that helps businesses financially protect themselves from the risk of cybercrime. Similar to any other insurance product, companies can save themselves from exorbitant expenses in the event of a cyber attack by making regular premium payments. A cyber insurance policy typically covers expenses such as:  Even more comprehensive policies might reimburse a business if its money is stolen in a fraudulent transaction. One example would be if a company’s email is hacked, and the scammer uses it to initiate a fraudulent bank transfer. Other policies can include coverage for hardware replacement if computers were permanently damaged, higher ransom payments to regain control of systems or data after a ransomware attack, or reimbursement if a scammer tricks the business into sending money. Any company with an online presence can and should have some form of cyber insurance. If a company has a website where it conducts business—making transactions, storing information, or communicating with customers—or if it uses a cloud storage system to house critical information, that company would benefit from cyber insurance. Large corporations tend to be more appealing targets for cybercriminals because criminals can make more money per hack. However, SMBs are also frequently attacked, which can be far more detrimental for those companies. Because SMBs don’t have as much expendable income as larger corporations, the loss can have deeper, longer-lasting financial repercussions.   Traditional insurers tend to create products that only cater to large corporations both in coverage options and pricing, which has historically left the SMB market significantly underserved and overcharged.  However, the landscape for SMB cyber insurance is changing, and more digital, customizable cyber insurance products are becoming available for a wider variety of businesses.  Running a small business comes with a lot of risk. For example, if a customer were to slip and fall on the floor of a hair salon, they might bring a personal injury lawsuit against the business. If a coffee shop’s espresso machine breaks down, the cost to replace it might be substantial (not to mention lost revenue while the shop couldn’t serve espresso). For an SMB, these kinds of costs can endanger the entire company. It’s far better for companies to err on the side of caution and protect against these risks, and for that, BOP insurance is essential.  BOP insurance exists to protect a company’s assets and operations. By paying a monthly premium, businesses can protect themselves from larger expenses if a covered incident occurs, such as:  BOP insurance policies often have options for additional endorsements such as cyber, that provides basic protection against cyberattacks, or crime in the event of robbery, theft, counterfeit money orders, forgery, or unauthorized credit card use. Depending on what industry the business is in, it could also have industry-specific coverage. For example, a restaurant might add endorsements that would cover losses related to food contamination. A retail store might add an endorsement to cover related costs if one of their products is recalled and must be withdrawn.   Every SMB should have BOP insurance, but what varies is the level of complexity depending on the size of the business. For example, a self-employed freelancer would have different coverage from a medium-sized startup with a hundred employees. The needs of SMBs will be different as well, and the products available to them are unique.  Digital insurtech providers of BOP insurance typically build easier-to-understand products that are made for freelancers and gig economy workers, and can be configured online. These products often aren’t enough for SMBs' needs—they only offer a limited amount of coverage, and often exclude risks that SMBs frequently encounter.  On the other hand, legacy insurance providers of BOP typically build complex products that are too expensive and too complicated to understand without the help and recommendations of a traditional insurance agent. In many cases, the coverages and limits they offer are overkill for SMBs.   Options are more limited for single-location small businesses, but as the insurtech industry expands, more digital-first BOP insurance products are entering the market that cater specifically to the SMB market.  Allegations of employment discrimination, wage disputes, and sexual harassment are only a few of the issues that can spark a lawsuit, and all are expensive to defend against.  In 2022 alone, workplace settlements cost companies nearly Invalid Link combined. From big corporations to start-ups, a workplace lawsuit can be a major financial liability. Even if a company has done nothing wrong, the cost of legal defense can endanger the entire business, and cost thousands, if not millions, of dollars.  