Contact Us

Offering Insurance: Build, Partner, or White-Label?

By The Boost Team on Nov 1, 2021
8 min read
Offering insurance: build, partner, or white-label?

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.

Option 1: Build It Yourself

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.

Advantages of Building Your Own Insurance Business

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.

Disadvantages of Building Your Own Insurance Business

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.

  1. Get licensed as an insurance agency. Time required: minimum 5-6 months

  2. Be appointed as a producer/agent broker by an insurance carrier. Time required: minimum 3 months

  3. Become a Managing General Agency (MGA). Time required: Varies; each state has a different set of requirements 

  4. Create your insurance forms, rates, and underwriting guidelines. Time required: minimum 6 months

  5. Get a carrier to provide capital backing for your product. Time required: minimum 1 year

  6. Create claims administration capability. Time required: 3-6 months

  7. Build technology to sell your product through your website. Time required: minimum 1 year

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.

Option 2: Partner with an Insurance 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.

Advantages of Partnering with an Insurer

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.

Disadvantages of Partnering with an Insurer

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. 

Option 3: Offer a White-Labeled Product with Insurance-as-a-Service

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.

Advantages of White Label Insurance-as-a-Service

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:

  • New recurring revenue stream. Your customers’ premium payments create a significant new source of recurring income for your business.

  • Increased retention and engagement for existing customers. Adding an insurance product to your lineup helps you increase per-customer revenue, and also helps strengthen the customer relationship. The more things they buy from you, the less likely they are to buy from (or switch to) someone else.

  • Enhanced brand authority through highly relevant offerings. You’ve already invested a great deal of time and resources getting to know (and acquire) your customers. By working with an insurance-as-a-service provider to create insurance products tailored to your customers’ real-world needs, you can enhance the perception of your brand as an expert, and increase ROI on your customer acquisition.

Disadvantages of White Label Insurance-as-a-Service

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, 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, 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 out 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.

