TLDR:

1. Agents are vertically integrating via programs / MGAs to capture more economics

2. This vertical integration makes sense if you have data + distribution

3. However, it’s really expensive to execute this vertical integration

4. Authentic eliminates the millions it takes to execute

TL;DR: MGAs are booming. Authentic has quietly built the infrastructure to launch and scale them fast. Think: modern underwriting, targeted distribution, shared tech, and real traction. We're building the MGA factory. Here’s what that means and why it matters.

Authentic is building the MGA factory. Here’s why it matters and what's happening in the MGA market. Skip the first few paragraphs if you’re an insurance expert!!

Why MGAs Are Booming

Managing General Agents (MGAs) are increasingly vital players in the insurance world. Think of them as outsourced underwriting teams specializing in niche areas that big insurers might miss. They provide instant infrastructure - expert underwriters, strong broker relationships, and ready-to-go technology - letting insurers tap into new markets without building everything themselves.

The numbers back up the MGA boom. The U.S. MGA market now handles roughly $100 billion in annual premiums, consistently outpacing overall insurance growth. In 2023 alone, MGA premiums grew by about 13%, compared to about 10% growth across the broader market. This trend has attracted huge investor interest, fueling a surge in mergers and acquisitions.

MGAs are particularly thriving in specialty and excess & surplus (E&S) lines, stepping in where traditional carriers hesitate. For instance, specialty E&S markets in places like California have grown dramatically - quadrupling over the past decade. Authentic has admitted paper as well, which is a differentiator against the large supply of MGAs that have come into the market.

Inside Authentic’s MGA Factory: 4 Core Elements

At Authentic, we believe the MGA trend will continue. We’ve also realized we’ve built the bones of a next gen “MGA factory”. Our approach combines specialized underwriting, targeted distribution, and powerful shared infrastructure to launch numerous tailored programs efficiently and rapidly:

🎯 Specialized Underwriting

We dive deep into each vertical - whether fitness, wellness, education, or trades - and use detailed operational data to price risk better than anyone else.

🚀 Intentional Distribution

No spray and pray. We strategically partner with software platforms, associations, and relevant aggregators to directly tap into new business flows, providing partners with faster quotes and clearer appetites.

🛠️ Centralized Infrastructure

Our tech-driven core system lets us launch new programs in days/weeks, not months. By sharing technology, operations, and relationships across all programs, we significantly cut the cost and complexity of scaling.

📊 Metric Obsessed

We track everything - customer acquisition costs, funnel metrics, lifetime value, renewal yields - to optimize each MGA program's performance. This obsession with data ensures profitability.

Where Are We Today?

✅Launched: 30+ tailored affinity programs in the food & bev and fitness space

🚧In Progress: Building into retail, wellness, and other “Main St Plus” areas. This is a large TAM and we will continue to improve our main street affinity programs

🔭On the horizon: More embedded, specialized programs beyond Main St! 👀

Where We’re Betting Next?

We believe the future of insurance is tailored programs for all. In practice, this means specialized, profitable MGAs built on a common platform. At Authentic, that’s exactly what we're creating - an MGA factory designed for rapid, sustainable growth.

🗺️Overview

From the perspective of Matthew Zupkay, Risk Management Advisor at the Oliver L.E. Soden Agency, a Keystone Network Partner in New Jersey:

🧩Challenge

The market for fitness businesses presents a unique set of challenges:

• Established brokers had in-house portals and direct carrier access for Retro Fitness, making it tough for new agents to compete

• Gathering loss runs, financials, and site inspections by email was tedious, error-prone, and dragged out the quoting process

• Prospects expecting fast answers chose agents who could deliver quotes in days, not weeks

✅Result

Partnering with Authentic transformed Matthew’s workflow and results:

• A web-based portal streamlined quoting, document uploads, and real-time firm indications

• E-signatures and instant endorsements enabled same-day policy binding

• A live dashboard tracked underwriting needs, preventing delays

📈Impact

• 60% faster quote turnaround | from 7 days to under 3

• New business growth | Matthew secured the first Retro Fitness account within the first quarter, setting the stage for future expansion

🧠Conclusion

“Technology and underwriting expertise from Authentic have given me the credibility and agility I needed to carve out a Retro Fitness specialty.

The seamless quoting, binding, and renewal processes not only save me hours each week but also position me as a proactive partner to gym owners. I’m excited to build on this success and grow my franchise portfolio even further.”

🧭Overview

Since 2010, the Oliver L.E. Soden Agency, a Keystone Network Agency in New Jersey, has built a niche specialization in insuring Planet Fitness franchises. With over a decade of experience in this space, the agency has developed a thorough understanding of the specific risks and operational needs within the fitness industry. This expertise has allowed the team to form strong, long-standing partnerships with franchise owners and deliver insurance solutions tailored to support their businesses.

🚧Challenge

The market for fitness businesses presents a unique set of challenges:

• Few traditional carriers actively write business for fitness accounts

• Existing markets often rely on archaic systems that slow down quoting, underwriting, and service

• Response times are often delayed, creating friction for agents and clients

• Most markets lack the digital tools needed to efficiently support agents and franchise owners

⚡Result

To better serve their fitness clients, the Oliver L.E. Soden Agency partnered with Authentic, a platform that helps organizations create and manage their own captive insurance programs. Rather than acting as a traditional carrier, Authentic provides the infrastructure, technology, and support services needed to run customized insurance solutions.

This partnership offered a faster, more modern alternative to outdated markets. The agency’s largest Planet Fitness client made the switch to a program managed through Authentic, drawn by the improved service experience, quicker response times, and digital-first approach that better fit their operational needs.

📚Conclusion

The move to Authentic’s platform allowed the Oliver L.E. Soden Agency to retain its largest client and improve the way it serves fitness franchise accounts. The process, ease of doing business, and enhanced technology have made a noticeable difference — positioning the agency for future growth in a market where better options have long been overdue.

