Laura Knight

A captive is an insurance entity that a business creates, rents, or owns in order to self-insure risks. A cell captive, sometimes also called a protected cell captive or segregated cell captive, is a specific insurance captive structure that allows an entity to segment or separate business in one cell from that in another cell, so that a particular cell’s assets and liabilities are insulated from anything that happens in another cell (even if both cells are part of the same overall captive facility).  Using captives to self-insure risk offers businesses a number of benefits: they can participate in some or all of their program’s underwriting profitability, maintain end-to-end control over risk (including pricing and claims handling), and avoid paying significant overhead fees to a “middleman” insurer. Companies have several options for structuring and utilizing an insurance captive. They might build a single-parent captive, pool risk in a group captive, or make use of a cell captive. In this blog, we’ll take a look at each.  In a single-parent captive, a company will often partner with a fronting carrier to reinsure at least part of their own risk. These are most commonly used by very large companies with exposure to multiple lines of business, which they can insure through the same captive entity.  Example: A national food-delivery business wants to provide insurance to its restaurant partners, to protect against the risk of lawsuits related to food safety for meals delivered through the service. It discusses partnerships with several major insurance carriers, but none are willing to provide the level of coverage that the business is looking for at a reasonable price. To get what it needs, the food-delivery business sets up a captive to reinsure a fronting carrier partner, enabling the business to insure its own risk and provide the coverage it needs to its restaurant partners. Setting up a single-parent captive is a considerable undertaking with high capital requirements and a complex setup, with significant ongoing operational requirements going forward. In order to make sense financially, it usually requires a high volume of premium. For that reason, this option is usually only viable for very large businesses. For businesses that can’t afford (either in time or in money) to set up their own captive, a second option is to partner with other businesses in a related industry to set up a group captive. In this scenario, a single captive maintains portfolio capacity that can be shared by a group of entities. The entities can then pool risk together in the single captive. Example: Several real estate companies form a partnership to share a group captive to pool their similar risks. Each company contributes a certain amount of capital to fund the captive, and the capacity is shared among the partners. The participating real estate firms are then able to leverage the captive’s capacity to exercise greater control over their risk, and avoid paying high fees to middlemen. This can allow the partner businesses to share risk (and benefits) between them, and works well for trade associations and other groups of companies in related industries, that share similar risks. However, since the fund is shared between partners as well, one partner’s negative returns can impact the other partners involved.  In a cell captive, the business first sets up an entity called a core, which is a similar process to setting up a single-parent captive. Once the core entity is complete, however, the business can much more easily spin up additional cells within the captive structure. The financials for those individual cells are separate from each other, rather than the combined funding of a single-parent or group captive. For many companies, however, using a cell captive doesn’t mean building one themselves. While there are use cases for single-parent cell captives, most businesses that create them then rent out cells to other businesses. Using a cell in another company’s captive entity (also called captive-as-a-service) allows a business to reap the benefits of an insurance captive at a much lower cost. We’ll look at some examples in the next section. The first step in creating a cell captive is to create the “Core” entity. This process is similar to building a single-parent captive:  Once the core captive entity has been created and adequately funded, the owner can spin up individual cells within the captive’s structure to support different lines of business, segments, or partners. The Department of Insurance will still need to approve all new cells, but the process is much more streamlined than in prior cases. New cells can often be set up in weeks instead of the months or years typically needed for entirely new captive entities.  Captive cells’ assets and liabilities are then statutorily protected from each other (which is where the ‘protected cell captive’ name comes from). This means that if one cell has a difficult year and experiences significant underwriting loss, the assets of the neighboring cells can’t be used to fund that loss.  There are multiple ways that cell captives are used, including offering captive-as-a-service (also called rent-a-captive) to other partners or businesses, and separating different parts of the parent company’s business for performance tracking.  In a captive-as-a-service or rent-a-captive scenario, the company that owns the captive core would allow other businesses to use cells in its captive. For a fee, the owner can set up a new cell specifically for the partner business, and manage it on their behalf. This lets the partner business leverage the owner’s infrastructure to achieve many of the same benefits of a single-parent captive, without the cost and complexity of creating one. Example: An insurtech specializing in commercial insurance has built a very strong customer base, and wants to further grow its business by participating in some of its own risk. However, building a full captive is too resource-intensive for the insurtech to take on. Instead, the insurtech partners with a CaaS provider and rents a captive cell. The insurtech then uses the cell to self-insure some of its risks, enabling it to participate in the underwriting returns and further scale towards a full-stack insurance business.  While the most common reason for building a cell captive is to rent out cells to other businesses, there are a few reasons a company might build one for its own use. Because the cells’ financials are statutorily separated from each other, a cell captive allows a large enterprise to delineate between different lines of business or geographic regions, and monitor their performance separately. Example: A nationwide property management company offers several insurance products to its customers to help protect their personal property and finances.  For planning and budgeting purposes, each line is supported by an individual cell in the management company’s cell captive. Over the course of the fiscal year, several lines perform over their targets, while one line significantly underperforms. The other LOBs’ budgets are unaffected by the low-performing LOB’s losses, and the company has clear visibility into which of its products are doing well and which may need a course correction. Cell captives provide a number of benefits to both their owners and the end users: Cell captives are popular for a reason: they offer significant value to both the companies with the resources to build them, and the companies that would rather rent a cell than build a single-parent entity from scratch.  To learn more about Captive-as-a-Service with Boost, contact us.

