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How Do Insurtechs Use Insurance Infrastructure-as-a-Service?

By The Boost Team on Jul 21, 2023
4 min read
A row of servers in a datacenter. The servers are mostly black, with glowing blue strips separating them.

Insurance Infrastructure-as-a-Service (IIAAS) is an increasingly popular option for modern insurtechs looking to expand their product offerings, or create innovative products to address new market needs. In this article, we’ll explore what IIAAS is and how insurtechs can leverage it to successfully scale their business.

What is Insurance Infrastructure-as-a-Service?

Insurance Infrastructure-as-a-Service (IIAAS) is a comprehensive solution that provides all the necessary components for a company to offer insurance to its customers. It goes beyond simply providing insurance products and encompasses the entire infrastructure needed to support an insurance program. This includes things like:

  • Technology needed to offer embedded insurance and digitally manage insured customers’ policy lifecycles

  • Risk capital needed to provide capacity for the insurance products

  • Resources and expertise to manage ongoing compliance requirements

  • Claims administration management and other operational needs

What IIAAS is not:

  • A “starter kit” insurance program

  • An intermediary between insurtechs and their customers

  • A replacement for in-house insurance expertise and business leadership

Insurance infrastructure-as-a-service plays a similar role for insurtechs as AWS does for software developers. Buying and maintaining a proprietary server farm is expensive and time consuming for a software company, with significant capital outlay required to scale (since scaling requires buying and integrating more servers). At the same time, owning the server farm doesn’t add much value to the business - customers don’t care how the software they use is hosted, so long as it works. 

In choosing to build on AWS instead, software businesses can access high-quality technology infrastructure at a fraction of what it would cost to build something comparable, and so focus their time and budget on their core business.

For insurtechs, IIAAS provides similar benefits: access to high-quality insurance infrastructure that would otherwise be expensive and time-consuming to create and maintain, so that they can focus on growing their business. And like AWS, IIAAS provides a long-term foundation to scale.

Services Offered by IIAAS Partners

There are a wide variety of useful and important services that an IIAAS partner can provide.  Here’s just a few:

Customizable White-Label Insurance Products

Most IIAAS partners build their own insurance products in-house, which are then available for partners to white-label and resell. Since the IIAAS provider owns the product, they can generally offer more options for insurtechs to customize the coverages and packages they offer their customers than might be available with a traditional insurance partner.

White-labeling an IIAAS provider’s existing product allows insurtechs to easily expand their product lineup, with offerings tailored to their target audience.

New Insurance Product Development

Building new insurance products from scratch has traditionally been a long, difficult, expensive process, with a lot of moving pieces. One of the biggest value props for insurance infrastructure-as-a-service, however, is that those pieces are already in place. This allows IIAAS providers to create new insurance products at a fraction of the traditional cost and time requirements.

For insurtechs with exciting ideas for insurance products that don’t currently exist, partnering with an IIAAS provider to create their new product can be a significantly smoother, more cost-effective path to bringing their concept to market.

Modern Technology

21st-century buyers expect their purchase experiences to be easy, straightforward, and all-digital. For insurtechs trying to meet those expectations, the prevalence of legacy technology in the insurance industry can be a serious obstacle.

One of the advantages of insurance infrastructure-as-a-service is that it was designed specifically for modern workflows, particularly around embedded insurance. IIAAS providers’ policy administration systems tend to be API-driven, and built with developers in mind. 

Rather than trying to work around a legacy system, insurtechs can leverage IIAAS partners’ technology to deliver a seamless experience to their customers. Since developing sophisticated insurance technology platforms requires significant investment and expertise, an IIAAS partnership allows insurtechs to benefit without investing heavily in technology development themselves - again, freeing up resources to focus on the core business.

Reinsurance Backing and Capacity

Insurance capacity determines everything from what coverages a program can offer, to how quickly the program can grow, to whether it can get to market at all. It can also be difficult to secure, especially for emerging insurtechs without strong carrier relationships.

Working with an IIAAS partner can be a straightforward route for insurtechs to access risk capital. Products offered for white-labeling by an IIAAS provider already have capacity built in, since the provider will have already invested in developing relationships with reinsurers and securing risk capital to back their products. This is one reason that IIAAS providers can cost-effectively develop new products: they’ve already established the relationship with carriers who can provide capacity.

By partnering with an IIAAS provider, insurtechs can gain access to these pre-established reinsurance relationships, ensuring they have the capacity they need to grow their business.

For insurtechs looking to scale faster, leveraging IIAAS can deliver the necessary components for growth while allowing them to focus on their core mission. 

Learn more about how Boost’s insurance infrastructure as a service works, or contact us to discuss how you can grow your business by working with Boost.

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