Management liability insurance is a collection of coverages designed to mitigate the cost of lawsuits against the company—specifically related to upper management. That means that if the company is sued, the insurance may cover legal fees, settlements, and other related costs. The three most common coverages included in management liability insurance all cover a different type of lawsuit:  Some management liability packages may also include non-lawsuit-related coverages, such as a type of crime insurance that covers kidnapping for ransom and other specific crimes against a company’s senior management. Any business with a management or leadership team should have management liability insurance. Companies with a C-suite, board of directors, or strategic investor partners could benefit from the protection that management liability offers. What SMB management liability insurance products are available?  The small to medium businesses that are most likely to need management liability insurance are startups. However, this market often has a difficult time finding a suitable policy.  Because most available management liability insurance products were created for larger companies, these products evaluate the level of risk associated with the business based on things like how long the company has been in business, how many employees they have, and their revenue numbers. Since startups often have little or no revenue and relatively limited business history, these kinds of underwriting factors often lead to startups being flagged as very high risk. When a company is flagged as high-risk, they will either be denied coverage altogether or, if they do get approved, the policy they are offered may be extremely expensive. Many startups simply can’t afford it.  A secondary challenge is how coverages are sold. It can be difficult for startups to understand what coverages they need because most distributors sell D&O, EPL, and Fiduciary coverages as separate products without a clear explanation of how they work together. This can be a barrier for these businesses getting the protection they actually need. However, there are management liability insurance products on the market that cater specifically to startups. These products package the three coverages as a unit so they are easier to understand, and they use alternative datasets to better evaluate startup risks. That being said, it’s important for startups—and companies that cater to startups—to do their research and find a product that fits their business.  Parental leave is the Invalid Link benefit for US workers, but according to the Bureau of Labor Statistics, only Invalid Link of privately employed U.S. workers had access to paid parental leave benefits in 2021.  In the absence of a national parental leave solution, it’s up to the private sector to find ways to support new parents in the workforce. Some companies offer self-funded paid leave to employees, but for many SMBs, this can be prohibitively expensive.  Parental leave insurance is a business insurance innovation designed to make parental leave affordable specifically for SMBs. The company chooses a package that covers the kind of leave they want to offer their employees, including factors such as what percentage of their employee’s salary to pay during leave, and how long employees can take leave.  Once the policy is customized and purchased, the SMB simply pays the insurance provider a recurring premium based on their selected benefits and employee demographics. When a covered employee takes parental leave, the company files a claim through their insurance provider’s claims process. Then the company will be reimbursed for the cost of paying the employee during the covered leave period, up to the contracted amount.  Every SMB can and should offer parental leave insurance. It is an important benefit for employee acquisition, retention, and overall satisfaction. It’s a solution that mitigates the large, unexpected leave costs that often prevent SMBs from being able to offer this benefit. With a parental leave insurance product, the employer can avoid unexpected costs by paying a regular premium, and they can rest easy knowing their insurance policy will protect them. Boost’s parental leave insurance is a first-of-its-kind product and is currently the only parental leave product on the market. It is specifically designed for SMBs and fills an important gap in the market.  Seeing as there is no national parental leave program or solution, the other options for parental leave include short-term disability, a combination of state-funded parental leave and PTO, and the Family and Medical Leave Act, which legally gives 12 weeks of protected, unpaid parental leave wherein the parent cannot lose their job during that time. However, most people cannot afford to go 12 weeks without pay. In short, parental leave insurance is a great option for SMBs who are looking to provide an equitable solution to their employees.  All businesses need protection against unexpected financial loss, and SMBs are no exception. When something does go wrong, the right insurance products can be a crucial support for SMBs getting back to business as usual. If you cater to small to medium businesses and want to learn more about how you can grow your revenue by offering insurance—including but not limited to cyber, BOP, management liability, and parental leave— contact us, or dive into building your insurance program with Boost Launchpad. 