When businesses that provide digital goods and services think about growth, they probably don’t think about insurance - but they should. “Insurance” might call to mind a complex, largely offline business, but the reality is that modern consumers’ behavior and expectations are driving rapid change in the industry, especially for the embedded insurance market. Over 60% of US consumers have said they prefer to buy insurance digitally, and just as many are happy to buy from non-traditional insurers1. In the US market alone, embedded insurance is opening up billions of dollars in opportunities for new entrants.  Most people are familiar with embedded finance, whether they realize it or not. If you’ve ever used a meal delivery or a ride-sharing service, you’ve used an embedded finance system. The meal delivery company likely didn’t develop its own payment processing system from scratch - it probably integrated with a fintech company that already had the technology. You were able to seamlessly make your payment for the service without ever leaving the app because the payment-processing tech was embedded in the app experience. Embedded insurance follows the same premise: a business offers an insurance product, usually at the point of sale, and the consumer can buy it within the same experience as the rest of the company’s products. This creates opportunities for companies whose core product or service isn’t insurance, but that consumers would benefit from insuring. The point when the consumer buys the product or service is a natural (and convenient!) time to buy insurance as well.  An embedded insurance example might be a televet provider offering pet insurance on their app or website. A consumer could set up a virtual vet visit on their mobile device, and then be offered insurance to protect their furry friend’s health, right on the same page (and from a source they already trust when it comes to their pet). The consumer could then buy the policy in a few clicks, without ever leaving the televet’s brand experience. This is different from the more usual click-through partnerships with insurance, also called affinity partnerships. In the affinity scenario, the televet might have a button for getting insurance on the site, but clicking on it would only send the customer off to the insurance partner’s signup experience (with the televet essentially just acting as a lead gen channel for the insurer). The customer buys the insurance product from the insurance company directly, who then manages the relationship (for better or for worse). With digital embedded insurance, the entire purchase experience takes place in the televet’s front-end environment, with the televet’s branding. The televet also continues to own the relationship and benefits from the consumer’s continued brand loyalty. It sounds simple, but it can make a big difference for your top and bottom line, along with your customer satisfaction and retention. Here are three key reasons why your company should be thinking about adding embedded insurance to help grow your business:  The single biggest reason to consider offering digital embedded insurance? It’s a very significant financial opportunity. Your customers will make regular premium payments to keep their policies active, which translates into regular income for your business. And recurring revenue builds value for your company besides just the money itself - regular, repeating income streams are exactly what investors and shareholders like to see. The more your customers buy from you, the more likely they’ll keep buying from you. Adding insurance products increase your stickiness as their brand of choice - both by strengthening your relationship with the customer, and increasing their switching costs. This has benefits beyond just increased ARPU; Bain & Co. famously posited that a 5% increase in customer retention can boost profits by as much as 95%. In 2021, the US property & casualty (P&C) insurance market is projected to take in $700B in gross profits. That’s an enormous sum coming in just from insurance, and a considerable amount is open for new entrants to tap into. Despite its size, the insurance market is ripe for disruption, because...  For many consumers, the traditional insurance-buying experience just isn’t working any more. Why? The explosion of personalized services over the last decade has raised the bar on consumer expectations, and traditional insurers aren’t meeting it - as reflected in traditional insurers’ often-low NPS scores. A one-size-fits-all, take-it-or-leave-it approach isn’t compelling to the modern digital consumer. If a consumer does want to buy traditional insurance, providers don’t make it easy. The insurance industry is still largely dominated by old-school analog processes, requiring phone calls, printed and scanned forms, or even faxes (and nothing adds friction to a signup flow like needing to stop and google where to find a fax machine). Making things worse, the process itself tends to be a disjointed mix of multiple UIs, with the consumer required to submit the same information multiple times. This wastes consumers’ time - and increases the odds they’ll just abandon the transaction. With traditional insurance, the policy they offer is the policy you get, regardless of what you actually need. Need pet insurance to help cover your dog’s allergy meds? A traditional policy will likely package that coverage along with coverage for things like cancer and hip dysplasia, even if your dog is unlikely to ever require those treatments. If a company like Equifax gets hacked and costs insurers tens of millions in losses, your neighborhood coffee shop gets hit with a rate increase as if they pose the same risk. This one-size-fits-all approach means that many customers get stuck paying for things they don’t need because it’s the only way to get insurance coverage for the things that they do. All these problems with traditional insurance add up to a big embedded insurance market opportunity to grow your business, because as it turns out...  It may seem counterintuitive, but companies who aren’t traditionally known for selling insurance are uniquely positioned to win a significant share of the modern insurance market. The opportunity is greatest for digital businesses that provide other goods and services, where protecting those offerings with insurance is a natural fit. So why is your company in such a good place to help? You’ve already spent a lot of time and energy acquiring, learning about, and understanding your customers. You know their needs, which helps tailor the right insurance products to fit their life, and you know their preferences, which helps create the right experience. You specialize in serving your customer group, and you understand their needs in a way that a giant, generalized insurer can’t. Your customer knowledge also allows you to reduce friction in the signup flow. Instead of requiring customers to fill out and send long, involved applications, you can use the information you already have about them to prepopulate the necessary forms and ensure you’re only asking them to provide information you actually need. One of the insurance roadblocks for modern consumers is that they prefer convenient buying experiences with brands they already use and trust - which isn’t most insurance companies. This is particularly true for younger people. In a recent survey, 82% of millennial customers said they’d want to buy insurance from a “new entrant” (i.e., a company from outside the insurance industry). Buying a traditional insurance policy often means tracking down and researching products from brands they aren’t familiar with - and as we’ve already seen, the industry doesn’t make this an easy task. For customers, it’s far simpler to obtain insurance from a trusted brand that they already have a relationship with (and also to keep track of the policy once they have it). In the past, all these advantages still might not have been enough to make adding an insurance offering worth it. Insurance is a highly complex, highly regulated business, and new entrants could expect to take 24-48 months to bring a minimum viable insurance offering to market. For companies whose core focus isn’t insurance, the investment simply wouldn’t pencil out. Things have changed, however, and so has the business equation. Advances in the insurance-as-a-service space mean that you can now partner with a company that’s already done the heavy lifting on the technology, operations, compliance, and capital required (like Boost!). With the right partner, you can go to market with a co-branded or white-labeled insurance offering in a matter of days or weeks, instead of years.  If you’re looking to increase your company’s revenue (and who isn’t?), offering embedded insurance should definitely be near the top of your consideration list. With the potential for significant recurring revenue from embedded insurance, increased customer engagement and satisfaction, and an easier go-to-market path than ever before, there’s never been a better time to start. Ready to get started with embedded insurance?  Contact us to speak to one of our Boost insurance product experts today.

