How to Build a New Insurance Program

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New Product Development Guides

By The Boost Team on Aug 18, 2023

7 min read

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As the insurance landscape evolves, there are several approaches to consider for taking a new, innovative insurance program from idea to reality.

In this guide, we'll explore the three major avenues to creating a new insurance program: building it from scratch in-house, outsourcing to traditional partners, or partnering with an Insurance Infrastructure as a Service company like Boost.

Option 1: Build It Yourself

Building an insurance program from the ground up is a long, multifaceted undertaking that requires careful planning, meticulous attention to detail, and a robust set of resources.

The main benefit of this route is the control. When you build your own insurance product, you have complete control over the concept, design, operations, compliance, and tech, so you can approach each area in a way that centers your business needs.

Complexities of Building an Insurance Program

The downside of building an insurance program, however, is that you have complete control. In other words: you have complete responsibility for every aspect of this undertaking, several parts of which may be outside your core business and expertise.

Building an insurance program is a long and capital-intensive process, with heavy regulation adding considerable complexity. Here’s a brief, 10,000-ft view of the steps to getting your new insurance program off the ground:

1. Obtaining the Necessary Licenses

Your business is probably already licensed to sell insurance, but creating a new program in-house requires your company to also be licensed as a Managing General Agency (MGA). The requirements for this license vary by state, so you’ll need to research the process in each state you intend to sell in. Depending on whether you plan to build an admitted or non-admitted insurance product, you may also need to obtain a surplus lines license.

2. Developing Forms, Rates, and Guidelines

Creating the actual insurance product that your program will support involves crafting forms, establishing rates, and setting underwriting guidelines. Unless you already have people capable of those tasks within your business, you will need to hire experienced actuaries, underwriters, and insurance lawyers, which can be quite expensive.

3. Navigating State Regulations

A closely related factor to consider is that each state has its own unique insurance regulations. Forms, rates, underwriting guidelines, licensure, billing procedures, and more vary from state to state. Additionally, state regulations can frequently change, so you will need to stay up-to-date to ensure compliance. This process can be time-consuming and demands ongoing attention.

4. Garnering Carrier Buy-In and Capacity

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. That being said, capital is not enough: by law, you will need to secure backing from one or more licensed insurance or reinsurance carriers. This step can take a long time to complete, especially if your business does not have existing carrier relationships.

5. Developing Distribution Technology

Creating or acquiring a Policy Administration System (PAS) can be one of the most expensive, and time consuming aspects of the process. The PAS is the technological backbone of the insurance program, and one of the most essential (and complex) pieces of the insurance tech stack. In order to deliver a modern, all-online insurance experience, you need a PAS that can support all operations related to an insurance policy.

Getting it right is complicated and very expensive, which is why few companies choose to build a bespoke PAS in-house. Most choose to work with an outside partner and purchase an existing PAS, though this comes with its own challenges (more on that in the next section). Either way, you have to do your research on which path would be best for your budget and your business.

6. Establishing Claims Administration

Legally, insurance claims must be administered by a licensed claims adjuster. This means that handling claims requires either hiring licensed adjusters in-house, or partnering with a Third Party Administrator (TPA) to administer them for you. You’ll also need to establish processes for how your customers file their claims, and how that information gets to the right person.

While building an insurance product in-house offers control and customization, it is an expensive, multi-year investment. In addition to the functional costs of building the product itself, you’ll need to recruit and hire internal experts to do the work on the program and manage it on an ongoing basis.

Option 2: Outsource to Traditional Partners

Most businesses that want to create a new insurance product don’t end up DIY’ing it, because, as we just explained, it is complicated, time-consuming, and very costly. Instead, many companies opt for a more cost-effective, less labor-intensive route, which is to outsource.

While we here at Boost are big supporters of outsourcing, the experience you have will really depend on who you outsource to and what they are capable of. There are a variety of traditional outsourcing partners that specialize in different parts of the insurance process - emphasis on parts of the process. You’ll need to work with different partners for different aspects of building a new program.

Actuarial Consultants

Actuarial consulting firms can help you with the creation of the product itself. This includes developing the forms, helping determine appropriate rates, and creating the underwriting guidelines. Some actuarial firms may also assist you with filing your product once it’s complete.

PAS Vendors

As mentioned in the previous section, you can outsource or purchase a Policy Administration System (PAS) through a PAS vendor. These third-party companies provide generic “off-the shelf” software designed so that any insurance company can buy it.

However, these systems usually aren’t usable straight off the shelf. In order for it to be able to support your insurance program, you will need to customize and configure it to support your business’s specific needs and workflows. Most vendors will do this work for you, for a substantial fee. There may also be ongoing licensing or platform costs required to use the software.

Additionally, system capabilities will vary from vendor to vendor, and not all PAS may be able to support every insurance operation. Depending on the level of sophistication your program requires, you will need to do some research on what off-the-shelf product would be the right fit.

Reinsurance Brokers

A reinsurance broker acts as an intermediary between you and reinsurance carriers. The broker’s primary role is to connect you with reinsurers who might be able to give you the capacity you need for your program. While these partners can be expensive to work with, they can be a big help in getting your program the necessary risk capital backing.