In the world of insurance, there are two kinds of products: admitted and non-admitted. Simply put, admitted insurance products are those that are approved and regulated by the state, and non-admitted insurance products are those that are not—but this explanation can raise more questions than it answers.   In this blog, we break down the major differences between admitted vs. non-admitted insurance products and answer some commonly asked consumer questions.  An admitted insurance product is one that has been licensed and approved by the Division of Insurance (DOI) in the state where it’s being sold. Each state’s DOI has requirements for everything from how much carriers can charge to what kind of coverages are offered to how the carriers communicate with customers. The process of getting a product admitted through this office—or even making changes to a product that has already been admitted—is lengthy and complicated for carriers. But in return, the carrier and its customers get some financial protection from the state.  As a consumer, you can be sure that if a product is labeled as “admitted,” it has gone through all the necessary scrutiny of its policy requirements, language, and rates, and it meets your state’s DOI regulations.  In the event that your carrier “goes under,” you will have an additional, state-funded safety net wherein debts can be paid by the state up to a certain amount.  On the other hand, non-admitted insurance products are those that have not been licensed and approved by a DOI. These products fall outside of the standard market for that particular state and, therefore, don’t meet its requirements.  When a product falls outside of the standard market, it doesn’t mean that it’s covering an illegitimate risk or that insurance wouldn’t be helpful protection. It simply means that it’s a risk the state doesn’t want to cover. If an insurance carrier wants to sell that product anyways, they can—they would just need to sell it on a non-admitted basis. Being non-admitted allows these products to operate outside of DOI regulations and restrictions. This makes them much more flexible in what they can cover, but they also don’t receive the same financial protections from the state.  Examples of non-admitted products include parental leave insurance or crypto wallet insurance. They don’t fall into the standard market insurance category that products like health insurance, home insurance, car insurance, or pet health insurance do, but they still offer important protection that people are willing to pay for.  This is an understandable and common misconception. When people hear that non-admitted insurance products aren’t licensed or regulated by the state, they might think that non-admitted products are entirely unregulated or even illegal. But this isn’t the case.  Non-admitted products are legitimate insurance products that undergo their own forms of approval before going to market. While they don’t have to go through the intense approval processes with the DOI, the companies that create these products do need to submit articles of incorporation, a list of officers, and various financial and company information to the surplus lines office, which is run and regulated by the state. Additional state guardrails for non-admitted products include taxes and licensing. All non-admitted products are subject to being taxed by the state and all agents who sell these products need to be licensed brokers in the state where they conduct business.  In short, the state is definitely involved with non-admitted products, but the regulation of these products is significantly less intensive when compared to those of admitted products.  Because admitted products are “approved by the state” and non-admitted products are not, you might assume that admitted is always the more responsible choice as a consumer-—but that isn’t always the case. There are many reasons why choosing a non-admitted insurance product could provide better protection than an admitted one.  First, the distinction between admitted vs. non-admitted is largely administrative and doesn’t say much about the overall quality of the product or the stability of the carrier offering it. You might be in the market for home insurance, and there are both admitted and non-admitted options available, but the coverage of the admitted product doesn’t meet your needs.  This is an especially common problem for people who live in areas with frequent natural disasters like fires or hurricanes: their risk is often outside of what an admitted product is built to cover, and so they may not qualify for the level of protection they need. In some cases, if your home is deemed too high-risk, you might even not be able to buy an admitted policy at all. Since non-admitted products are more flexible in what they can cover, you may be able to buy a policy that provides more robust protection from natural disasters (though it will likely cost more than an admitted product might). Second, there are situations where you could benefit from insurance, but no admitted products exist to provide it. In these situations, non-admitted insurance products are the only option. For example, cryptocurrency is an increasingly popular market for consumers, but there are currently no admitted crypto wallet insurance products available. This can be a serious problem for crypto wallet holders because there are billions of dollars in cryptocurrency being held in online custody. Additionally, crypto theft and large-profile hacks are increasingly common, but less than 1% of consumer assets are insured. There are some options for crypto institutions to have insurance, but even in those cases, it does not provide explicit protection for individuals. In the event of a hack, consumers can lose all or a portion of their holdings with no guarantee from the crypto institution that they will be reimbursed. The only way for an individual consumer to protect their cryptocurrency holdings would be through non-admitted crypto wallet insurance.   