So you’ve heard that the insurance market is set to pass $700B gross written premiums this year and that changing consumer expectations are creating big opportunities for companies that haven’t traditionally offered insurance. Now what? If you’re ready to get started with offering insurance, your options fall into three general buckets: build and sell the insurance product yourself from scratch, partner with an insurance company to offer their product, or work with an insurance-as-a-service provider to offer white-label insurance products. So, which is right for your business? We’ll go through what’s involved with the top 3 options, as well as some pros and cons to be aware of. Your first option for offering insurance to your customers is also the most intensive: you can create the insurance products you want to offer, in-house. With this option, you would essentially create a business within a business: an insurance agency that operates as part of your company. As with most business-DIY options, the big advantage of building your own is that you can create exactly what you want. You’ll be responsible for the concept, design, operations, compliance, and tech, so you can approach each area in a way that centers your business needs. Building a new business from scratch is never easy, but insurance is a particularly difficult vertical to get into. It’s complex and heavily regulated, and getting started requires a significant investment of time and money. How significant? Here’s a quick overview of the steps you’d need to follow to create your own insurance products and offer them on your website. All in all, you’re looking at a multi-year timeline to build your insurance products in-house from scratch, with a considerable financial investment as well. And that’s not even considering the ongoing financial investment to maintain them - long-term program management requires significant resources. Besides just the effort involved, the long lead time for getting an insurance product to market means that by the time you get there, the market may well have changed. On top of time concerns, there’s another disadvantage you should weigh before going the build route. Everything we just covered about starting your own insurance program probably falls outside your company’s core business and specialization. What’s more, recruiting and hiring the right people to manage it may be significantly more challenging than hiring the right people for your core business. It’s often difficult to know what to look for when hiring for a completely different skill set, outside your core industry. Once you’ve brought all these new people on board, you’ll also have to manage them in an area where your core leadership has little experience. Consider whether the benefits of building it yourself outweigh the inevitable distraction of running an entirely separate secondary business within your company. Instead of creating an insurance product yourself, you might choose to partner with an established insurance company to offer your customers their product. In this scenario, you would have a link on your site for the customer to buy insurance. When the customer clicks it, they would be taken to the insurance partner’s website to buy the product from them. This is sometimes called affinity marketing, or click-through affinity. In this situation, you would be essentially acting as lead gen for your insurance partner. Your partner may pay you a certain amount per click, but after that you would not participate in the transaction. Your insurance partner would complete the transaction, collect the premiums, and own the insurance relationship with the customer. A click-through insurance partnership like this is both fast and simple to set up. After you’ve worked out the details of the partnership agreement, all you’ll need to do is add the link on your website to direct customers to the insurer. A partnership like this is also relatively low-commitment. Because you’re simply passing web traffic on to the insurer, you can later switch insurance partners or even remove the insurance option from your site altogether with a minimum of disruption to your business. The easy setup of a click-through affinity partnership also comes with considerable drawbacks. Because you’re just providing a link to your partner’s signup form, you lose control of the customer immediately after they click the link. Whatever comes after that is up to your insurance partner. If the customer has a negative experience during the process, it might reflect badly on your brand for offering the referral. Even if the experience is a good one, losing control of the customer comes with another big downside: you also lose control of the revenue. The insurance customer relationship will be with your partner, and they’ll collect the premiums. While a click-through partnership is a fast and straightforward way to connect your customers with insurance, it also removes one of the major benefits of offering insurance on your site in the first place. With this option, you won’t see the kind of regular recurring revenue that you would if your company were able to collect the premiums. Further underlining that it’s not your product (or your customer), with this kind of partnership you’ll have little to no input into the insurance product you’re offering. Your insurance partner will build, develop, and sell the products that best fit their business interests, which may or may not be a good fit for your particular customers. As just another marketing partner, you won’t have much influence to try and get a product created that closely matches what your customers need from insurance.  A relatively new third option is to work with a company that offers insurance-as-a-service, and white-label the insurance product they provide you with. If you aren’t familiar with insurance-as-a-service, it generally works like this: insurance-as-a-service providers are companies who have already done the work we outlined in Option 1 (Boost is one example). They’ll have all the necessary state licenses to create their own insurance products, and they will have already negotiated with licensed carriers to back those products. A good insurance-as-a-service provider will also already have built the necessary technology to offer an embedded insurance product experience. Your company can then sign on with the provider to offer one or more of the insurance products they’ve created, under your own brand name, on your company’s website or app. Unlike affinity partnerships, partnering with a white-label insurance-as-a-service provider doesn’t simply generate customers for someone else. Your company will be the one selling the insurance product, on your own website. The customer will buy the policy from you, and you’ll be the one to collect the premiums and own the ongoing customer relationship. White-labeling an insurance-as-a-service product offers many of the advantages of building it yourself, but at a fraction of the time and cost. Because your partner will have already done the heavy lifting on things like operations, technology, compliance, and capital, you can easily offer the right insurance products for your customers - and get to market in a dramatically shorter timeline versus trying to create an insurance company from scratch. A white-label insurance product also allows you to reap the full business benefits of offering your customers insurance: While white-labeling an insurance-as-a-service product is much faster and easier than building one yourself, it’s still more involved than simply adding a link to your website. Working with an insurance-as-a-service provider may take longer to implement than partnering with an insurer for click-through affinity since you will be building the full experience into your website rather than just linking out to an insurance partner's website. Selling white-label insurance policies also requires an important additional step: someone at your company will need to be licensed as an individual broker, and then sponsor a license for your company. You may recall this as Step 1 in the build process - the broker license is required to legally sell insurance, which your company will do with its insurance-as-a-service products. This sounds much more intimidating than it actually is. The insurance licensing process itself is relatively simple and straightforward. However, it does require additional effort from one of your employees (usually a senior executive who is unlikely to leave the company). The other good news is that not only is the licensing process easier than it sounds, but once it’s done, it’s done. You’ll need to maintain it with fees, renewals, etc, but you won’t need to go through the process again as long as that employee is still at the company. A good insurance-as-a-service partner will also help you with this step, so you can check the box and start offering insurance to your customers as soon as possible.  