What is Insurance as a Service?

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By Laura Knight on Jun 21, 2022

7 min read

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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: What is it?

Insurance as a service provides everything a company needs to start offering insurance to their customers. This includes:

The technology to deliver an embedded experience and manage an all-digital insurance program, including claims, compliance, and the entire lifecycle of the insurance policy
The insurance capacity required to sell policies
The operational infrastructure necessary to support their program
The regulatory approvals required to stay compliant
Insurance products that can be white-labeled under the company’s own brand

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.

How Does Insurance as a Service Work?

Choose an insurance as a service partner. If you’re not sure how to choose the right partner, our embedded insurance checklist can help.
Select the insurance products you want to offer. If your partner allows customization, you can choose which coverages to include in your offering, and create an insurance package tailored to your target customer.
Integrate your digital experience with your partner’s system. An API-driven platform will allow you to offer your insurance packages seamlessly through your own site or app.

Launch your insurance offering, under your own brand. Your customers will interact exclusively with your brand as their insurance provider, with your partner invisibly providing the infrastructure.
Focus on serving your customers. Your insurance as a service partner will handle ongoing requirements for maintaining your program, such as ensuring the program and products meet compliance requirements, securing insurance capacity to scale, and continually updating the technology platform. The tech component is particularly important, since the policy administration system is what allows you to offer your customers an end-to-end digital experience, from purchasing a policy to submitting a claim online. Meanwhile, your business can do what it does best: acquire, retain and delight your customers.

How Did Insurance as a Service Come to Be?

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:

In order to legally sell insurance, companies need to obtain an insurance license for each state they want to sell in and each state has its own licensing requirements. Creating new insurance products then requires an additional license.
Creating the forms, rates, and underwriting guidelines necessary for an insurance program is a complex undertaking requiring experienced actuaries and compliance experts.
Insurance programs must be backed by sufficient insurance capacity to be able to pay out all claims, and that backing must come from a licensed carrier. Securing that backing can be very difficult, and it’s not unusual for new entrants to spend years building the necessary relationship with a carrier - and not always succeeding.
The tech systems required to seamlessly buy and manage insurance online are complicated and can take significant time, money, and expertise to build.

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.

Benefits of Insurance as a Service

Here are a few ways insurance as a service helps businesses overcome traditional barriers to getting started with insurance:

Fast Go-To-Market

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.

Built-in Capacity

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.

Mature Technology

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.

More Cost-Effective than Building From Scratch

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.

Focus on Core Mission

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.

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Ready for Liftoff: BHMS Backs Boost

Jul 31, 2024

Friends of Boost, Today Boost is thrilled to announce that we have secured a significant equity investment from BHMS Investments, setting the stage for an incredibly exciting next phase for this company and the amazing team that has built it brick-by-brick over the past seven years. With a rock-solid foundation firmly in place, this partnership is going to supercharge our growth, fuel more innovation, and cement Boost’s position as the go-to infrastructure platform in insurance. We are on a mission to empower MGAs, insurtechs, independent brokers and agents, wholesalers, embedded insurance providers, and really any company that just wants to build, transact, and operate more efficiently in this technology-enabled world of ours. While capital is great, today is about hard-earned validation for our team doing that the right way since Day 1. BHMS is the perfect capital partner for Boost in terms of their insurance expertise and unquestionable track record in the space, but more importantly, they are fantastic people that share both our views on the industry and our principles of company building. The market is dangerously fixed for early and growth stage companies right now (and I say “fixed” intentionally). It’s incredibly easy to get picked off in an environment like that, so it takes a rare mix of both intellect and character to do the right thing when you’re on the capital side of that equation - and even more to be truly value-add to your portfolio companies. BHMS has that mix in spades and appreciated Boost for what it is, what it has accomplished, and what remains an incredibly high ceiling for this company vs. playing short-term charades with the herd. That’s our kind of investor. This investment isn’t just about the money—it's a resounding endorsement of Boost’s strength, credibility, and potential to make a truly meaningful impact on the insurance industry at scale. With BHMS now on board, alongside an incredible group of long-time strategic backers like Markel, RenaissanceRe, and Canopius, we’re ready to take our game to the next level. Our mission has always been to disrupt the insurance space with cutting-edge tech and unparalleled service, and this backing proves that disrupting responsibly is the only approach that works in our industry. Anyone can grow fast if they don’t care about quality or long-term credibility. At Boost, we underwrite profitably, we respect compliance, and we always - always - take a collaborative approach with our stakeholders across the entire value chain. As someone with literally zero patience, I can personally attest to that being incredibly difficult to do at times - but it scales. Even with the market’s ups and downs, Boost has been a powerhouse of innovation in the insurtech landscape with equal commitment to disruption and reliability. Doing things the right way does not mean you cannot innovate - or even disrupt - and leveraging best-in-class technology is not a right reserved for #insurtechs. Our platform has always been a one-stop shop for insurtechs and embedded insurance providers and MGAs, independent agents and brokers, and wholesalers alike - offering everything from product development to underwriting and program management to claims administration and reinsurance capacity. With our proprietary tech and a dream team of industry pros, we’re delivering smarter, more efficient solutions than ever before. Since our first program launched in 2019, we’ve underwritten over $200 billion in coverage, which is a somewhat staggering figure in hindsight. Today we’re proud to support programs for giants like Amwins along with trailblazers like Cowbell, Newfront, and Wagmo, and we’re grateful for all of the companies that chose to build with Boost even when Boost itself was just getting started. Our steady, disciplined approach has kept our portfolio profitable and we like to think that has kept our partners in front of us very happy as well. All of Boost’s success is thanks to what is hands down the best team in the industry. Hard stop. Their grit, dedication, and willingness to tackle tough challenges head-on has been crucial. Boost’s commitment to quality starts with our team and is reflected in them every single day. We keep things lean at Boost because that quality always outperforms quantity. Even if that approach always requires more from each individual and makes the stakes a bit higher, working with the right people makes the returns on each long hour invested that much more gratifying. Few people exemplify those principles or have demonstrated such an unwavering commitment to Boost more than Jeremy Deitch, so I am also thrilled to announce that Jeremy has been promoted to President at Boost and will join me on our Board of Directors. Jeremy’s leadership has been critical since the day he started at Boost almost 6 years ago, following probably the most grueling interview process in our company’s history - one he is always happy to dramatize even more if you ever ask him. ;) I couldn’t be more grateful to have a partner like him as Boost soars to new heights. With this new investment, we’re geared up to boost (pun intended) our growth and expand our tech offerings. We’re planning to scale our MGA programs, roll out new products, and snap up some strategic acquisitions. Our goal? To make building a business in insurance easier, faster, and more efficient for everyone so they can better serve their customers. We’re more fired up than ever about our mission to empower insurance providers with the tech and infrastructure they need to thrive. This partnership with BHMS is just the beginning. The future is bright, and we’re ready to lead the charge. Thank you to everyone who has been part of our journey thus far. Let's all keep pushing boundaries together - because the best is yet to come. Special thanks to the team at Howden Capital Markets & Advisory for helping Boost always say what it’ll do and do what it says. You can find our full press release here and, more importantly, can start joining our platform here. All my best, Alex Maffeo CEO & Founder Boost Insurance