The distinction between admitted and non-admitted insurance products has an abundance of implications for insurance carriers, agents, and brokers, but the biggest impact that this difference has on consumers boils down to pricing and coverage options. Because states aren’t able to set rates for non-admitted insurance, non-admitted policies usually cost more than comparable admitted insurance. Additionally, as a consumer, you may not get the same kinds of tax breaks as you could with an admitted product. But one of the reasons non-admitted product costs often run higher is that they can have more robust options for protection and coverage than admitted products do.   For example, if the state were to set a rate on pet insurance and tell carriers they can’t raise rates on policies above a certain threshold, this would impact policies significantly. The state might also have more stringent rules that could impact your eligibility for coverage, such as age restrictions, breed restrictions, pre-existing condition restrictions, etc. In order for carriers to affordably meet the state’s requirements, they would have to limit the actual benefits of the coverage.  A more affordable, admitted product might not be able to include certain protections, or might exclude certain pets entirely based on eligibility. A non-admitted product would cost more to buy, but would also have the flexibility to offer more coverage to more people. While an admitted product will be a good choice for many consumers, non-admitted options are important for the subset of people who aren’t a good match for what admitted products can offer. The biggest benefit for admitted products is that they are backed by the state’s guaranty fund in the event of a carrier’s insolvency. Insolvency is when a carrier is unable to pay its debts—maybe the carrier underwrote too much risk, or a global event caused customers to max out the carrier’s borrowing capacity. Insolvency is relatively rare, but it does happen occasionally, and the effects are different depending on the kind of product. When this happens to carriers with admitted insurance products, the state will pay the carrier’s claims up to a certain amount.  This can give consumers peace of mind because it ensures that costs won’t come back around to them. You could confidently pay your monthly premium on your admitted insurance policy knowing that if your carrier can’t cover the cost of your claims, the state will.   On the other hand, if a carrier were to become insolvent, any of their non-admitted products would not be protected by the state. For consumers in this situation, the financial losses that should have been covered by your insurance policy will most likely come back to you, and you could be tied up in legal disputes during the liquidation of the carrier.  As a consumer of insurance, it is always important to do your research on your carrier and understand your insurance policy. You can check sources like A.M. Best Ratings—or other similar rating agencies—that can help you make sure a potential insurer is financially solid and worthy of your trust.  Knowing the difference between an admitted vs. non-admitted insurance product can help you to make a more informed decision, ensure that you are getting the biggest bang for your buck in terms of coverage, and help you know what to expect if your insurance carrier “goes under.” After reading our breakdown of admitted vs. non-admitted insurance questions, we hope you’re feeling more comfortable with the topic.  Boost makes it easy for anyone to understand the world of insurance or to get started offering embedded insurance themselves. Contact us to learn more.

Any business with a management or leadership team needs management liability insurance, and startups are no exception. However, startup companies often face challenges in getting the protection they need. In this blog, we’ll explain what management liability insurance is, why it can be difficult for startups to acquire, and how and why Boost built an award-winning management liability product specifically for startups. “Management liability insurance” is not a single insurance coverage. Instead, it’s a collection of several different coverages designed to protect a company and its managers from potential legal costs, as well as costs related to mistakes, mismanagement, and disputes. Some insurance providers offer these coverages separately, while others sell them together as a management liability package.  The three most common coverages included in management liability insurance are:  All three coverages protect against the cost of lawsuits against the company, meaning that if the company is sued, the insurance will cover legal fees, settlements, and other related costs. Each covers a different type of suit. Directors and Officers insurance is a type of liability insurance for a business’s senior management (hence the “directors and officers” in the name), in case they are sued for something related to their duties managing the company. This coverage frequently applies to both personal lawsuits against the directors and officers, and to lawsuits against the company related to their actions. Employment Practices Liability insurance protects a company from the cost of being sued for things related to hiring or personnel practices. This can include lawsuits for things like wrongful termination, discrimination, harassment, and other employment-related issues.  