The insurance market is changing quickly, and there’s never been a better time for new entrants to take advantage of the embedded insurance opportunity. Depending on the route you take to get there, however, the cost, time to market, and experience for your customers can vary a great deal. When starting on the road to offering insurance, it pays to carefully consider your budget, your timeframe, and your business goals, so that you can choose the option that’s right for your company. Is insurance-as-a-service the right option for you? Boost can help get you started. Contact us today to learn more about your options for offering the different ways to offer insurance with one of our Boost product experts.

With more companies taking advantage of the growth opportunity of embedded insurance, you may be wondering if it’s a good option for your business.  Many businesses stand to benefit from offering embedded insurance, particularly those from outside the traditional insurance industry. Like any opportunity, however, some businesses will be a better fit than others. In this article, we’ll take a look at what types of businesses are good candidates for offering embedded insurance, and which might be better off exploring other options.  First, let’s take a step back and cover why embedded insurance is such a promising opportunity in the first place: The insurance market is big and getting bigger, with the US property & casualty insurance market projecting $700B in 2021 gross written premiums. With traditional insurance providers frequently falling short of modern consumer expectations, the door is open for new entrants to grab a piece of the pie. Offering embedded insurance allows businesses to tap into a large and growing market as a new revenue stream. Since insurance customers will pay regular premiums on their policies, this translates into a steady flow of recurring income for the business. The more customers buy from you, the more they’re likely to keep buying from you. Insurance is also a sticky industry, with an average customer retention rate of 84%. Embedded insurance thus gives businesses a loyalty-building cross-sell product for their existing customers, both deepening the relationship with the customer and increasing the cost to switch. Helping your customers protect the things that are important to them is a way to set yourself apart from your competitors, particularly if you’re the first in your industry to offer it. Businesses that get started with embedded insurance early on will have an easier time gaining new customers versus competitors who start later and will have to convince people to switch. Embedded insurance is a great opportunity, but is it the right opportunity for your company? Embedded insurance is probably right for your business if… You’re already providing your customers with value. Providing them with the means to protect that value is a natural next step. With embedded insurance, you can meet your customers where they already are (at your point of sale!), and offer insurance at the time when they’re most likely to buy it. For example, a company that sells pet products or services might also sell embedded pet insurance that provides care for its customers' animals. At the moment they’re making a related transaction on the company's website, the customer could click a button and be seamlessly offered a policy tailored to their needs, increasing the probability that they’ll opt to buy. If the customer needs to later research insurance providers and call around for their options, they’re more likely to not buy insurance at all. This is true for services as well as physical goods. Neobanks, for example, are already selling financial health to their customers. Insurance is a natural complement to products designed to protect and grow consumers’ finances, and offering it alongside the rest of the suite means reaching customers when they’re already thinking about their financial health. Your business also has an advantage in that your customers already trust you, and thus are more likely to buy from you. In fact, 60% of US customers have indicated they’d prefer to buy insurance from non-insurance companies. Insurance is a relatively easy way to deepen your relationship with your customers, while also increasing your business revenue. If your business already has robust online distribution channels selling to a large customer base, embedded insurance is a great opportunity to increase your average revenue per user (ARPU) or customer lifetime value (LTV). Selling embedded insurance adds a valuable new product to your mix, and creates a cross-sell opportunity that may not have existed otherwise. Since you’re selling to your existing customers, embedded insurance allows you to grow your revenue faster without additional acquisition costs. For many companies, it provides a faster, less costly path to growth than expanding into new customer groups. And since customers tend to be loyal to the brands they frequently buy from, embedded insurance also helps increase the likelihood that your existing customers will turn into repeat buyers. If your company has a strong record of successful product launches, it’s a sign that you know how to handle new business opportunities. That agility will help you get up and running quickly with a new embedded insurance offering, and position it to succeed. Insurance is a product like anything else - it needs organizational support to thrive and reach its full potential. Companies that regularly launch new initiatives and have strong internal processes to drive successful new products are particularly well-suited to adding ancillary revenue streams like insurance. As we’ve seen, selling fully-embedded insurance is a great opportunity for many businesses - but it’s not for everyone. For some companies, other paths to growth may be a better fit for their markets and objectives. Embedded insurance probably isn’t right for you if… Like many financial sectors, the insurance space is heavily regulated. This provides important protection to both consumers and businesses, but it does mean the insurance market is less open to new entrants. With software, you can simply set up a website and start selling the product. With insurance, there are rules that need to be followed first. With a supportive insurance partner to help you navigate the landscape, staying compliant doesn’t have to be difficult. A good partner will help you determine what you need to do to get started (for example, you may want to get an insurance license for someone at your company), and will help you stay compliant once you’re in the market. While your partner can help simplify compliance processes, ultimately your company will still need to take the necessary steps to meet them. If your company is unable (or unwilling) to follow the rules of the road, insurance won’t be a good fit for your business. While embedded insurance can deliver a lucrative income stream, you can’t simply add a link on your website and wait for the revenue to start piling up. As we’ve seen, adding digital insurance can be a faster, easier path to growth than new customer acquisition. However, it still requires work on your part in order to be successful. While the launch window is