As InsurTech investment continues apace, questions are often asked about the ability of startups to launch into a sector that is heavily regulated and requires significant capital. In answer to this question, leading ILS fund manager Nephila Capital, its fronting partner State National and some top VCs are backing a platform designed to take the pain out of going to market.
Enter start-up company Boost Insurance, which has just received $3 million of funding in an investment round led by Norwest Venture Partners along with participation from IA Capital Group, Greycroft Partners, fronting and program management specialist State National Companies and the world’s largest catastrophe re/insurance and weather risk investment manager Nephila Capital.
Boost Insurance is being launched as a platform to help InsurTech start-ups through the often painful process of getting started in the risk business, with the mission of “scaling a unique development platform that streamlines the go-to-market process for insurtech startups and innovative insurance products.”
The company will offer a turnkey approach to enabling early-stage and expanding InsurTech startups to get their products to market more quickly and easily, providing tools, mechanisms and platforms where real insurance and reinsurance business can be transacted in real volume.
Boost founder and CEO Alex Maffeo, previously the lead insurtech expert at venture capital firm IA Capital Group, identified the go-to-market timeline as a critical issue facing insurtech start-up entrepreneurs today.
In response to the issue, Maffeo formed and incubated Boost at IA Capital and now, after raising this funding round and getting initial industry partners Nephila and State National on board, Boost is ready to launch.
“There are many resources for educating entrepreneurs and assisting with the development of business models, however there is no insurance industry nexus that provides all of the tools and services for launching a startup in the insurance space,” explained Maffeo.
“Traditional insurance carriers provide the valuable expertise to help entrepreneurs avoid common industry pitfalls, but often cannot meet the fast-paced demands of a startup and lack the technology to integrate efficiently. Boost offers the best of both worlds: technology and startup sector expertise, as well as the highest-quality re/insurance partners,” he continued.
State National and Nephila have backed a number of insurtech start-ups over the years, and likewise came to the conclusion that the re/insurance ecosystem would be best served by their contributing experience and capabilities to an industry initiative.
With a focus on distribution and product-focused start-ups looking to disrupt the $600 billion property and casualty insurance market, the Boost Insurtech Platform will offer streamlined access to regulated insurance paper and capacity, through partners such as State National and Nephila Capital.
This model, of leveraging a program fronting manager with rated insurance paper, alongside capital markets-backed reinsurance capacity, is precisely the manner in which Nephila itself has moved along the value-chain over the past 20 years to steadily increase the efficiency of its investors’ capital.
With insurtech start-ups already targeting efficiency, a platform providing them with a direct route from underwritten risk to capacity will reduce their go-to-market friction, cost and timelines.
Distribution and product-centric start-ups looking to modernize the $600 billion property and casualty insurance market will be able to access a range of capacity and paper providers through the Boost Insurtech Platform, which the company calls “a flexible, API-driven platform that provides modern insurance data exchange for insurtech startups.”
“Boost empowers insurtech startups to enhance their speed to market with a tailored approach and technological capability that is not readily available in the traditional insurance marketplace,” explained Luke Ledbetter, EVP & CUO – Program Services, State National. “Our partnership with Boost is an opportunity to drive increasing industry innovation while leveraging our unique skills and experience to support the growth of this dynamic segment of the insurance marketplace.”
“Insurtech startups bring a welcome injection of new ideas and energy to the re/insurance market, but putting systems, paper, and risk capacity into place to make their ideas a reality has been a challenge,” Barney Schauble, Managing Partner, Nephila, said. “We have been deeply involved in several such projects over the past decade, and are investing in and partnering with Boost because we are certain that they will provide real value to startups in getting to market swiftly and smoothly.”
Boost said it will work with a select group of distribution or product innovation focused startups beginning in early 2018. The platform can be used by both pre-launch ventures seeking to ease their go-to-market experience, or in-market startups looking to launch new products or expand into new markets.
“Insurance is a unique and highly-regulated industry which requires cooperation between startups and regulated insurance companies,” commented Jared Hyatt, Principal at lead investors Norwest Venture Partners. “Boost serves as a conduit between insurtech startups and insurance capital, but is also a buffer from a technology and cultural perspective. The Boost Insurtech Platform™ eliminates the need for technology startups to integrate and conform to archaic systems while also allowing them to control the entire customer and brand experience.”
The company is also announcing the Boost Trusted Partner Network, which offers a central resource where insurance paper, capacity, and service providers in the re/insurance industry can work with start-ups and capitalise on the tech disruption wave. Boost wants companies involved in claims, underwriting, data analytics, actuarial, and other insurance services to reach out to join its network.
Not only will Boost provide a much simpler and less costly route to getting an insurtech start-up or product to market, it will also enable entrepreneurs to tap into the most efficient forms of insurance and reinsurance capital for their particular product, in the most direct manner possible.
The added edge this can give to an insurtech product’s capital efficiency and speed to market could make all the difference to start-ups’ chances of success, and offer them a way to avoid the significant regulatory and financial burden of launching their own re/insurers.