Fiduciary insurance protects the company from the cost of lawsuits related to mismanagement of the company benefits plan. This can include anything from wrongfully denying benefits to making poor choices for the company’s 401(k) plan investment. Some management liability packages may also include a type of crime insurance that covers kidnapping for ransom and other specific crimes against a company’s senior management. This differs from the three coverages discussed above as it is not aimed at protecting against lawsuits. While the protections that management liability insurance provides are important for many businesses, it can be difficult for startups to access the coverages they need. Many of the management liability products currently on the market were designed for much larger businesses, which is reflected in their risk assessment methods.  For these products, underwriting decisions consider factors like how long the company has    been in business, how many employees they have, and their revenue numbers. This can be a problem for startups, since they often have little or no revenue and relatively limited business history. Often, this results in startups being flagged as very high risk - or being denied coverage altogether. Even for startups that are approved for coverage, the high-risk pricing means many can’t afford to buy the policy they’re offered. Another challenge for startups can be the way that management liability insurance is sold. Many insurers offer the key coverages separately, with little guidance on how they fit together or what a company needs to buy. For young companies that lack insurance expertise, it can be hard to know which coverages they should even apply for. For insurtechs and other businesses that cater to startups, this represents a significant business opportunity. Startups are a big market, with tens of thousands of venture-backed companies in the United States. They’re also a well-funded segment: US-based startups Invalid Link in venture capital in 2022. If your business can meet startups’ insurance needs, you’ve got a lot of prospective customers. And the potential is bigger than just revenue. Insurance is sticky, and building relationships with startup companies can lead to bigger commercial insurance opportunities as those startups grow.  To capitalize on these possibilities, insurtechs need to offer a management liability product that can provide startups with the protection they need, at a price they can afford. Boost can help. Our Invalid Link, white-label management liability insurance product addresses the biggest barrier, price, by using an alternative dataset to evaluate risk. Instead of traditional metrics like revenue and organizational age, Boost’s proprietary algorithm takes into account a startup’s institutional backing. Potential VC investors examine a company in great detail, including far more information about its business practices than an insurer would be able to access. If a top-tier investor supports a startup, it’s a reasonable indication that that startup is well-run, and reasonably low risk.   This alternate risk assessment allows for rates up to 40% lower than traditional products. The three key coverages - Directors and Officers, Employment Practice Liability, and Fiduciary - could also be offered in a single white-label insurance package, making it easy for startups to access everything they need.  Like all businesses, startups need insurance that can provide protection against possible costs, but traditional products and legacy underwriting frequently lock them out. For insurtechs able to offer a more inclusive management liability insurance product, there’s a large prospective market just waiting to be tapped. Contact us to learn how you can get started offering management liability to your startup clients.

You may have heard that embedded insurance is a big opportunity to grow your business, but are your customers actually interested?  We wanted to get the story straight from the source, and so in Q4 2022 Boost surveyed 650+ US consumers. We asked about their experiences with insurance, how they felt about their options, what mattered most in their insurance purchases, and more.  Here are the top 3 things that we learned from our consumer survey results. [See Full Size] In our survey, a whopping 73% of consumers had either already bought insurance from a non-insurance brand, or would be interested in doing so. While price was mentioned most often, other reasons included brand loyalty and convenience. Trust was another important factor. 62% of respondents were interested in buying financial products from a trusted brand, rather than a bank. For millennials, the number went up to 95%. First movers might have an advantage here as well. 20% of our respondents had never been offered financial products from a retail brand - but they liked the idea. All this is promising news for companies outside the traditional insurance sphere who are looking to build revenue and customer loyalty with embedded insurance. If you can deliver the product and experience consumers are looking for, the appetite is there. It’s hardly a secret that convenience is crucial to customer experience in the digital age, so it comes as no surprise that it was important to our respondents. 59% told us that they’d be more likely to buy insurance if it were offered digitally, as part of a related transaction. Younger consumers were more likely to be enthusiastic: nearly 70% of respondents aged 18-29 were interested in buying insurance directly through a transaction on a retail website. For half our respondents, embedded insurance wasn’t a novel idea. 50% had already bought embedded insurance at least once, at the point-of-sale in a related transaction. For many consumers, insurance is a long-term purchase. 68% of our survey respondents told us they’d had the same insurance provider for at least two years, and 10% had had the same provider for more than five years. For retailers, insurance could also be an overall boost to retention. 62% of respondents said that when a retailer offered protect-your-purchase options, they were more likely to be repeat customers. Learn more about offering embedded insurance in our free guide, or contact us to get started.