obviously very important, the resourcing need doesn’t end there. Like any product, your embedded insurance offering will need to be appropriately supported by marketing, product management, and other go-to-market resources, as long as you offer it. If your company isn’t able to provide that ongoing support, you’re unlikely to get significant results. One of the biggest drivers of embedded insurance adoption is how seamless it is for the customer. Your company offers the digital insurance products in your own experience when the customer is buying other goods and services from you, and the customer can then buy a policy with little-to-no friction. The ability to meet the customer with the right insurance product at the right time is a major reason why the customer is likely to buy in the first place. If digital sales aren’t a big part of your business, then you lose a lot of that potential. If you can’t incorporate your insurance offering into a digital experience, it’s much harder to achieve the right time/right place factor that plays a big role in embedded insurance success. Without the point-of-sale convenience, your customers are stuck in the same routine as with traditional insurance: having to research and pursue an insurance opportunity after the fact.   If you believe embedded insurance could be a good fit for your business, explore what to look for in an embedded insurance partner or get started with Boost today. Still not sure? Here at Boost, we’re always happy to consult. You can drop us a note any time.

If you’re unfamiliar with insurance and trying to learn more, there’s one thing you probably noticed right away: there's a lot of special insurance terminology.  This can make it challenging for newcomers to dive in and research what they need to know in insurance. We’ve put together a guide to explain the most common insurance terms to help you get up to speed with the industry. [See Full Size] Reimbursement that the insurance customer is entitled to get under their policy. For example, a pet insurance policy would probably include a benefit for accident or illness, meaning that the insurer will cover some or all of the customer’s expenses if their pet gets injured or sick. If a policy has an annual benefit, that’s the maximum amount the insurer will pay for that particular benefit during a policy period (usually a year).  In insurance, “binding” means that coverage is now tentatively in effect and the insurance company will cover your losses, even if you haven’t received your policy yet. A licensed insurance company. Many carriers sell policies directly to customers (Geico and Lemonade are two examples), and also through various channel partners (such as independent agents and brokers). Processing for insurance claims made by policyholders. If your customer suffers a covered loss, they’ll file a claim for the money they should get under their policy. Claims administrators (or “adjusters”) will receive the claim, report it to the carrier, determine how much the carrier needs to pay, and provide the approved settlement money to the insured. It’s important to note that not just anyone can process an insurance claim. By law, claims administrators and adjusters must be specifically licensed. Additional coverages that the insured person or business can choose to add to a policy. This is commonly used for specific things that fall outside a standard insurance policy. For example, a business might add an endorsement to their cyber insurance for social engineering, that pays out if certain employees are tricked into transferring money to a fraudster. Without the endorsement, their cyber insurance policy wouldn’t cover that loss. Specific costs that an insurance policy will not pay for. For example, a standard Accident & Illness pet insurance policy might exclude costs for alternative therapies like acupuncture. Endorsements often extend coverage to costs that are otherwise excluded from a policy. The total sum of the premiums that an insurer expects to receive, based on the policies the insurer has written. GWP is also used to describe the value of specific insurance segments (for example, “$2B in 2020 pet insurance GWP” means that if you added up the premiums customers paid for all pet insurance policies active in 2020, the total would be $2B). Generate policy documents and deliver them to the insured. This process typically takes place after the “binding” step and officially confirms that coverage is in place for a customer during the policy term. A cost incurred by the policyholder. Costs that qualify for reimbursement under their policy are sometimes called covered losses or qualified losses. Most policies also spell out exclusions and specific losses that are not covered, and will not be reimbursed. Unlike insurance brokers, who are typically only authorized to sell other carriers’ products, MGAs are delegated full underwriting authority by one or more carriers. This means the MGA can do things like evaluate the risk of a potential policyholder, decide whether or not to offer them a policy, and quote them an expected premium based on their expected risk. MGAs also have the authority to actually issue the policies to customers rather than wait for their insurer to complete that process for them after the fact. The insurance company’s balance sheet, used as shorthand for the company itself. “A-rated paper” means a policy provided by a company with an A rating from AM Best.  The amount that the customer pays for their insurance policy. This amount will vary depending on the level of coverage, and the risk associated with the individual policy. For example, a pet insurance policy covering an elderly dog who is more at risk for health issues would likely be higher than a policy covering a puppy.  An estimation of the premium that a potential customer would pay for their insurance policy, based on the information they provided and the insurer’s underwriting guidelines.  Pricing for an insurance product. Insurance rates are calculated using complex algorithms that are created by licensed actuaries and must be approved by state regulators before the insurance product can be offered in that state. A score given to an insurance carrier by third-party agency AM Best, evaluating the insurer’s financial strength and ability to pay out its customers’ claims. This is important: if an insurer has a low rating, it means there’s a risk they may not be able to pay all the benefits their customers are entitled to. Insurance coverage taken out by an insurance company to protect against losses and guarantee that claims can be paid. While reinsurance is complex, the basic concept is a way for insurance companies to share financial risk with the reinsurance companies that back them, increasing overall stability in the insurance market. The evaluation of a potential policyholder and the risk associated with covering them. Underwriting is the process used to determine whether or not an applicant is eligible to purchase an insurance policy. A framework used by an insurer or financial institution to decide whether or not they will take on a risk. In insurance, this means taking on the risk of covering that particular policyholder. Outside of insurance, underwriting guidelines apply to financial products like loans (in which the risk is whether or not the borrower will be able to pay). Also called underwriting standards. Some insurance policies don’t go into effect immediately. Instead, there is a certain amount of time (for example, a week or a month) that must pass before the insurer will start paying costs. This is called the waiting period. Certain endorsements may come with their own waiting periods, separate from any waiting period that applies to the rest of the policy. After reading our glossary of insurance terms, we hope you’re feeling more comfortable with the insurance terminology we commonly use in the industry. Boost makes it easy for any company to get started offering embedded insurance. Learn more about our digital insurance products, or talk to an expert about how embedded insurance can fit into your business.