Highlights

• 📈~8% of PushPress clients signed up for a policy during the first 6 months of launching.

• 📉~$600 average cost savings annually for PushPress gym owners (~25% savings on average)

• 😊9 out of 10 satisfaction rating for those who purchased a policy powered by Authentic, compared to 7 out of 10 average customer satisfaction for U.S. small commercial insurance

🤝Building Trust with Smarter Insurance Solutions

PushPress’s ethos is driven by deep roots in the industry and years of close relationships with gym owners nationwide. Its gym management platform is purpose-built to solve real problems their community faces, from nurturing and retaining members in a CRM to streamlining everyday operations.

Through these authentic connections and firsthand insights, the PushPress team consistently heard one frustration emerge: commercial insurance was overpriced and overly complex for fitness businesses.

Rather than just listening, they decided to act. In 2024, PushPress set out to create not just another insurance option, but a fundamentally better solution built around the genuine needs of gym owners.

🤔Understanding Gym Owners' Insurance Challenges

Gym owners consistently reported three major pain points in managing their commercial insurance:

1. ❗Many insurance companies have standard pricing that doesn't fully account for how today's fitness facilities operate, leading to higher premiums for gym owners.

2. ⚠️Market-wide premium increases put additional pressure on gym operations, despite the lower-risk nature of today's well-managed fitness facilities.

3. 📱Gym owners need a more digital-friendly way to purchase and manage their insurance policies, allowing them to focus on what matters most — running their gyms and serving their members.

For PushPress, developing an insurance solution aligned with its core mission of creating a healthier world by helping boutique gyms run stronger businesses. With a long history of putting its community first and solving real problems, PushPress saw an opportunity to help its gyms overcome yet another business challenge.

🧩The Right Partner for Gym Insurance

Known for setting the bar high with outstanding customer service with knowledgeable team members and a self-serve AI assistant, PushPress wouldn't settle for anything less in launching PushPress Insurance.

After evaluating options across the industry, they chose to launch a captive insurance program with Authentic, whose solution stood out for its ability to truly tailor coverage for gym owners while maintaining control over the entire customer experience.

In Authentic, the PushPress team found a partner who not only matches their dedication to service excellence, but also shares their vision for innovating and modernizing their respective industries.

"Finding the right partner is not easy, but when you do, everything aligns. Authentic helped us turn our vision into reality."

-Brian Aung, CFO and Co-Founder of PushPress

From sign-off to soft launch took just weeks, despite PushPress having limited team to dedicate to the project. Authentic streamlined the entire process, providing everything needed to get the program up and running quickly and easily — a testament to both teams' commitment to rapid, high-quality execution.

🎯Results: Making a Real Difference for Gym Owners

The impact of the insurance program went beyond initial expectations. Within six months of launch, the program was so successful that traditional insurance providers began adjusting their prices to compete. Despite this market response:

• 💻PushPress customers appreciated the convenience of managing their insurance within the same platform they use for the rest of their business.

• 💰One gym owner saved over $2,500 on their annual premium while maintaining the same level of coverage.

• ➕Other gym owners gained additional coverages compared to their previous policies, even with an average savings of $600.

More importantly, the program strengthened the trusted relationship between PushPress and its gym owners. As one gym owner shared:

"We run everything through PushPress, so it's nice to have everything together with a trusted company that we have had great customer service with so far."

The seamless digital experience and significant cost savings showed we understood exactly what gym owners needed. By providing coverage specifically tailored to the fitness industry, the program's success has only strengthened Authentic's position as a trusted partner.

PushPress is thrilled with its decision to partner with Authentic, and the success of the program has led to even bigger opportunities. Through the launch of gyminsurance.com, PushPress and Authentic are now expanding their insurance solution to the wider boutique fitness market. As PushPress puts it - why keep a great thing hidden? This expansion not only helps more gym owners, but also strengthens the partnership between PushPress and Authentic.

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Overview: We’ve built an end to end “program in a box” offering. Typically our programs serve small business groups (franchises, vSaaS, etc.). Below is our “menu” of offerings—though most clients buy the full package! We are powering the transition to tailored programs in the small business space.

If you prefer a video demo here is a loom link!

Agent Tool: Introducing our new tool!

We built a tool to help our agents save time on servicing and sell to SMB groups more efficiently!

Managing policies, servicing clients, and keeping track of documents can often feel like an endless cycle of emails, phone calls, and waiting for updates. That’s where the Authentic Agent Tool comes in—a game-changer designed to give brokers more control, efficiency, and freedom to focus on growth.

What Does the Agent Tool Do? The Authentic Agent Tool is an all-in-one digital platform that allows brokers to:

• View and edit applications for existing quotes and policies including underwriting questions, coverages, limits

• Generate quotes, complete payments and bind polices on behalf of clients

• Share application links and quote links with customers

• View and download policy and quote documents

• Perform common endorsements and servicing requests such as generating certificates of insurance, adding Additional Insureds, and updating business information

What Major Pain Point Does It Solve?

Through extensive research and feedback, we’ve identified the top challenges brokers face:

• Lack of real-time visibility into applications and policy changes

• Limited control over making policy updates without contacting Authentic’s support team

• Inefficiencies in servicing requests, leading to delays for their clients

• Inability to track user interactions, such as when clients view or modify applications

• No centralized access to policy-related documents and payments

The results speak for themselves. Early adopters have praised the ability to generate COIs instantly, bind policies and take payments for customers, track client engagement in real time, and manage policies with unprecedented ease.

Now is the time to take advantage of this transformative tool and differentiate yourself as an agency.

Front-End Engine

The Authentic platform is highly flexible and configurable, enabling us to white-label both the user experience (UX) and product for each affinity group.

What Our Front-End Engine Does:

• Creates fully white-labeled programs with a modern, intuitive UX.

• Configures tailored commercial policies seamlessly within the “shopping cart”.

• Integrates key business functions, including payments, marketing, and servicing.

• Tracks user interactions in real time, such as when clients view or modify applications.