Pet accidents and illnesses are unfortunately common, which can cause considerable financial hardship for pet owners. The average emergency vet visit costs Invalid Link, and pet owners in America collectively spend over Invalid Link on veterinary care.  If your business caters to pet owners, this presents a significant opportunity for you to offer your customers a service they need. In this blog, we’ll explain what accident and illness pet insurance is and how your business can use it to grow new recurring revenue and build deeper relationships with your customers. As its name indicates, accident and illness pet insurance is a kind of insurance policy that reimburses pet owners for necessary veterinary costs in the event of an accident or illness (up to a certain amount). Typically, a base pet insurance policy will cover emergency veterinary care, and examinations to diagnose, treat, or operate on a covered injury or illness. This can include things like: Without insurance, these services can cost hundreds or thousands of dollars. It’s not surprising that more and more Americans are considering pet health insurance to ensure they can afford care for their pets.  A standard policy will have rules about what qualifies as a “covered” issue for the purpose of reimbursement. So what exactly is considered an “accident” and what is an “illness?” The answers may seem obvious, but knowing the precise definitions can be important. If a pet owner needs a service that falls outside of those categories, they would need to add it as additional coverage in order to receive those benefits.  An accident is usually defined as something like “a sudden or unexpected event that causes injury to the pet." For example, if your cat is injured by another animal, or your dog eats a box of chocolate and needs emergency vet care. Events like these would be defined as “accidents” and be covered by most accident pet insurance policies. It should be noted, however, that if the owner causes intentional harm to their pet, that would fall under abuse and would generally not be covered.  An illness is usually defined as something like "any change to the normal healthy state of the pet, a sickness, disease, or medical condition that is not caused by an accident.” An example of an illness that would typically be covered by illness insurance would be something like heartworms, canine flu, skin rashes, diabetes, or arthritis. Due to cost and complexity, however, cancer treatment is often excluded from accident and illness policies.  The distinction between the accident and illness is important, because it can affect whether a pet’s care is covered. Many standard pet insurance policies cover both accident and illness, but there are policies that may only cover accidents. It’s important for potential policyholders to understand what they’re getting, and if it’s a good fit for their needs. Unfortunately, the short answer is “no.” As a general rule, if a pet has a pre-existing health condition, treatment for that condition will usually not be covered by the insurance policy. However, a pre-existing condition will not necessarily disqualify the pet from being covered entirely. For example, if a dog has pre-existing allergies, and his owner purchased a pet insurance policy for him, any treatments related to his allergy likely wouldn’t be covered. If the dog contracted heartworms after the policy was purchased, however, his treatment could be covered.  This is great motivation for pet owners to get insurance when their pets are young. When it comes to purchasing medical protection, “the earlier the better” very much applies, because as pets age, they are more likely to develop conditions. If a pet owner waits until their pet starts to show symptoms, it can be too late to get the financial protection they need.  Insurance needs will vary for every pet, and sometimes those needs fall outside of standard policy coverage. Some pet breeds have a higher risk of conditions requiring long-term care – while for others, the biggest risk is playing too hard at the park. To accommodate for those differences, pet owners can choose to add endorsements to their policies, such as:  Even more comprehensive policies might cover loss and theft, kennel/boarding services, or even advertising a missing pet and offering a reward for its return. Depending on the provider, pet owners can fully customize their policies and make them as robust or as simple as they need, which can save them thousands of dollars.  Now that we’ve seen how valuable accident and illness pet insurance can be for pet owners to have, let’s briefly talk about the opportunity that this product offers for pet-related business owners. There is an increasing demand for pet insurance in the United States. Since 2017, the average annual growth rate of insured pets is Invalid Link. At the end of 2021, close to Invalid Link million pets were insured, a Invalid Link increase since 2020. In 2022, the total premium revenue for pet insurance was nearly Invalid Link. That is a huge market with a promising annual growth rate.  