One of the most crucial components of an insurance program is its capacity. What coverages a program can offer, how quickly it can grow - and whether it can get to market at all - are all determined by insurance capacity. An insurance program’s capacity is the maximum amount of value that it can insure, which is typically associated with a total premium. This is determined by the amount of capital available to cover its losses.  For context, let’s quickly recap how insurance finances work: To ensure that the company stays solvent, it can’t sell policies that could potentially result in more losses than the company can absorb. This creates a limit on the amount that an insurance company can cover in its total policies - i.e., the insurance capacity. It’s important to note that when it comes to capacity for insurance programs, it’s not enough to just have money sitting in a bank account. By law, insurance products must be backed by a licensed insurance carrier. Insurance capacity is vital for any insurance program. If you don’t have the capital to pay out policyholder claims, then you don’t have an insurance program. The availability of insurance capacity is not just a concern for launching a new program, however. Once an insurance program is live, its ability to grow will be directly impacted by the amount of capacity it has available. With each new policy written, the amount of value the program is insuring will increase - which directly decreases its available insurance capacity. For insurtechs, this means that scaling their business will require continually adding more capacity to their insurance programs. Otherwise, the insurtech will hit the limits of what their insurance capacity can support, and won’t be able to sell any more policies until that capacity increases. As we discussed earlier, insurance capacity requires more than just funding: the provider must also be a licensed insurance or reinsurance carrier. An insurtech looking to launch a new insurance program would need to either become a licensed carrier with sufficient capital itself, or work with another company that already meets those requirements.  The first “option” isn’t really an option at all - insurance capacity providers require a vast amount of capital to operate, with millions or billions of dollars on their balance sheets. For most businesses, this will be impossible to raise themselves as a startup or even growth stage company. The more realistic path is to secure a partner who can provide them with the insurance capacity they need. There are two ways for an insurtech to go about finding a capacity partner: The first is to go directly to a carrier, and try to convince them to provide backing. For insurtechs without connections to industry incumbents, it can be a difficult route to capacity. Insurtechs will first identify and gain access to the right decision makers at the carriers, then convince them to commit the carrier’s financial resources to backing a new entrant’s product. For startup insurtech companies, this can easily become a years-long process. The second option is to work with an insurance infrastructure-as-a-service provider (like Boost) who has already gone through the process of acquiring insurance capacity from carriers, and can then extend it to partners. Insurtechs that go this route can white-label an insurance product developed by the infrastructure-as-a-service partner, which are already backed by licensed carrier entities. This is almost always a faster path to market than going directly to the carriers themselves, providing insurtechs with the ability to launch with the capacity they need in weeks rather than years. As we’ve discussed, however, insurance capacity is an issue for more than just launch. As an insurtech’s business scales, the capacity that their partner provides will need to scale as well. When choosing an insurance as a service provider, it’s a good idea to ask questions about how much capacity they can provide, and how many carriers/reinsurers they work with. If the provider only has one or two capacity partners, that’s a red flag that they might not be able to keep up with the needs of a fast-growing insurtech. If the provider works with a network of carriers or reinsurers, it’s a good indicator that they will not only have sufficient capacity today but also have the relationships in place to be able to continually secure more as their insurtech partner's scale.  Insurance capacity is a critical part of any insurance program. Any insurtech hoping to launch or expand an insurance offering will need to first determine how they’ll secure the capacity they need. Working with an insurance infrastructure-as-a-service provider can be a faster, smoother path to market than trying to work with a carrier directly. Learn more about how Boost’s insurance infrastructure as a service works, or contact our team to discuss how working with Boost can get your business the insurance capacity you need to launch or expand your insurance program.

