Authentic, a turnkey insurance platform that allows vertical SaaS companies, franchises, and other groups to reap the benefits of captive insurance, announced the close of a $5.5M Seed round. The round was led by Slow Ventures with participation from Altai Ventures, MGV, Upper90, Clocktower, Commerce Ventures, Mischief Ventures, Core Innovation Capital, and prominent insurance executives.
According to the NAIC, 90% of Fortune 500 Companies utilize captive insurance, which is a form of "self-insurance." With captive insurance, organizations create their own insurance companies instead of buying insurance from a broker or insurance carrier.
Captive insurance provides many benefits, including creating an additional revenue stream for parent companies, tailored insurance coverage, lower insurance premiums, and more. For the last 50 years, only large corporations have mainly utilized captive insurance companies due to the cost and complexity of setting one up.
Authentic's "Captive in a Box" platform now makes it possible for any Vertical SaaS company, franchise, association, etc., to launch captive insurance programs for their members in a matter of weeks. Authentic's turnkey platform handles all of the logistics of setting up a captive insurance company, including:
• Legal: Setting up a Domicile, Administration, etc.
• Underwriting: Filing Rates with Regulators, Pricing, Actuarial Analysis, etc.
• Reinsurance & Capital: Reinsuring, Capitalizing Captives, etc.
• Claims Management, Customer Servicing, and more.
How ZA Tech leverages battle-tested technology to enable insurers to innovate
"Captive insurance provides many benefits to organizations and their members, but until now, setting one up was a very long and expensive process," explained Cole Riccardi, CEO & Founder, Authentic. "Through Authentic's platform, anyone can create their own captive insurance program and realize the benefits within days," said Riccardi.
Before Authentic, there were two ways Vertical Saas companies, franchises, etc., could monetize insurance. First, they could sell their leads to insurers and receive a one-time lead fee. The second option was to partner with an insurance broker or carrier and get a commission on each policy sold.
Authentic not only allows its partners to get a commission on every policy sold, but they also keep the majority of underwriting profit. Partnering with Authentic requires no engineering or insurance resources. All that is required from Authentic's partners is to insert a line of code into their platform to start selling insurance.
"Over the last few years, we've seen a lot of software startups becoming FinTech companies by embedding payments and lending products to monetize their customer base," explained Marc Schroder, founder of MGV. "Insurance is the next embedded product, but what makes Authentic a win-win is that software companies, roll-ups, etc., can create a new revenue stream while its members get hyper-tailored insurance policies at a fair price," said Schroder.
Authentic, based out of Manhattan, NY, and Dayton, OH, is comprised of professionals from leading technology and insurance companies, including Next Insurance, Amazon, Canary Consulting, and Aquiline Capital Partners. This mix of technical, entrepreneurial, and insurance experience helped Authentic create the first end-to-end platform that allows SMEs to create captive insurance programs and distribute insurance to its members.
"Authentic's 'captive in a box' allows them to sidestep the current distribution problems of adverse risk selection that the insurance industry has struggled to overcome," explained Sam Lessin, Managing Partner, Slow Ventures. "Authentic's partners stand to benefit from sharing data to better assess and price risk, as they are the ones that reap the rewards from more successful programs."
Authentic has launched with initial customers and already has a waitlist of customers launching throughout Q4 2023. Currently, Authentic is offering Business Owner's Policy (BOP) coverage and is targeting businesses in the food & beverage, salon & spa, retail, fitness, and professional services.