• Provides dynamic FAQs tailored to each affinity group.

• Offers a centralized policy management hub for all post-purchase needs.

Pain Points We Solve:

• A single destination for P&C insurance—no more jumping between platforms.

• Tailored insurance solutions that align with users’ exact P&C needs—eliminating guesswork.

• A modern, frictionless experience, allowing users to purchase a policy in minutes.

• Centralized claims and servicing touchpoints, eliminating confusion and inefficiency.

Why Authentic Stands Out

Most competitors can only offer a different "skin" on top of existing infrastructure. Because we have built our own end-to-end technology stack, we don’t just change the look—we intelligently match the appropriate commercial policy with a best-in-class white-labeled UX.

Our product configurability is our secret sauce. By empowering affinity groups with a fully integrated, customized insurance experience, we remove complexity, enhance efficiency, and improve the end-user journey—all while driving higher conversion rates and retention.

Underwriting Platform

Authentic's rating and underwriting platform allows us to build targeted programs to fit the unique risk profile of every affinity group - no matter the size or complexity.

What Our Underwriting Platform Does:

• Easily adapt underwriting criteria, policy structures, and coverage needs, making it suitable for both standard and niche markets.

• Support a wide range of insurance products and risk models, enabling Authentic to quickly configure and launch new programs.

• Efficiently rate and underwrite multiple exposures within the same policy, streamlining policy administration and ensuring comprehensive coverage across various risk factors.

• Evaluate complex rating criteria and create bindable quotes in less than one second.

Pain Points We Solve:

• Accelerated Speed to Market
  Traditional insurance platforms require lengthy development cycles to launch new products.

• Seamless Coverage Customization
  Adding or removing coverages often requires significant manual effort and system modifications. Our platform simplifies this process - adjusting policy structures with ease.

• Instant, High-Performance Rating
  Slow rating engines create friction in the buying process, leading to user frustration and drop-offs. Authentic’s API-driven platform delivers sub-second rating per exposure, ensuring users receive pricing instantly—eliminating delays and improving conversion rates.

Authentic continues to change the small business insurance landscape with its fully integrated platform. From streamlining agent workflows to delivering tailored insurance solutions and rapid underwriting, our technology empowers the shift towards “programs” in the small business space.

Features of a program:

1. 👥 Targeted Audience: Focus on some businesses or risks within a specific industry or segment.

2. 🤲 Customized Coverage: Policies are tailored to address unique exposures and requirements of the target audience.

3. 👀Specialized Underwriting: Program administrators or carriers have expertise in assessing and pricing risks for the specific segment.

4. 🧱Risk Management Services: Additional resources such as safety training or loss prevention strategies may be included.

Key benefits of a commercial insurance program:

1. Meet Specific Needs: Tailor coverage to address the risks of a niche market.

2. Attract Specialized Business: Appeal to clients with unique exposures.

3. Increase Profitability: Programs often command higher premiums due to customization.

4. Leverage Expertise: Show industry knowledge, fostering trust and brand differentiation

📈As a result of these benefits and the “hard” insurance market, program business continues to grow. Program business premiums increased by 32.8%, reaching $53.8 billion in written premium by 2020. In contrast, direct premiums earned for commercial lines grew by only 9.33% during the same period. By 2022, the program business market was estimated at approximately $70+ billion, continuing its upward trajectory. If you attend Target Markets, you can get a feel for this first hand! We are seeing a shift in preference over off the shelf products for SMBs.

Why doesn’t everyone have a program today?

1. ⏲️Time. Historically, creating a program takes significant time.

2. ⚡Energy. If something is working, and everyone is making money, why do work?

3. 💲Cost. Certain carriers charge a flat fee to create a program - $50k+ in some instances.

So where is Authentic “innovating” in the program value chain?

⛓️ Today’s value chain:

1. Traditional Carrier Program: Broker works with a traditional carrier to create a package that is tailored towards the insured.

2. MGA Program: Broker works with a Managing General Agent (“MGA”) that specializes in underwriting the specific risk to create the product. Ultimately, this MGA works with risk bearing parties on the back end.

🔮 Where we are innovating in the program value chain:

1. 💻 External technology (UX): Authentic provides a platform for all parties across the program. Insureds can purchase and manage policy documents, brokers can consult and administer the program (although little is needed here), while Authentic handles the rest! We are saving brokers significant time and energy on quoting, binding and payments in the program space.

2. 🏃Internal program technology (speed): Authentic has the ability to build a small business program in a matter of hours. We can adjust underwriting questions, logic, and other key program components instantly. We’ve stood up customized programs overnight for our partners :)

3. 💸Economics: If the group is large enough, Authentic can create profit sharing programs or captive cells. Authentic has capital partners that will capitalize programs, so brokers or insured groups do not have to find millions of dollars in capital to stand up a captive program.

In conclusion: We believe the program space will be utilized for all types of risks, not just those that are hard to place. At Authentic, we are addressing the challenges of time, energy, and technology to ensure all insureds can benefit from a program. Brokers can leverage Authentic’s technology to win new program business or administrate existing books much more efficiently. With strong tailwinds driving the program space forward, we are confident in our ability to contribute to its momentum.

Authentic’s role in evolving the commercial insurance landscape

Navigating the complexities of commercial insurance can be a daunting task for small business owners; at Authentic, we empower our partners to create tailored insurance programs that meet the exact needs of their end-businesses. Authentic’s products are cheaper and more digestible without compromising on comprehensive coverage.

Our new AI Tool allows us to roll up key functions of a traditional insurance agent. We’re combining smart, AI-powered policy analysis with the ability to bind instantaneously, ensuring SMBs receive personalized quotes while eliminating the time-consuming processes and complexity of engaging with a third-party agent. 

This tool is a game-changer for SMBs, allowing them instant access to the information they need to make an informed insurance decision on their own schedule.

Empowering SMBs by simplifying their insurance policies

A competitive price is only half of the story, it’s equally important to know what you are sacrificing for the lower cost. That’s where our AI-powered solution adds real value.