As the embedded insurance market continues to take off, more and more companies are using insurance as a service to help them get started quickly. Embedded insurance represents a significant revenue and customer engagement opportunity for many businesses, but getting started can be costly and time-consuming.  With insurance as a service, businesses get everything they need to get to market much more quickly and cost-effectively, as well as access to technology and capacity they might not be able to secure themselves. Rather than spending several years and millions of dollars building a new insurance program from scratch, the business can simply connect with an insurance as a service partner via insurance API, and get started right away with offering new or additional insurance products through their own website and brand. In this article, we’ll look at the definition of insurance as a service, what the benefits are, and how it’s different from other types of insurance partnerships. Insurance as a service provides everything a company needs to start offering insurance to their customers. This includes: Insurance as a service is sometimes also called insurance infrastructure as a service, because it provides the whole solution necessary to support an insurance program, rather than just the insurance products themselves. This is important, because selling policies is actually only a small part of offering insurance. Without the broader infrastructure (including claims processing, regulatory upkeep, technology, reinsurance backing and more), a business won’t be able to successfully enter the insurance market.    Insurance as a service was developed to help companies launch new or expanded insurance programs, for drastically less time and cost than building from scratch. Modern consumers expect seamless, all-digital experiences, and they want to buy from brands they already trust. Traditional insurers often can’t meet those expectations, which creates opportunities for new entrants like insurtechs, or businesses who offer related products, to offer customers the insurance they need. Actually taking advantage of those opportunities, however, can be easier said than done. New entrants to the insurance space have traditionally faced significant barriers. Complex regulations, specialized operations needs, and high capital requirements make it difficult for new players to even get to market, much less grow: Many of these barriers are in place for good reason, to ensure that insurance buyers will get the protection they pay for. However, a side effect is that they also make it difficult to innovate in the insurance industry, and many new ideas can’t even get off the ground. Insurance as a service was developed to help new entrants get to market more quickly and cost-effectively than the traditional DIY path. Here are a few ways insurance as a service helps businesses overcome traditional barriers to getting started with insurance: Building an insurance program from scratch is a long, difficult, expensive process, and it can easily take more than two years just to bring an offering to market.  With insurance as a service, the provider has already gone through the process of creating the insurance products and securing regulatory approval, and building the infrastructure to sell and support them. With the hard part already finished, the go-to-market process is dramatically shortened. Working with an insurance as a service partner allows business to launch a new insurance program in as little as a few weeks.  One of the hardest parts of building an insurance program is securing enough financial capacity, both to launch the program and to scale it. Insurance capacity is the maximum amount of value that a program can insure, determined by how much capital is available to cover its losses.  This requires an enormous amount of money. Most capacity providers have millions or billions on their balance sheets, and by law insurance capacity must be provided by a licensed insurance carrier. For new entrants to the insurance market, it can be very difficult to convince an established carrier to provide capacity for their products.  An insurance as a service provider has already built relationships with insurance carriers, and secured capacity for their products. When a business white-labels the insurance-as-a-service product, they’re getting access to the capacity behind that product as well, with no need for lengthy, complex business development initiatives. Modern insurance buyers expect seamless, all-digital experiences - something traditional insurance companies have frequently failed to deliver. This creates significant opportunity for new entrants, but delivering an insurance transaction experience that meets modern consumer standards is easier said than done.  Digital insurance requires a fairly complex piece of software called a policy management system, which automates all the key workflows and decisions involved in any insurance transaction. This is how claims get submitted, reviewed and paid out to your customers. Building a policy management system from the ground up can take a year or more in development time, and cost several million dollars. With insurance as a service, the policy administration system is already built and tested. Businesses only need to connect it to their own systems, usually through an API. The system can then deliver the all-digital insurance policy management that modern buyers demand. As we’ve seen, building a new insurance program is a very long process. It’s also very expensive. From concept to launch, creating an insurance program from scratch requires years of work by a number of legal, actuarial, and technology experts - all of which comes with significant cost. Businesses who take the DIY approach to insurance will spend millions of dollars in development before they’re able to sell a single policy. Insurance as a service allows businesses to start or expand insurance programs without those high upfront costs. Instead, they can begin making sales and collecting revenue from premium payments right away, usually with a small commission paid to the insurance as a service partner. For companies without insurance expertise, building and managing an insurance program in-house would likely be a costly distraction from their core business. An online pet supply store, for example, would probably see better returns from investing its resources in sourcing and marketing pet products, rather than learning how to be both an insurance company and a pet store. With insurance as a service, they’re free to do what they do best, while the partner runs the insurance backend. Even for insurtechs, whose business is focused on insurance, the core mission usually doesn’t involve getting bogged down in a long, expensive slog to get to market. For many insurtechs, insurance as a service fills a similar role to how software companies use AWS. It provides access to infrastructure that would otherwise be costly and time-consuming to build and maintain, so that the insurtech can get to market quickly and focus on serving customers.  Whether you’re a non-insurance company considering offering embedded insurance, or an insurtech looking to expand your product lineup, insurance as a service can help you get there faster and more cost-effectively than trying to build a new insurance program yourself.  Learn more about Boost’s white-label insurance products, or get started configuring your insurance program with Boost today.