Third Party Administrators (TPA)

Third Party Administrators (TPA) are agencies that employ licensed claims adjusters, and manage various aspects of insurance policies, claims processing, and benefits administration. Generally speaking, working with a TPA is a cost-effective way to get licensed claims adjusters to handle your customers’ claims for you. They also operate as intermediaries between you and your policyholding customers. The downside of that however, is that the only touchpoint that your customers will have with their insurance company will be with the TPA and not with you. That means that you won’t have visibility into customer experience with this portion of your brand.

Disadvantage of Outsourcing to Traditional Partners

Outsourcing can be a quicker and more cost-effective solution than building from scratch, but that’s not to say that it is quick or inexpensive. The biggest disadvantage of this route is that since most traditional partners only cover a part of the insurance program development process, you will likely need multiple partners to create your program.

Each of these partners will provide their piece of the puzzle, but managing the process and making the pieces work together will be your problem. Not to mention, working with multiple vendors will likely add up in costs and time to market.

Option 3: Insurance Infrastructure as a Service

Unlike the traditional outsourcing partner companies, insurance infrastructure as a service (IIAAS) companies like Boost provide everything you need to start offering insurance to your customers. Think of us like a one-stop-shop for all of your insurance program development needs.

As a first-of-its-kind IIAAS partner, Boost has already gone through the build-a-program steps we looked at in the first section, and has put together the necessary infrastructure for every aspect of new insurance product development. In fact, we are the only outsourcing partner that assembles compliance, risk capital, and technology infrastructure under one roof.

An IIaaS partner like Boost handles every aspect of development in-house, including

Forms
Rating
Underwriting guidelines
Tech integration
Reinsurance
Filing

This is an important distinction because, in comparison with DIYing it or working with multiple traditional partners, working with an IIAAS partner will help you cut down expenses and minimize the effort of juggling multiple contracts and partnerships. You can leverage your partner’s existing expertise and infrastructure to get to market more quickly, with lower overall costs.

Whether you decide to build from scratch, partner with traditional partners, or embrace the innovative IIAAS approach, launching a new insurance program is an intricate journey with multiple avenues to explore.

If you want to learn more about partnering with Boost to build a custom insurance program, contact us.

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

Nov 1, 2021

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.

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.

How to Market & Sell Pet Insurance

Mar 11, 2022

Offering embedded pet insurance is a great way for companies that already serve pet owners to bring in an ongoing source of revenue. But just like every other product out there, marketing and advertising are key contributors to your overall sales. If you’re new to the industry, here are six pet insurance marketing tips to keep in mind when selling pet insurance. Because pet insurance is still relatively new in the US, some of your customers may not even be aware that it’s an option. So how do you convert them? From industry experience, we know that customers are most likely to sign up for insurance when it’s offered as a complement to their existing pet purchase. If you can make them this offer at the point of sale as an add-on to what they’re already buying, you are much more likely to win that additional revenue (and turn a one-time customer into an ongoing one). Your existing relationship with your customers can help you make the right insurance offer at the right time. From their purchase records, you probably already know what kind of pet(s) your customer has, and how much they tend to spend on pet expenses. Leverage that data in your pet insurance marketing strategy. A customer who regularly buys vitamins and specialty food for their pet might be interested in a wellness package. A customer with several pets might be interested in a multi-pet discount offer. Additionally, you likely have a database of prospects that you’ve identified as your target audience, but who haven’t purchased with you yet. Since you’re already actively marketing to this group, you can add your pet insurance offer into the mix and the additional value may help nudge them over the conversion line. Insurance is complicated, and sometimes consumers miss out on the coverages they need because the details are confusing or buried in legalese. As a trusted source for information about their pet, your brand is in a great position to break it down for them. In your pet insurance marketing, offer detailed explanations of how your pet insurance works, and what is or isn’t included, in clear, natural language that your customers can easily understand. Avoid confusing your customers with jargon or complicated legal statements, and don’t try to hide details in small print. Everything in your pet insurance advertising should be understandable by the average consumer, and any information about what is or is not included needs to be easily visible. One of the most powerful sales tools you can get is a real-life story about how your customer’s pet insurance made a difference for them. Consider reaching out to insurance customers who save on big bills, and see if they’d be willing to share their stories so you can leverage these in your pet insurance marketing. When sharing testimonials for insurance, there are a few things to keep in mind: This sounds like a marketing no-brainer, but this is particularly important for insurance advertising. If a state insurance commissioner finds your ads to be misleading or deceptive, you could be hit with fines and other enforcement actions, so it is always advised to be transparent when selling white-label pet insurance. If you use any statistics in your insurance ads, you’ll need to cite where that information came from. It pays to go the extra mile for good, credible sources - a great statistic isn’t so great if you have to attribute it to “koolstats4u.biz” in your ad. It’s a good idea to make sure that nothing related to insurance goes live without first passing a compliance review. If you use external marketing agencies for things like paid search ads, set up a review process to ensure that all insurance-related copy is vetted by your team before going live, including for A/B tests and similar experiments. If your company offers pet-related products or services, selling pet insurance is a great option and it is so easy to do with Boost. If you’re just getting started with pet health insurance, our team is here to help. Get in touch with us today.