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What is a Cell Captive?

May 23, 2024

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.

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Partnerships and Focus: Big Trends at Money20/20

Nov 3, 2021

It was a busy October for the team at Boost Insurance, wrapping up with one of our favorite industry events: Money20/20. The conference was a super interesting contrast to ITC which was laser-focused on insurance, while Money 20/20 was more about fintech in general and much, much bigger! With fintech about ten years ahead of insurtech in terms of maturity, it’s interesting to see the level of innovation and diversity of companies in our big brother industry. Here are some of the big trends we noticed. One of the really interesting trends that kept being repeated at Money20/20 was a shift in mindset among both fintechs and banks. In the past, they have tended to see each other as competition for consumers’ business and attention but now everyone is moving towards viewing each other as complementary vs. competitive. We saw multiple collaborative efforts between the upstarts and the established, working together to create a better customer experience. This works because they each have a specialization (fintechs excel at meeting modern consumer expectations and banks are experts in profitably navigating a very regulated, very complex business), and partnership lets them bring both those strengths to the table. This was extra interesting to us at Boost because it reflects what we see in insurance, with insurtechs and carriers working together and bringing their own strengths together to meet modern consumer needs and expectations. For example - Boost has built a modern tech platform making various insurance products available via API but partners with established reinsurance companies to facilitate risk transfer. There will still be winners and losers between the incumbents and the upstarts, but as collaboration and competition continue consumers will be the clear winners. A trend I’ve written about before, and one that we continue to see play out, is tech companies’ focus on affinity groups. Fintechs are springing up all over with explicit goals of serving a relatively narrow group of people and serving them well. Companies like Paceline for people focused on health and wellness, Daylight for the LGBTQ+ community, and First Boulevard for African-Americans are just some of the fintechs concentrating on being the best option for a specific set of consumers. This is pretty much the opposite of traditional one-size-fits-all programs - instead of creating something broad that can be good enough for the biggest slice of people, creating something very targeted that can be great for a specific niche. This trend is great news for consumers who traditionally have not been served well by financial services in general. At Boost we’re starting to work with more affinity-focused companies because our modular, customizable product structure allows partners to tailor insurance for their customer needs. It’s exciting to be part of making insurance more accessible to all groups of people! Finally, it was really exciting and validating to see so much interest in new approaches to traditional industries. Finance and insurance have historically had a reputation for being very slow to change, sometimes for good reason (highly regulated, handling people’s money is a big responsibility, etc). This year though there’s a ton of interest in potential innovations, look no further than the enormous presence of blockchain and crypto-focused companies at Money20/20! Boost met with a TON of different companies during the show, and we cannot talk about anything yet but be on the lookout for some very interesting things coming in the near future! Money2020 was a heck of a conference and while my conference year is wrapped, the Boost team will be out and about at shows the rest of the year. We are looking forward to more opportunities to meet people in 2022, so if you did not get a chance to connect with us at Money2020, just drop us a line.