US insurtech Authentic has raised US$5.5m in seed funding to help grow its insurance platform, which allows SaaS providers to launch captive insurance programmes in a matter of weeks.
The round was led by Slow Ventures and included participation from Altai Ventures, MGV, Upper90, Clocktower, Commerce Ventures, Mischief Ventures, Core Innovation Capital, and insurance-industry executives.
With dual headquarters in Manhattan and Dayton, Ohio, Authentic was founded by insurance and technology professionals with backgrounds at the likes of Amazon and Next Insurance. It will use the money to make good on its waitlist of customers, who it hopes to welcome on stream by the end of this year; and is already targeting businesses in food and beverage, salon and spa, retail and fitness, and professional services.
According to the National Association of Insurance Commissioners (NAIC), 90% of Fortune 500 Companies already utilise captive insurance – which is a form of self-insurance – rather than relying on insurance bought from a broker or insurance carrier.
Due to the cost and complexity of setting up captive insurance though, it has traditionally been reserved to larger and better-resourced organisations – something that Authentic is hoping to change. The startup’s turnkey platform covers all aspects of setting up a captive insurance company from the legal and underwriting side to claims management and customer service.
‘Insurance the next embedded product,’ Authentic backers say
"Captive insurance provides many benefits to organisations and their members, but until now, setting one up was a very long and expensive process," says Cole Riccardi, CEO and Founder of Authentic. "Through Authentic's platform, anyone can create their own captive insurance programme and realise the benefits within days.”
Sam Lessin, Managing Partner at Slow Ventures, adds: "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. 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 programmes."
And Marc Schröder, Founder of MGV, continues: "Over the last few years, we've seen a lot of software startups becoming fintech companies by embedding payments and lending products to monetise their customer base. Insurance is the next embedded product, but what makes Authentic a win-win is that software companies and roll-ups can create a new revenue stream while its members get hyper-tailored insurance policies at a fair price.”
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