Every day, SMBs tell us the same story: their premiums keep increasing, and they don’t truly understand which coverages they do or don’t need. This is why we built this tool, to provide quick access to more affordable policies while also empowering owners with the knowledge that has historically required years of expertise.

Our instant estimates help mitigate these obstacles, enabling your platform to present more small businesses with the opportunity to quickly check if they are either overpaying for insurance or underinsured. In doing so, our tool overcomes the inertia of sticking with an inferior product by leading with the monetary value of switching. 

How we’re empowering SMBs to evaluate commercial insurance for themselves

Primarily, we’re helping SMBs answer two basic questions:

Am I paying the lowest possible price?

Instant estimates simplify the insurance application process, using a customer’s existing policy to elicit all of the information we need to provide them with a competing price. By getting a customer a quote in less than a minute, we allow more customers than ever-before to see a quote.

Do I have all the coverage I need for my business?

Most SMBs have had enough negative insurance experiences to adopt the understandable “if it ain’t broke, don’t fix it” mindset and stick with their existing insurance. This led us to seek an ingenious solution, saving users time while enabling them to preview savings they may be leaving on the table. 

How does it work?

Simply upload your existing policy documents, and our AI-powered policy comparison tool will extract the data from your existing policy and compare it to an Authentic alternative and other policies on the market. With a layer of intelligence that comprehends the nuances of insurance (such as the perils, limits, and exclusions that are the foundation of an insurance policy) combined with our leveraging of OpenAI’s advanced language processing technology, we are able to present customers with a quote we have built exclusively for their business.

Benefits to your platform

• Reduce churn/increase “stickiness”:  Easily add insurance into your platform, adding another fundamental SMB product into your workflow

• Easy integration: Like all Authentic products, you can integrate extremely quickly

• Simple insurance applications: the simplicity of the product will lead to more usage

• Access to more customers: Many customers who thought they were satisfied with their insurance will use the calculator because of the easy access

• Trial insurance in your platform: Implementing our calculator can serve as a pilot, measuring appetite for future in-platform insurance features

Benefits to your SMBs

• Saves money: Checks if we can beat their current price

• Saves time: See a fully tailored quote in seconds

• Easy to use: Just upload your existing policy

• Peace of mind: Match all coverages and ensure no lapses of coverage

• Stop paying for unnecessary coverage: Helps SMBs identify if they are over-insured

• Improved accuracy: reduces the risk of human error in interpreting policy details

How does our tool work behind the scenes?

1. Intelligent Data Extraction: 

• Extract key insurance information: Automatically scan and extract critical details from policy documents, such as coverage limits, exclusions, and business metrics

• Analyze coverage: Assess the extracted information to identify coverage gaps or areas where better options may be available

2. Policy Analysis:

• Optimize costs: Identify opportunities for cost savings without compromising on coverage

• Compare policy offerings: Side by side analysis of existing policy and Authentic offering, even in instances of “apples to oranges”

3. Personal Insurance Breakdown 

• Provide tailored solutions: Offer insurance policies that are specifically suited to the unique needs of each business

• Enhance decision-making: Equip business owners with clear, concise information to make informed insurance decisions

Integrating the pricing calculator into your platform

This feature will be rolled out with some of our platform partners, such as Mindbody, PushPress, and Worksmith in the coming weeks, enabling their customers to check they aren’t missing out on savings or underinsured in the platform they already manage their business.

All of Authentic’s clients (franchises, brokers, SaaS companies) can leverage the tool. Reach out to the Authentic team to get you set up in hours. 

In short, instead of paying large premium $$ to a third party insurance carrier, a captive allows you to pay that premium into an entity that you own, AND still deduct that premium from income for tax purposes. The below looks at the “soft IRR” of a captive insurance company by factoring in tax savings, premium saved, and investment income…

Let’s imagine a 7 year captive insurance program. The “max loss” we are insuring up to is $50mm, and therefore need to capitalize the captive for $50mm in year 1, and topping that number up to $50mm every year depending on claims & expenses. 

Other assumptions to note (tagged accordingly in the screenshot): 

1. This business does $10mm / year in earnings

2. 7 year captive program

3. We are able to account 50% of the $50mm dollars in as “premium” (tax deductible) while 50% is contributed capital (not tax deductible). This is a very loose assumption

4. This reduces the tax bill to $11.25mm over 7 years (assuming 25% tax rate) vs. $17.5mm

5. Saved premium (otherwise paid to third party carriers) also factored in. This premium number is $25mm / 7 (# of years). This is also a very loose assumption 

So, while the “hard dollar IRR” is -3.76% in terms of actual cash in and cash out (we’re assuming a few million in claims every year and relatively low investment income), you can tell a story of +6.5% “soft IRR” in the same scenario if you factor in saved premiums and tax benefits.

Soft IRR detailed calculation below (based on above math + assumptions)

Keep in mind, there are MANY ways to structure these programs and MANY assumptions at play here. However, hopefully this gives a sense of the tax and savings impact in a captive insurance program.

⏲️ History: 

• 1981: While the structure of RRGs / reciprocals / mutuals has been around for some time… RRGs specifically began with the Product Liability Risk Retention Act of 1981. Passed by Congress in 1981, this act allowed businesses with similar liability exposure to form RRGs, which are a type of self-insurance pool. The PLRRA was initially limited to product liability insurance. In the early 1980s, the United States experienced a liability insurance crisis. Businesses, especially those in high-risk industries, found it increasingly difficult and expensive to obtain liability insurance. The crisis was characterized by skyrocketing premiums, reduced coverage availability, and in some cases, the complete withdrawal of insurers from certain markets

• 1986: After some initial success with product liability in 1986, regulators broadened the scope of RRGs beyond product liability to include all types of commercial liability insurance, except for workers' compensation. 

• 1980s+: By the end of the 1980s 70-80 RRGs had formed… with an addition ~100 formed in 1990s.