Previous articles
A smiling man feeds a baby a bottle while working from home. The baby is grabbing a fist full of chart printouts from the desk.
Paternity Leave: How Parental Leave Insurance Supports Equal Leave for Families
Mar 6, 2024
For many new parents in the U.S., getting the time off to care for their new child is fraught (and for some parents, simply not possible).  Unlike most other countries in the world, the U.S. has no national requirements for paid parental leave, and so parents are left to navigate a patchwork of options that can vary widely by location and employer. Out of the options above, short-term disability is the most widely available, and the most commonly used solution for paid parental leave. One big problem: in most cases, it’s not available to new dads. Excluding fathers from parental leave isn’t just unfair - it’s increasingly out of step with U.S. families. The average amount of time U.S. dads spend caring for their children has nearly tripled since 1965, and fathers now make up nearly 20% of stay-at-home parents Dads’ expanded role as caregiver is reflected in changing social attitudes as well. In a 2023 survey over three-quarters of Americans agreed with the statement that children are better off when both their mother and their father are equally focused on work and childrearing. Research has also shown a link between taking paternity leave and long-term financial benefit for the family. So, how can businesses support their employees who become fathers, without breaking the bank? Parental leave insurance is designed to make it affordable for SMBs to offer paid parental leave to their employees.  Parental leave insurance is a commercial insurance program; like other types of commercial insurance, the SMB gains coverage by purchasing a policy. The SMB can choose the level of benefit they want to offer their employees, including things like length of leave and percentage of salary covered, and then pay a regular premium based on the selected benefits and the demographics of their employees.  When a covered employee takes parental leave, the SMB can file a claim through their parental leave policy to be reimbursed for the cost of paying the employee during the covered leave period, as specified in the company’s parental leave policy.  Parental leave insurance is a much more inclusive option than STD. Boost’s product, for example, will cover paid leave for any new parent, regardless of whether they are actually giving birth. This includes not just fathers, but also foster and adoptive parents (who are generally also ineligible for STD).  With parental leave insurance, SMBs can offer equal maternity and paternity leave benefits. Not only does this acknowledge and support the role of new fathers in caring for their children, it also empowers families to choose leave that is right for them, instead of making the best of whatever they can cobble together. A parental leave insurance policy benefits the business as well as the employees: Lower expenses. Funding a paid parental leave program requires a business to try to forecast how many employees might take leave in a given year, set aside money to cover those potential costs, and sometimes pay an extra temporary employee to fill in while the parent is out. Buying parental leave insurance means much lower costs overall to providing this benefit.  Predictable costs. One of the more challenging aspects of self-funding parental leave is the uncertainty: it’s impossible to actually know how many employees will become parents in a given timeframe. This means costs can vary wildly from year to year. With parental leave insurance, these unknown expenses are replaced by a regular, predictable premium payment, making it much easier for the SMB to budget around it. Talent attraction and retention. Highly valuable employees are often in hot demand, with many companies competing to hire them. As we’ve seen, paid parental leave is a very desirable benefit, and offering it can help an SMB differentiate themselves as a great place to work. It also helps retain top employees if they become parents. In a recent McKinsey survey of fathers, many reported that “they felt more motivated after taking leave and that they were considering staying in their organization longer.” For insurtechs and other businesses that work with SMBs, offering parental leave insurance provides your customer with an affordable path to supporting (and retaining) their employees who become parents, regardless of gender.  Interested in adding parental leave insurance to your offerings? Get in touch today.
Continue Reading
A businessman types on a calculator while holding a pen. His desk is covered in financial charts.
Build, Buy, or Boost: A Cost Breakdown for Insurance Infrastructure
Feb 28, 2024
A big reason that businesses choose Boost is that we can help them launch scalable, profitable insurance programs much more quickly and cost-effectively than the alternatives. In this blog, we’ll explore the time and cost requirements for using Boost to develop a new program vs traditional build or buy, and how Boost is able to offer a better option. We’ll break it down by the three main components you need for a new program: the MGA infrastructure to support it, the new product itself, and the distribution technology to sell it online. The first step to developing a new insurance program? Being legally permitted to do so. And if you want to create your own product versus just selling someone else’s, your company needs to be an MGA. In this section, we’ll look at the cost and requirements for building a new MGA. There are two big requirements for building your own MGA: hiring the right people, and securing the right partnerships. On the hiring side, you’ll need to build an organization to run a full-stack insurance business. This includes everyone from underwriters to claims administrators to compliance managers to regulatory experts. As you might imagine, this is a significant, ongoing resource commitment, particularly for positions requiring experienced senior employees. On the partnership side, you’ll need to build relationships with reinsurers and other risk capital providers, and with fronting carriers who will allow you to write on their paper. This can be difficult, especially without existing connections. Total estimated cost: $5 million Total estimated time: 2 years When creating an MGA, there’s actually not much difference between building and buying.  You can contract with qualified professionals instead of hiring directly (like using a licensed third-party agency for handling claims instead of building an internal claims team), and work with consultants that specialize in other MGA requirements, but you’ll still need to do a lot of the same things that we saw in the build section. The most important and challenging pieces, like the reinsurance and fronting carrier partnerships, can’t be bought. Total estimated cost: $5 million Total estimated time: 2 years Boost has already invested the time and money in building a robust MGA infrastructure to support our customers’ insurance programs, including:  When you work with us, you can leverage our already-existing infrastructure to get what you need to support your insurance programs right away, for an annual platform fee.  Total estimated cost: $150,000 annually Total estimated time: Immediately available The core of a new insurance program is the product itself: the coverages you’re going to offer, the risk capital to back them up, and the administration to support its operations. In this section, we’ll look at what it takes to create a brand new insurance product from scratch. If you choose to build your product from scratch in-house, you’ll need to hire experienced people to do everything mentioned above, including: Additionally, you’ll need to secure capacity for your product. This is often harder than it sounds, especially if you don’t already have relationships in place with risk capital providers. Particularly in the current economic environment, convincing reinsurers to commit financial resources to insuring a new, unproven risk can be a long, difficult journey.  