Management Liability Insurance for Startups: How is it Different?

White-Label Insurance

All Tags

White-Label Insurance

By Laura Knight on Feb 10, 2023

4 min read

A group of young startup professionals sit in a circle in a modern office and discuss a business problem.

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.

What is Management Liability Insurance?

“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:

Directors and Officers (D&O) insurance
Employment Practices Liability (EPL) insurance
Fiduciary Insurance

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.

1. What is Directors and Officers (D&O) Insurance?

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.

2. What is Employment Practices Liability (EPL) Insurance?

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.

3. What is Fiduciary Insurance?

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.

Why is It Hard for Startups to Get Management Liability Insurance?

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.

Startup Management Liability: The Opportunity for Insurtechs

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 raised nearly $200B 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’s Management Liability Insurance Product for Startups

Boost can help. Our award-winning, 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.

Explore Popular Categories

Boost News Insurance 101 Insurance Infrastructure New Product Development White-Label Insurance

Explore Popular Tags

Business Owners Insurance Captive-as-a-Service Crypto Insurance Cyber Insurance Data in Insurance Embedded Insurance Employee Spotlight Growing Your Business Guides Insurance Industry Management Liability Insurance Parental Leave Insurance Pet Insurance Reinsurance Why Boost

Share this Article

The top 3 takeaways from our embedded insurance consumer survey

Embedded Insurance Survey Results: What We Learned From Consumers

Feb 3, 2023

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 current insurance options, and what mattered most in their insurance purchases. Here are the top 3 things that we learned from our consumer insurance survey results. [See Full Size] In our insurance 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 about digital insurance: nearly 70% of respondents aged 18-29 were interested in buying insurance directly through a transaction on a retail website. For half of 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.

Get the Guide: Growing Your Revenue with Embedded Pet Insurance

Jan 12, 2022

It’s a great time to get into the pet insurance market. In fact, more than 70% of American households now own at least one pet, and with the rising cost of vet care, those households are more and more likely to insure their pets’ health. For businesses that serve pet owners, offering embedded insurance is a significant opportunity to grow their revenue and deepen relationships with their customers. At the same time, for most pet-related companies, insurance is a whole new line of business outside their core expertise. The opportunity is there, but it can be hard to know how to get started in the pet insurance market. Partnering with Boost can make it easy to get underway! Download The 2022 Guide to Growing Your Revenue with Embedded Pet Insurance, and learn everything you need to know to get your business started with pet health insurance: Learn how pet health insurance works and what coverages are most commonly available, and explore the use cases that make pet insurance valuable to your customers. Learn which types of businesses have the best opportunity for offering white-label pet insurance, along with what it takes to actually get started (spoiler: less time than you’d think). Learn how to reach your customers with your new insurance offering, using the knowledge you already have about their preferences and buying habits for their pets. The 2022 Guide to Growing Your Revenue with Embedded Pet Insurance is free to download HERE. And as always, if you have any questions about our pet health insurance product or anything else, our team is here to help.

Introducing The New Boost Brand

Nov 9, 2022

It’s an exciting day for Boost: today we’re officially launching our new brand identity, and a shiny new website to go along with it. When we started Boost in 2017, we had one big goal: to drive innovation in the insurance industry. The insurance market is highly regulated, inefficient, technologically underdeveloped and traditionally dominated by a handful of large players, who haven’t had much incentive to change with the times. This added up to an environment that made it very difficult for new players to get modern ideas to get off the ground - which is why buying insurance was still a painful, largely offline process, with often-outdated products. We built Boost to change that. Our mission is to make the insurance industry accessible to innovators by providing the compliance, capital, and technology infrastructure they need to offer modern protection to their customers. We wanted to make it easier for new players to get to market, and to make insurance work better for everyone - the people buying it, and the people offering it. Five years later, it’s been a wild ride. We’ve built an API-based platform that enables any company to offer branded, digital insurance through their website or app, powered by one of the most advanced policy administration systems in the industry. We’ve launched a suite of first-of-their-kind insurance products like parental leave insurance, crypto wallet insurance, and management liability insurance designed for startups, as well as launching improved, more customer-centric versions of established products like business owners insurance for small businesses, cyber insurance and pet health insurance. Since Boost’s inception, we’ve powered more than 40 insurance innovators as they’ve improved the insurance buying process. I couldn’t be more proud of what we’ve accomplished. But we’re nowhere close to finished. Boost’s overall vision for the insurance industry is much bigger than where we are today: we’re building the insurance market for the modern world. Our vision is to democratize the industry through technology and innovation so everyone can have access to the protection they need, when they need it. To tackle that vision, we’ve grown a lot as a company - and it’s time for our brand to grow, too. The updated Boost brand better reflects who we are now: a bold, modern, tech-forward leader in the insurance space. It allows us to tell our story in a way that’s easier to understand, and gives us room to scale as we continue moving forward. The central element in our new brand identity is one you’ll hear us talk about often - the idea of the platform. Boost delivers more than just robust tech infrastructure, white-labeled insurance products or access to risk capital through our managed reinsurance facility (though we have those too). With Boost, you get an end-to-end platform comprising every layer of the embedded insurance value chain, all in one turnkey solution. The platform is what gives our customers the tools to scale their insurance programs and build long-term, profitable lines of business, and that’s why we made it the cornerstone of our brand. Alongside our new brand identity, we’re also excited to unveil the all-new Boost website. Our new online home isn’t just prettier to look at - it’s also packed with more information about what we offer, and more ways to connect with us. Boost has come a long way since the beginning, and I look forward to the next steps we take on our journey. Much more to come!