🦣 Here are some of the larger RRGs today…

• 🔨 Attorneys' Liability Assurance Society, Ltd. (ALAS): Legal malpractice insurance for large law firms. 

• 🧑‍⚕️ The Doctors Company: Medical malpractice insurance. 

• 🐴 Spirit Mountain Insurance Company: Liability insurance for Native American tribes and their enterprises.

• 🏫 States Self-Insurers: Coverage to municipalities, schools, and other governmental organizations.

• 🏠 Green Hills Insurance Company: Liability insurance for nursing homes, assisted living facilities, and other long-term care providers. 

• 🚧 American Safety RRG, Inc: specialty liability insurance for various industries, including construction, environmental services, and security. 

Below we challenge some of the typical “benefits” discussed with affinity group programs/ RRGs

🩼 Lower loss ratios: Authentic’s hypothesis is that “community based” programs create positive selection bias and beneficial social pressure. I took a look at all RRGs in CA. The 2023 CA RRG report shows a 49% loss ratio (aggregate) vs. 63% state average - 14% improvement in LR for RRGs. 2022 report shows 45% vs. a 56.2% state average - 11% improvement in LR for RRGs. When drilling down into the groups and recalling past conversations, there are success stories where this hypothesis is true, stories where it is not, and stories where it may have held but other factors impacted LR. We’re putting together a larger dataset here but for the time being… TLDR: Seemingly true in the aggregate. Not always / many factors at play

👐 “Custom coverage” how can you actually customize coverage? Contrary to popular belief, small commercial insurance is not a commodity (more to come on this in a separate post). I’ve learned this first hand as we customize BOP packages that are specifically tailored to affinity groups at Authentic. While RRGs typically only sell liability (and not property) there are still many ways to customize a liability package. For example, certain groups will need liquor liability, sexual above & molestation coverage, medical expense coverage, etc. Customizing this coverage takes work between the carrier and the group to understand the nuances of risk. So, even though a small commercial liability policy might be cheap… I wouldn't call it a pure commodity. There is value to “packaging” for an affinity group. TLDR: There is value here

🧑‍🤝‍🧑 Better/faster/cheaper distribution? These groups have different levels of affinity. People often lose sight of how SMBs interact with these groups. Higher affinity = better distribution. The goal is to create virality - this can be achieved if there is a clear value proposition to SMBs plus a high affinity. It is exciting to see the network effects in some cases. In other cases, groups will try to use the “stick” vs. the “carrot” to push adoption into the insurance program. In the worst case scenario, nobody joins the insurance program because the value proposition isn’t strong, affinity to the group is low therefore nobody cares. All three of these happen… and the first two are the programs that stick around! TLDR: Yes but not created equal

💡 RRGs and Captives: What’s the difference?

1. Regulatory Framework: An RRG is formed under the Liability Risk Retention Act of 1986, a federal law that allows businesses to collectively self-insure against liability risks. Once an RRG is licensed in one state, it can operate across all 50 states without needing additional licenses. This federal regulatory framework provides more flexibility for RRGs to offer liability coverage across state lines. On the other hand, a captive insurance company is governed primarily by state insurance laws. A captive is created and regulated by the laws of the state (or country) in which it is domiciled. 

2. Types of Coverage: RRGs are limited to offering liability insurance only

3. Ownership and Membership: Captives can be owned by a single parent company or by a group of companies, depending on the structure. RRGs are owned by their members, which are companies or organizations that join the group to insure their liability risks. The members must share similar types of liability exposures

4. Risk Pooling: In a captive, risk pooling can be more diversified. A group captive might pool risks from multiple industries, helping to spread risk across different types of exposures. This flexibility can make captives more resilient to a broader range of risks, and they can also choose to reinsure certain exposures to further mitigate potential losses

👀 Authentic’s Perspective: In a very challenged insurance market we believe more businesses can benefit from these retention group structures. Typically the constraints have been capital, reinsurance, operations & technology, servicing and distribution. At Authentic, we believe that this fundamental, cooperative model of insurance is the way forward. We empower affinity groups to establish their own tailored insurance programs, designed specifically to meet the unique needs of their members. Through these programs, members not only benefit from customized coverage but also share in the financial rewards, creating a community-driven approach to insurance.

1. Cost Savings

One of the most compelling reasons to join an association captive program is the potential for substantial cost savings. Traditional insurance policies often come with high premiums, influenced by the insurer's administrative costs, profit margins, and the need to cover a broad spectrum of risks. In contrast, association captive programs are owned and controlled by the member companies, which allows for more competitive pricing. Members can pool their resources to purchase insurance, leading to lower premiums and reduced administrative costs.

2. Tailored Coverage

Association captive programs offer the flexibility to customize coverage to meet the specific needs of the members. Unlike traditional insurance policies that provide generic coverage, captive programs can be tailored to address the unique risks and requirements of the participating businesses. This ensures that each member has the appropriate level of protection without paying for unnecessary coverage.

3. Enhanced Risk Management

Joining an association captive program encourages businesses to adopt better risk management practices. Members are typically required to implement risk mitigation strategies to reduce the likelihood and impact of claims. This proactive approach not only minimizes losses but also fosters a culture of safety and responsibility within the organization. As a result, companies can enjoy lower claims frequency and severity, further reducing insurance costs over time.

4. Greater Control and Transparency

In a traditional insurance setup, businesses have little control over the underwriting process and premium determination. Association captive programs, however, provide members with a higher degree of control and transparency. Members can participate in the decision-making process, influencing key aspects such as coverage limits, underwriting standards, and claims management. This increased involvement ensures that the program operates in the best interests of its members.

5. Potential for Profit Sharing

Another significant advantage of association captive programs is the potential for profit sharing. Since the members own the captive, any underwriting profits and investment income generated by the program can be distributed back to the members. This creates an additional financial incentive for businesses to join and actively participate in the captive, as they stand to benefit directly from the program’s success.