White-labeled, embedded insurance can be a big opportunity for pet businesses to tap into that market and build new streams of recurring revenue. If your clientele is primarily pet owners, you are perfectly positioned to offer this product. Accident and illness pet insurance would be a natural addition to your product lineup, and because your customers already trust and have a relationship with you, they would be more inclined to get the coverage they need from you instead of an insurance company.  Insurance is a very “sticky” product. Due to the nature of insurance, it establishes an ongoing relationship with your customers through monthly premium payments. Not only would you have the benefit of that recurring revenue, but you also have the ongoing brand exposure that it provides. It gives you another touch point with your customers, which can only strengthen your long-term relationships with them. Modern customers expect modern experiences. Traditional insurance carriers and policies tend to be rigid with a mixture of slow offline processes and archaic online ones. By offering your customers a customizable, convenient, and entirely digital solution, you can meet your customers in the 21st century and stand out from the competition.  Embedded insurance, as its name implies, is insurance that is embedded into an existing purchasing experience–it allows your customers to buy digital pet insurance without requiring them to leave your website to complete the transaction. Another example of embedded insurance would be travel insurance for an online plane ticket or crypto wallet insurance offered on a crypto-related website.  A white-labeled insurance product is one that is completely integrated not only into your website, but also into your brand. If you were to offer white-labeled pet insurance, your customers would have no indication that the product was not created by your company.  Embedded pet insurance is a great opportunity for pet business owners to grow their revenue and deepen their customer relationships.  If you are interested in embedded accident and illness pet insurance, Get the Guide to Growing Your Revenue with Embedded Pet Insurance, and learn everything you need to know to get started.  If you’d like to speak to one of our pet insurance experts, contact us to learn more.

The insurance market is huge and growing. But when it comes to collecting those payments, insurance is a lot more complicated than most goods or services. We’ll take a look at the factors that go into calculating an insurance bill, and what options companies have for billing methods. The reason why insurance billing is so complicated can be boiled down to one thing: state-by-state differences. Since every state makes its own rules for insurance, the requirements to stay compliant can vary significantly. Businesses that sell insurance in multiple states need to pay close attention to each state’s rules (or work with a partner that can help). Here are 5 things that can make billing for insurance complicated: Every state imposes its own taxes and fees, sometimes with different guidelines for how they should be collected. This means that if you sell insurance in fifty states, you need to stay up to date with fifty sets of rules for when and how to add taxes to your customer’s bill.  Different insurance products can also have their own rules, depending on both the type of product and its regulatory status. Admitted products, which are products that have met regulations set by the state’s Department of Insurance, have most (but not all) taxes and fees included in the premium. For non-admitted products, however, taxes and fees are billed separately.  Taxes and fees can cause complexity for more than just the policyholder’s bill. Some are commissioned on, meaning that they’re included in the amount calculated for an insurance seller’s commission, and others are not. This is yet another set of rules an insurance organization needs to track in their billing.  Besides just having different rules about how taxes can be charged, different states may have differing rules about how to charge for the premium itself.  As we saw earlier, the premium is the cost of insurance for the entire coverage period, frequently six months or a year. Going back to our earlier example: say an insurance policy covers a 12-month period for a premium of $600, with an additional $120 in taxes and fees. Depending on the state, the premium might be billed a number of different ways: If the insured doesn’t pay their premium, what happens? The answer depends on the state. Usually you’ll send a notice that their policy will be canceled on a certain date unless they pay their bill, but the way that notice is sent may be dictated by state requirements. Some states mandate much longer notice periods before a policy can be canceled for non-payment. States may also have specific requirements around the language used in the notice, and how it’s delivered to the policyholder.  If the policyholder cancels their policy partway through the term, they may be entitled to a refund. The amount of that refund, however, can be complicated to compute.  