Total estimated cost: $8 million to set up, with $2 million annually to maintain Total estimated time: 5-6 years If you go the “buy” route for developing your new product, you’ll need to contract out to a number of partners to get what you need, including: Each partner will deliver their piece of the puzzle, but it will be up to you to assemble the pieces and ensure everything happens as it’s supposed to. You’ll need to invest resources in project-managing a complex multi-year, multi-partner project. Additionally, some partners’ contracts may include ongoing fees, or a certain percentage of the product’s GWP. Total estimated cost: $5.8 million + 1% of GWP Total estimated time: 3-4 years If you choose to partner with Boost to create your product, you’ve already streamlined the process considerably. Boost can provide everything you need to build and launch your new insurance program under one roof (in fact, we’re currently the only partner that can).  Boost’s in-house team of insurance experts will work with you on market research and scoping for your opportunity, then develop a product sketch for how to address it. Once you and Boost have agreed on what the new product should look like, our team will get to work developing the forms, guidelines, and other program documentation. They’ll also help you design the program’s operations and claims workflows. When the product is ready, Boost will submit it to our panel of reinsurance and fronting carrier partners. Once we’ve secured paper and capacity for your product, our compliance specialists will start the filing process with the states that you intend to sell in. Total estimated cost: $400K Total estimated time: 4-7 months Modern buyers expect convenient, all-digital purchase experiences, and delivering those experiences requires a policy administration system (PAS) with the right capabilities. In this section, we’ll look at options for acquiring a PAS that can support end-to-end digital workflows. A PAS is a very complex piece of software, in no small part because of varying insurance regulations between each state. To function smoothly, your PAS will need to automatically identify and follow all applicable laws for the state a policy is sold in. This includes areas such as:  The time and difficulty of building a PAS also increases with each additional insurance line that it must support. If you build in-house, you’ll also need to plan for regular updates and maintenance to the software, and ensure your organization has the necessary resourcing in place. Total estimated cost: $2 million annually Total estimated time: 1-2 years If you opt to buy the technology you need, the cost will vary by PAS vendor pricing, and also by the amount of development work necessary to customize an off-the-shelf PAS to support your product and workflow needs. Traditional vendors often charge per-year service costs for your PAS buildout and subsequent maintenance. Newer vendors tend to forgo the large fixed annual rates, and instead collect a relatively low baseline platform fee along with a percentage of your gross written premium. In many cases, however, you’ll also need to separately arrange and pay for the custom dev work to configure your PAS for your products. Total estimated cost: $250k + 1% of GWP Total estimated time: 6 months to customize/implement Boost’s state-of-the-art PAS is at the heart of our platform, and is pre-configured to support all Boost products. The annual $150,000 Boost platform fee includes access to the PAS - just integrate with your front-end via API, and you’re ready to get started selling your Boost-powered insurance product.  The Boost API was built from the ground up to be easy for developers to build to and implement, reducing deployment times vs. complex legacy software. This includes a design that leverages RESTful patterns, comprehensive API documentation, and permanent access to a dedicated testing environment, at no additional fee. Total estimated cost: Included in the platform fee Total estimated time: 4 weeks deployment Considering if a new insurance program is the right move for your business? Learn everything you need to know with our free ebook How To Succeed with a New Insurance Program. And if you’re ready to get started with Boost, get in touch today.
Continue Reading
A stylized concept image  that shows a person working on a laptop, with various security and internet iconography superimposed over it.
3 Reasons Cybersecurity Firms Should Offer Cyber Insurance
May 19, 2023
Cyber threats are on the rise, and businesses of all sizes and industries are at risk of significant financial losses and reputational damage in the event of a cyber attack. While SMBs are regularly targeted by cyber criminals, however, it can be difficult for them to secure cyber insurance coverage that meets their needs.  For cybersecurity firms that serve SMBs, this is a great opportunity to expand your business by offering cyber insurance. In this blog post, we break down 3 compelling reasons why cybersecurity firms should offer cyber insurance to their clients. Cybercrime is rising across the board. In 2021 the FBI's Internet Crime Complaint Center received 845,000+ complaints, with total losses that exceeded $6.9 billion. 2022 had the second-highest number of data compromises in the U.S. in a single year, and the total cost of cybercrime is predicted to hit $8 trillion by the end of 2023 (then grow to $10.5 trillion by 2025) As frequency has grown, so has the cost to individual businesses. The average cost of a data breach for businesses in the United States reached a staggering $9.44 million in 2022. These kinds of unexpected costs would be taxing for even a large, highly profitable enterprise, but they can be devastating for small to medium businesses. Some never recover.  Your customers need a way to safeguard their operations from the harmful consequences of a cyber incident, and cyber insurance can help.   Cyber insurance protects individuals and businesses from digital risks such as data breaches,  phishing attacks, and other types of cybercrime. It usually provides financial coverage for expenses related to recovering from a cyber attack, such as legal fees, data recovery, customer notifications, and reputation management. It offers a safety net that allows your customers to mitigate the financial burden and operational disruptions caused by cyber incidents and provide some relief while they recover and rebuild.  With the increasing frequency and complexity of cyber threats, cyber insurance has become an essential component of any comprehensive risk management strategy for all businesses. This creates an opportunity for you to offer your customers a solution.  With approximately 33 million SMBs in the United States alone, this segment represents a significant portion of the business landscape. The insurance industry as a whole is also quite substantial, with P&C premiums totaling over $710 billion in 2021. Providing comprehensive cyber insurance lets you tap into this market, and creates the opportunity to generate significant revenue streams while filling a critical gap and meeting SMBs’ legitimate needs for cyber insurance protection.  Cybersecurity firms are already at an advantage in the market. Because cyber insurance is so aligned with your core business, you’ll be selling to your existing customers. Younger buyers in particular have reported that they prefer to buy financial products like insurance from brands they already know and trust, rather than a traditional provider. Since you already have a relationship with your customers around protecting them from cyber threats, buying their cyber insurance from you is a natural choice.  Expanding your business and adding new products can be a significant (and expensive) undertaking. But an important aspect to remember with cyber insurance is that you won’t be marketing to new customers. Instead, you would be selling to the same audience with whom you’ve already invested time, effort, and money. Not only does this streamline your sales and marketing processes, but it also allows you to generate additional revenue without incurring new customer acquisition costs. By weaving cyber insurance into your current marketing efforts, you can seamlessly expand your service offerings and build additional revenue per client.  Providing insurance to your existing clients can also help boost your customer retention. Insurance is a very “sticky” product with an average 84% customer retention rate. The additional touchpoints can help keep your brand top of mind, and the valuable protection your customers buy from you is another differentiation point against the competition.   By strategically integrating insurance into your product lineup, you can boost your revenue, strengthen customer loyalty, and further position yourself as a trusted partner for all their cybersecurity needs.  If you offer cybersecurity services to small to medium businesses and want to learn more about how you can grow your revenue by offering cyber insurance, learn more in our free ebook
Continue Reading