6. Improved Cash Flow

Traditional insurance policies often require businesses to pay premiums upfront, which can strain cash flow. Association captive programs, on the other hand, may offer more flexible payment arrangements, allowing members to pay premiums over time. Additionally, the potential for lower premiums and profit sharing can further improve a company’s financial health by freeing up capital for other investments and operational needs.

7. Long-Term Stability

By participating in an association captive program, businesses can achieve greater long-term stability in their insurance costs. Traditional insurance markets can be volatile, with premiums fluctuating based on market conditions and the insurer's financial performance. Captive programs, however, are less susceptible to market cycles, providing members with more predictable and stable insurance expenses.

Conclusion

Joining an association captive program presents a multitude of benefits, from cost savings and tailored coverage to enhanced risk management and potential profit sharing. By gaining greater control over their insurance programs and fostering a proactive approach to risk management, businesses can achieve significant financial and operational advantages. As more companies recognize these benefits, association captive programs are likely to continue growing in popularity as a viable alternative to traditional insurance solutions.

For businesses seeking a strategic approach to managing their insurance needs, exploring the option of an association captive program could be a game-changer. It’s an opportunity to not only reduce costs but also to take charge of their insurance destiny, ensuring they are well-protected against risks while optimizing their financial resources.

Reminder: We are changing where insurance is bought… moving from traditional carriers to tailored affinity programs or captives, beginning with small business groups. Products are tailored specifically for our partner’s affinity group, taking the guessing out of insurance for small businesses 

ICP Note: Authentic has an appetite guide for platforms that service small businesses across food & bev, fitness, wellness, retail, etc. “Main street small business” is a good way to think about the types of groups we serve… 

🖥️ Channel #1: Software Companies

1. ICP: Vertical or horizontal SaaS companies that service small businesses in target endmarkets 

2. Value proposition (platform)

   1. Profit: net new profit stream

   2. Product: authentic brings the platform closer to the “all in one” operating system

3. Value proposition (smbs)

   1. Price: software bundling / discounts

   2. Experience: vendor consolidation, prefilled application

   3. Product: tailored product based on endmarket. No longer “misinsured” 

4. Examples: Mindbody, PushPress, ZenPlanner (Daxko), SpotOn, etc. 

🥖 Channel #2: Franchisors

1. ICP: Franchisors or large franchisee group owners in target endmarkets 

2. Value proposition (platform):

   1. Compliance: easy administration and compliance certification

   2. Profit: net new profit stream

   3. Relationship: new value add service for franchisee

3. Value proposition (smbs):

   1. Compliance: tailored program to comply with FDD

   2. Experience: very easy to buy and manage insurance online

   3. Price: profit sharing back to the franchisee group / rate reduction 

4. Examples: Sylvan Learning Center, We Rock the Spectrum, 10th Planet Jiu Jitsu, etc.

🧍 Channel #3: Agents

1. ICP: Brokers that service franchises, associations or other affinity programs

2. Value proposition (brokers):

   1. Platform: Brokers have a software platform that facilitates small business transactions (save time and $) 

3. Value proposition (smbs):

   1. Product: tailored product based on endmarket

   2. Experience: very easy to buy and manage online

   3. Price: profit sharing back to the group / rate reduction

4. Examples: Larger agents (Brown & Brown) and smaller agents (Rountree agency)

As businesses continue to get more comfortable with embedded financial products, it’s important that we meet them where they are today. Trusted advisors, be it an agent, consultant, or franchisor, have a valuable role to play in the Authentic value-chain and can benefit from our bespoke insurance solutions and world-class technology.

In this episode, CEO Cole Riccardi walks through his background as an investment analyst in the insurance space and what inspired him to create Authentic. Kevin Rosenquest asks all the right questions about captive insurance and how it applies to small businesses.

Watch to learn more about how Authentic is changing insurance distribution!

We think it should be easy for businesses to buy their insurance through companies that they already know and trust – not through traditional insurance carriers. 

Authentic provides the infrastructure for franchisors, software companies or associations to roll out their own insurance offering – also known as a “captive” – to their existing customers. Like a “co-op” or “collective” model, these member-owned programs allow for hyper-customized coverage and potential dividends when there are fewer claims, which can lead to cost savings as well. 

It’s the first win-win insurance model for both small businesses, and the companies serving them today. Small businesses get better options at a better rate, while our partners can easily add new product lines and revenue streams with Authentic’s infrastructure. 

Authentic makes establishing a captive lightning fast (we’re talking a few hours), and customizable for small business customers’ needs. Plus, it creates a net new product that our partners can sell to their existing customers. For example, Authentic offers our captive insurance infrastructure to a technology company that provides software to 60,000 small businesses. The company can then sell commercial insurance to their customers and get dividends and cost savings. Some of our customers include Mindbody, Restaurant365, theCut, and PushPress, among others. 

We handle all the logistics of setting up a captive insurance offering: underwriting, filing rates with regulators, pricing, actuarial analysis, reinsuring, capitalizing captives, setting up a domicile, administration, claims management, and customer servicing. We’ve built our platform to adapt and tailor insurance coverage in real time to increase addressability and competitive pricing.

We’re already working with 10+ companies to roll out insurance to their customers. We’re proud to say our signed customers touch over a million small businesses today! 

To support this growth, Authentic has raised an $11M Series A round led by FirstMark Capital with participation from Slow Ventures, Altai Ventures, MGV, Upper90, and Commerce Ventures.

From Adam Nelson, Partner at Firstmark Capital: "The way commercial insurance is bought and sold has largely remained unchanged since it first came into existence over 50 years ago. Authentic is the first company to virtually eliminate the need for traditional carriers. With a platform approach that enables partners to roll out their own new insurance offerings, it's been incredible to watch as millions of businesses instantly gain access to a better insurance model on day one." 

With our funding, we’re growing our customer base and headcount in 2024 and beyond. We also plan to add new offerings to our product suite such as workers compensation, health insurance products, and benefits. 