A big part of Boost’s platform is MGA infrastructure, but many of our customers are also MGAs in their own right. So, what does it look like for a business that’s also an MGA to partner with us? MGAs generally work with Boost in one of three ways: white-labeling one of our insurance products, working with us to develop a new product, or rolling an existing book of business onto our platform. In this blog, we’ll take a look at all three. The first way MGAs work with Boost is to expand their insurance offering by white-labeling one or more of Boost’s existing products.  Boost offers a range of in-demand insurance products, including SMB cyber insurance, startup management liability insurance, pet health insurance, and more. These products are designed to be modular and highly configurable, so our customers can build the perfect insurance package to offer their customers. Boost’s insurance products are accessible through a simple API connection between our platform and our customers’ front-end. So what does this mean for MGAs? Three things: a high-quality product configured to complement their existing offerings, faster time to market, and complete control of the experience.  While numerous insurance businesses provide products available for partners to sell, traditionally these products have not offered much flexibility or customization. This means MGAs looking for differentiated insurance product offering have often needed to build what they want themselves - a very long, very expensive process.  Boost’s products, however, are designed in-house to be modular and highly configurable. MGAs who white-label with Boost are able to select the protections they want to offer from a range of optional coverages, and build a package that will complement the rest of their lineup at a price point that will be attractive to their specific target customers. While integrating with a traditional provider to offer their product can take a long time (and building a new product takes even longer), working with Boost allows MGAs to be in-market and generating revenue with a new LOB in a matter of weeks.  Boost’s insurance products are all preconfigured with our proprietary policy admin system, and all an MGA needs to do to get started is build an API integration between Boost’s PAS and their existing website or app. And since Boost’s API was designed to be developer-friendly, the integration process can be completed far more quickly than with a traditional insurance partner.  The third reason MGAs choose Boost as their white-labeling partner? Control. While Boost’s PAS handles the insurance transactions via the API, the end buyer’s experience is wholly owned by the MGA. No barely-customizable templates here - the MGA builds the exact front-end experience that they want to offer their customers, and Boost’s platform powers it. Buyers can digitally manage every aspect of their policy’s lifecycle, without ever leaving the MGA’s website or app. For MGAs that seek to offer new, innovative coverages for emerging risks, working with Boost can achieve their goals at a fraction of the time and cost required to build a new insurance program in-house.  Boost is the only outsourcing partner that can provide everything needed to create a new insurance program, under one roof. Traditionally, MGAs would need to manage a roster of specialized partner firms to produce the various pieces of a new program, as well as the complex project-management required to bring them all together. Instead, MGAs work with Boost to have every aspect of development, including forms, rating, underwriting guidelines, tech integration, reinsurance, and filing, handled by a single partner. The internal Boost insurance team has built 9+ products over the last few years, and we’ve put together a proven development process that enables us to get MGAs to market with new products on an accelerated timeline. Phase 1, Research and Proposal. The Boost team collaborates with MGA stakeholders to outline the scope of the product, create a product sketch, and iterate to a proposal that both companies can agree to. Phase 2, Product Development. Once the proposal is approved, Boost’s team will develop the forms and rates, create the underwriting guidelines, determine the program operations, design the claims workflow, and finally submit the product to reinsurance and fronting carrier partners. Phase 3, Technology and Product Filing. Once reinsurance and carrier partners approve, Boost will file the product in all applicable states, and configure the Boost PAS to support it.  Securing reinsurance capacity is usually one of the biggest challenges of building a new insurance. Partnering with Boost gives MGAs access to Boost’s dedicated panel of 12+ global reinsurers, plus the potential to self-insure some of the risk through Boost Re. Boost is also appointed by some of the most reliable fronting carriers in the United States, giving MGAs the peace of mind that their products will be sold on ‘A’ or ‘A-’ rated paper.   The third way that MGAs work with Boost is to roll an existing book of business onto Boost’s platform. If the MGA’s product is active and in-market, the process is similar to an expedited new build.  Boost configures the PAS to support the MGA’s product, and handles other tasks like refiling the product. Since the product is active, the product forms, underwriting guidelines, and other documentation is already complete, and so the process can move much more quickly than an entirely new product build. There’s a few different reasons why MGAs decide their book is better off with Boost, but the two biggest are tech capability, and capacity. Boost’s PAS is one of the most sophisticated in the industry, and supports end-to-end digital workflows and policy management. For many MGAs, this means the opportunity to move away from time-consuming manual processes and increase their efficiency with programmatic underwriting and all-automated workflows. Boost’s PAS also enables MGAs to provide the fast, convenient, all-digital transactions that their customers want (and expect). Rather than wrestling with trying to adapt legacy technology to changing times, MGAs who roll their books to Boost are able to leverage Boost’s API-based PAS to create modern, seamless customer experiences. MGAs looking to scale an existing product can move their book to take advantage of the Boost platform’s reinsurance capabilities. Boost’s dedicated panel of global reinsurers connects MGAs with risk capital, while Boost Re enables self-insurance through captive-as-service (CaaS). With CaaS, MGAs can access all the benefits of an insurance captive at dramatically lower cost and operational requirements. Learn more about how to leverage the Boost platform to grow your MGA’s offerings, or get in touch with an expert today.

Built In just released their 2022 Best Places to Work lists, and here at Boost, we couldn’t be more excited: we are a winner in not one, not two, but THREE different categories: #27 of the 100 Best Places to Work in NYC #6 of the 50 Best Small Companies to Work For in NYC #43 of the 50 Companies with the Best Benefits in NYC Built In determines the winners of Best Places to Work based on an algorithm, using company data about compensation, benefits, and companywide programming. To reflect the benefits candidates are searching for more frequently on Built In, the program also weighs criteria like remote and flexible work opportunities, programs for DEI, and other people-first cultural offerings.  The past year has been an exciting one for Boost, and we’ve accomplished a lot - from closing a Series B to launching four new products to multiple awards and accolades. None of it would have been possible without our amazing team, and we’re excited to reach even greater heights in 2022.  So if you’re looking for your next big challenge, head on over to our Careers page. We’re making it easy for any company to offer embedded insurance products to their customers, and we’d love to have you onboard.