If the entire premium was paid upfront, how much of the term has passed? The appropriate amount to refund might vary if the policyholder cancels near the beginning of the month, versus near the end. Refunds might also be prorated to account for the part of the term that’s already over, in which case the amount refunded might vary based on the day of cancellation. Even the time remaining in the term may not be straightforward to calculate - different insurance products use different calendar types, and the number of days in a “year” or “month” can vary.  Separate from the premium are the taxes and fees. Depending on the situation, these may or may not be part of the refund. Some taxes and fees are considered fully “earned” at the beginning of the installment period or at payment - which means this amount would not be returned to a policyholder who cancels early. Determining which taxes and fees are included (and which aren’t) is an important part of any insurance refund calculation. Any time an insurance policy’s coverages change, the premium amount changes too. If it comes time to renew a policy and the insured decides to add or remove coverages, the billing is fairly straightforward - the premium for the next period will reflect the new coverages.  If the policyholder wants to add new coverages before their policy term ends, however, it’s called a midterm endorsement.  This is where things can get complicated, especially if the policyholder has already made payments toward the old premium amount. The difference between the old and new premium will need to be charged or refunded to the policyholder as a reconciliation. This isn’t as simple as just charging the difference between the old and new premium. The amount required for the reconciliation will depend on the time left in the policy, the amount already paid, and more. We’ve looked at some of the factors that add complexity to calculating an insurance bill. However, determining the amount owed by the insured isn’t the end of it. There are multiple methods for how the policyholder’s premium can be collected. The main reason for this relates to how insurance is sold. Many companies that sell insurance, like insurtechs, don’t build their own insurance product in-house. Instead, they partner with another company that’s already done that work to offer their product, whether that's an insurance carrier or a white-label insurance-as-a-service provider.  These companies then have two options for choosing a billing method: direct billing, or agency billing. In direct billing, the policyholder pays the insurance carrier directly. With this form of billing, the company that sells the insurance is paid a commission after the carrier has received the premium. With direct billing, the insurance carrier is responsible for all the billing issues we discussed previously, from taxes and fees to refunds, cancellations, and premiums. This can make it significantly easier for the company selling the insurance to get started, as they don’t have to build their own billing function around the product.  Because the carrier or insurance-as-a-service partner already has a functional billing system for the specific insurance product being offered, all the distributing company would need to do is build an integration to their partner. This can mean a substantial increase in time-to-market with a new insurance product. With agency billing, the policyholder makes payments to the insurance distributor (i.e., the company selling the insurance product). With this form of billing, the distributor collects the commission upfront and makes retroactive, monthly payments to the insurance carrier. With agency billing, the company selling the insurance is responsible for calculating the amount owed, including taxes, fees, and any refund issues. The distributor is also responsible for the actual collection of money, which means they either need to integrate with a payment platform or build one from scratch.  This isn’t necessarily a hurdle; businesses that sell goods or services online likely already have integrated billing capabilities that allow them to accept digital payments. For example, a business that sells pet products online would already have online payment infrastructure, which could likely be used for embedded pet insurance. This has the added benefit of keeping all of the company’s business data in one place. However, some payment platforms can present user experience challenges, like policyholders having to re-enter personal information on the payment platform, after already providing it on the insurance application. For businesses that aren’t yet set up to take payments, this is a function that would need to be built out before offering insurance with the agency billing method. In almost all cases, integrating with a best-in-class payment platform will be faster and more cost-effective than trying to build a proprietary billing system in-house. Learn more about how Boost's platform can help you manage insurance billing complexity, or dive into building your insurance program with our comprehensive guide.