We have a very big goal of changing how and where insurance is purchased, and more importantly, giving power and economics back to the people. To our partners and investors, thank you for the support you’ve given. This is a tremendous undertaking and it wouldn’t be possible without you! 

While Authentic’s platform has many differentiating capabilities, one we are extremely proud of is the new multi-state, multi-location functionality. With this announcement, our platform now has the ability to purchase business owners one insurance policy that protects multiple locations across multiple states, all completely online. We are the only insurance carrier with this capability.

While Authentic’s platform has many differentiating capabilities, one we are extremely proud of is the new multi-state, multi-location functionality. Recently, we launched the ability to purchase an insurance policy for multiple locations across multiple states all online. We are the only insurance carrier with this capability. 

Today, purchasing and managing insurance for a multi-unit owner/operator is a difficult experience. The customer is forced to fill out several applications, make multiple payments, and manage various usernames and passwords when they need access their own insurance information.

On the Authentic platform, the purchase and management of your small business insurance can live all in one place. This is a huge product differentiator vs. the rest of the insurance market if you manage multiple locations. Want to see how it works? Watch our Loom demo here!

If you provide services for or own businesses in any of the food & beverage, fitness, wellness, retail, or professional services sectors, you should have a captive insurance program. Want to know how?

1. Create your Branding

   1. We create brand assets in minutes on our partner hub (reach out to learn more).

   2. You embed these custom-made HTML outputs from our partner hub into your platform or create email campaign(s).

2. Construct your Captive

   1. Sign your Authentic contract.

   2. We create your tenant (captive) in minutes and turn on your program!

Thats it -- your captive is already ready to go!

Want to get in touch? Email us at support@authenticins.com.

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Historically, carriers relied on their insureds to provide correct information in their application. Then, once they received this information they verified its accuracy by soliciting third-party data (which relies on generalized information which is often less accurate and expensive) and conducting manual checks (which is quite expensive). Accessing accurate data is an enormous advantage for an insurance company. 

We believe captive insurance unlocks the full potential of first-party data in the insurance industry. The captive model creates an incentive for insureds to pass first-party data, as they receive the financial benefit of strong insurance underwriting and performance. In addition to more accurate pricing, first-party data benefits captive programs in three ways: 

1. Enhanced Risk Assessment & Protocols:

First-party data provides a deeper understanding of each policyholder's unique circumstances, habits, and risk factors. This dynamic creates a powerful incentive structure in insurance; for instance, restaurants with robust food safety protocols and high compliance can be rewarded with lower premiums, while those with higher-risk practices may have appropriately priced premiums.

If participants know they will be financially rewarded with lower premiums for passing data to the underwriter, they are more inclined to develop safety protocols and minimize risk. This level of insight reduces adverse selection, helps prevent potential fraudulent claims related to food safety, and ultimately benefits both the restaurants and the captive program.

2. Personalized Products and Services:

First-party data allows the captive insurer to craft packages aligned with individual risk profiles and preferences, thereby enhancing customer satisfaction and loyalty. By capturing data directly from the insured, captive insurers can assess risks more accurately and tailor insurance coverage to individual needs; in other words, the more accurate the data, the more precise (coverage and pricing) the insurance policy. 

This can be easily facilitated by insights derived from policyholders' equipment, ERP system, other business data, or property data, allowing insurers to deliver personalized products and services that meet their clients' needs. This tailored approach improves customer retention and the overall customer experience. 

3. Improved Customer Engagement:

By embracing captive insurance and harnessing first-party data, insurers foster a closer relationship between themselves and their policyholders. Within the captive, policyholders actively engage in data collection and transparently communicate the benefits. This mutual understanding encourages policyholders to willingly share more information, leading to a cycle of continuous improvement in risk assessment and policy customization. As the relationship deepens, captive insurers can provide valuable insights to help policyholders minimize risks and make better-informed decisions, further strengthening the engagement.

Conclusion: The captive insurance model unlocks the potential of first-party data. This is a massive advantage in underwriting but also has other beneficial effects on the insurance program. Learn more about starting your captive program with Authentic!!

During the 1960s and 1970s, the captive insurance industry continued to grow as more companies recognized the benefits of self-insurance. Captives were seen as a means to exercise greater control over insurance programs, tailor coverage to specific needs, and potentially reduce overall insurance costs. As captives became more prevalent, their applications expanded beyond large corporations to include mid-sized companies and even certain industry associations. Recent developments have introduced new captive domiciles within the United States, including states like Delaware, Oklahoma, and Montana, providing additional options for those interested in forming captives domestically. 

In the 1980s and beyond, captives evolved further, with an increased focus on risk management and alternative risk financing. Captives began to encompass a wider range of risks, including professional liability, product liability, and employee benefits. Alongside the traditional single-parent captives, group captives and agency captives emerged as additional models that allowed smaller organizations and independent insurance agents to pool resources and share risks. Regulatory frameworks for captives also developed, with various jurisdictions around the world recognizing the importance of captive insurance and enacting legislation to support their establishment.

Today, captive insurance continues to be an integral part of the risk management landscape, offering companies a flexible and cost-effective way to manage their risks. The industry has witnessed ongoing innovation, including the utilization of captives for more specialized risks, the growth of cell captives that provide segregated cells for multiple insureds, and the emergence of captive managers and service providers who assist businesses in setting up and managing their captives. The captive insurance industry is expected to evolve further as businesses seek alternative risk financing options and regulators adapt to changing market dynamics.

Authentic simplifies the complex world of captive insurance for everyone. Our turnkey platform offers an easy setup and maintenance process, removing cost and complexity barriers. With our modern insurance stack, anyone can seamlessly integrate insurance offerings into their existing channels without requiring insurance or engineering resources. Authentic brings innovation to the captive insurance space, benefiting individuals and businesses across various industries (such as food & beverage, salon & spa, retail, fitness, or professional services sector).

Captive insurance, traditionally a form of self-insurance, has emerged as a powerful alternative to standard business insurance. Whereas the majority of companies rely on external insurers, captive insurance allows businesses to create their own insurance company to cover their specific risks. Captive insurance offers potential benefits such as cost savings, customized coverage, improved cash flow, and potential tax advantages. 

How does it work? A parent company can create a captive (best thought of as its own company), which assumes the risks of the parent and potentially other affiliated businesses. The captive then assesses the business's risks, determines and collects appropriate premium amounts from the parent business. The premiums paid by the operating business are then invested by the captive to generate returns and further strengthen its financial position. In the event of covered losses or claims, the captive utilizes the collected premium as a source to pay for expenses, providing the operating business with direct funding. 

Other types of captives: Captive insurance sounds pretty cool, right? Well it gets even better – you don’t have to do it alone. Similar, like-minded businesses can come together to form one captive cell (similar, in some regards, to a mutual insurance company or a risk retention group). Multi-business captive insurance cells offer numerous advantages, particularly for small and medium-sized enterprises operating within the same industry or sharing common risk profiles. By joining forces, these businesses can leverage economies of scale, spreading the costs of captive establishment and maintenance across multiple participants. Moreover, a captive cell allows for risk sharing, providing each participant with access to a broader risk pool, increased risk diversification, and enhanced stability. This solution promotes collaboration, facilitates industry-specific knowledge exchange, and ultimately empowers similar businesses to confidently navigate their risk landscape.

What’s the catch? Setting up and managing a captive requires careful planning, risk assessment, and compliance with relevant regulations, necessitating professional guidance from experts in the field – which is the primary reason this alternative insurance solution has only existed for massive corporations to date. As the business landscape continues to evolve, captive insurance offers a compelling alternative that empowers companies to create better products and generate insurance returns.

Authentic’s goal is democratizing this complex world of captive insurance by providing a turnkey platform for distribution partners, making the setup and maintenance process significantly easier. With our end-to-end modern insurance stack, Authentic eliminates the cost and complexity barriers, enabling partners to seamlessly integrate insurance offerings into their existing channels without requiring insurance or engineering resources. Backed by industry experts and investors, our captive-in-a-box approach sidesteps distribution challenges and opens up new possibilities for businesses across various industries to efficiently manage insurance. With an initial focus on food & beverage, salon & spa, retail, fitness, and professional services industries, Authentic is poised to bring long-awaited innovation to the captive insurance space, offering unparalleled benefits for all stakeholders in the value chain.

Want to learn more? Feel free to get in touch by emailing support@authenticins.com

Commercial insurance is mission critical for small business. Restaurants, salons, and gyms all need liability, workers compensation and other protection in order to operate (in most cases it’s mandated!). These industries represent a significant portion of the 33.2mm SMBs in the U.S. The scale of the industry is over $350bn+ premiums per year in the U.S. alone. However, the space is still incredibly fragmented, with the top player representing only 8% in total premiums.

Why has nobody cracked the code?

1. Acquisition costs are too high. Finding the right customer is expensive and laborious through a broker or online search. 

2. Economics: Small businesses pay small premium dollars (ex: salons pay between $600 and $1,200 a year). 

   1. High CAC + low revenue = negative unit economics 

3. Regulation: Navigating the rules & regulations across 50 separate jurisdictions is challenging.

4. Other Complexity: Data collection, reporting, etc. 

Distribution - how it’s done today

Below demonstrates how insurance has been sold historically… option C has become more popular as vertical software and other platforms increase penetration in the SMB space

1. Broker: Broker takes ~20% of premium to find a carrier

2. Direct: Carrier matches with consumer directly online (online advertising via search acquisition cost)

3. Embedded: The opportunity exists to cross-sell insurance into these end customer bases for a lower cost

Embedded Opportunity

With Embedded Insurance, the benefits include:

• No middleman: Brokers or other distributors take a significant % of premium. Embedding is a way to access customers without paying fees to “traditional” distribution businesses (brokers, search, etc.)

• One core system: Small businesses are using software and other tools to run their operations. Embedding insurance consolidates another financial service onto one platform. This creates a more delightful & faster user experience, while increasing platform stickiness.

• End market focus: Distribution partners service a specific customer base. The embedded policy can be hyper tailored towards this category creating a superior consumer experience. For example, Toast can create FAQs and other components of the insurance experience designed towards restaurants.  

• Data collection: Customer data that is collected by the software or other distribution partner can be leveraged for insurance underwriting.

How to Embed Insurance

So you’ve chosen “option C” above. This concept (“embedded insurance”) has received significant attention the past 12 - 24 months given the challenge of acquiring customers in the industry. However, the archetype has existed before digital platforms. For example, purchasing auto insurance at the car dealership is a form of “embedded insurance.” 

Embedded options…

1. Lead generation: Software partners profit from a one-time lead fee when their end consumer clicks through to an insurance carrier website. The modern version of the auto dealership!

2. Embedded agency: Distribution partner splits commissions with third party carrier. 

3. Captive: A captive is the closest option to a software partner setting up their own insurance company. This enables them to capture both commissions and profit of an insurance program (premiums - claims).

Takeaway: 

1. Leads and embedded agent/broker do not provide compelling economics (small $).

2. Captive option allows partners to capture meaningful insurance revenue. However, it’s very challenging to do it yourself - actuarial tables, domiciling a captive insurance company, finding reinsurance, licensing, etc. is required.

Enter Authentic

Within the embedded landscape, we believe option A&B above will soon become table stakes. Anyone can sell leads to a third party carrier and make small referral fees... 

Authentic exists to enable option C for vertical software and other partners looking to embed insurance in a more meaningful way. We strip away the insurance complexity of creating a captive insurance company. With Authentic, partners maximize their economics (commissions + underwriting profit) and have the most control to create a seamless insurance experience within their platform.

Authentic embeds captive programs for partners in the food & beverage, retail, fitness, salon & spa, and professional services industries. We’d love to help you offer a better insurance product to your customer base and capture economics!

Read our first blog post here!