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Launch HN: Vouch (YC S19) – Business Insurance for Startups

We’re Travis and Sam, co-founders of Vouch Insurance (https://vouch.us).

Vouch is a new insurance company that provides business insurance for startups. We make it easy for founders to get all of the business insurance they need as they build their companies -- ranging from basic coverage for business property through to more complex coverages such as Directors and Officers (D&O), Errors and Omissions (E&O), Cyber, Employment Practices Liability and a range of others that companies need to close financings, scale their teams, do deals and take on office leases. Moreover, these policies protect against painful but all too frequent risks that we all face as we build our businesses.

We started Vouch after seeing how painful it is to get insurance the old way, and also experiencing many of the risk events that all-too-often happen as one scales a company. Previously I co-founded and led the U.S. arm of Funding Circle, a role I held up until our IPO last year; through this experience I had to purchase insurance many times -- and each time, the experience was slow, painful, opaque, and paper-based. Travis previously worked at Silicon Valley Bank and say that pain-point across their portfolio and, at the same time, saw the interesting developments in other insurance sectors -- Root, in auto insurance, for example -- and similarly believed that there must be a better way for startups to buy and manage their insurance. Although there’s been a lot of work done on the distribution side of insurance (better agent and brokerage-type businesses) no one has really tried to build better insurance products tailored to meet the needs of startups.

Traditionally, a founder needs to go through a broker to purchase the coverages we offer directly, and that process can take weeks, or even months (it took us over 60 days to get the E&O coverage we needed at Vouch to start writing business, as one ironic example). We designed the Vouch experience so that a typical company can get everything they need in under 10 minutes and with 0 paperwork. We also tailored the insurance products we’re offering to meet the unique needs of technology startups. As a result of this, our hope is that the entire experience should feel more tailored, and basic policies are quite affordable -- as little as $200/year. Our basic package is 30% cheaper than anything else we’ve seen in the market and on average we’re seeing our members save ~13% relative to other options.

We started the company after years of experience building and investing in other companies. Our view is that building a company is hard enough -- worrying about risk management and insurance shouldn’t be, and we’re building Vouch so that can be the case. We’re now live in eight states, and are excited to say that we can now serve companies based in CA -- a state that’s home to many startups. We’ll be in many states all across the country shortly, as we want to help entrepreneurs wherever they’re building great technology companies.

If you have questions about business insurance or any current insurance needs we’d love to connect. And we’d welcome reactions, feedback and any of your experiences around business insurance. Thanks for reading and if of interest check us out at: https://vouch.us

88 pointssam-at-vouch posted 6 days ago69 Comments
69 Comments:
gortok said 6 days ago:

I'm not really certain what void this is filling. As a solo-entrepreneur, it took me less than an hour all told to get Hiscox insurance. What is the competitive advantage to this? Why would I choose this over the alternative?

sam-at-vouch said 6 days ago:

I'm glad you had a good experience for your business, but I can also say that's not the case for many entrepreneurs we've worked with (we've done coverage assessments for 150+, and that's growing quickly). With Vouch in ~10 minutes you can get access up to 10 coverages, and I'm not aware of any other platforms that do that. In my experience if you need anything more sophisticated than coverage for GL and personal property you'll probably be looking at a process that takes a few weeks at least (and I've seen it take 2 months+ for some of the coverages we offer). Lastly, because we've tailored our insurance programs for tech start-ups, in most cases we're cheaper -- our basic coverage starts at ~$300/year, and in general we're seeing companies save 14%/year.

joshkaufman said 6 days ago:

I just submitted an application, and have been chatting with Myles, who has been very helpful and responsive.

Vouch is not able to proceed with my application because I run a bootstrapped business – zero funding and no debt. Vouch's current underwriting guidelines require at least $150,000 in funding, which seems odd.

I'm not sure why this is the case - if anything, my business has a much lower risk profile, since I have fewer counterparties, and don't have the exposures that would necessitate D&O, EPL, EB, or FD.

I hope this is something that Vouch will discuss with the reinsurer. I've been looking for a service like this for years now, and I'd like to vote with my dollars.

sam-at-vouch said 6 days ago:

Thanks very much for sharing your experience and I'm sorry we haven't been able to cover your needs yet. Serving boot-strapped businesses is part of our plan (just not in this first release) so I'll circle back as soon as we can cover you. Thanks again for your note.

CPLX said 6 days ago:

It's a pretty common model for VC backed startups in financial services these days, especially ones that involve risk assessment.

I think it is kind of a Potemkin village approach. Let's be honest, they don't want to actually solve the hard problems of underwriting things, they want to appear to solve them so they can impress VC's and get millions of dollars in funding for themselves. Unfortunately you can't help them with that goal.

For them, what better group to work with than the very companies that were funded by the same VC's they're trying to impress?

This approach works in both directions, since for one these companies are by definition well connected and well funded so they don't have to make tough underwriting decisions, and two VC's are for the most part living in a bubble, so by signing up a couple dozen venture backed startups they can create an "everyone is using it" impression.

Needless to say there are problems with this approach. The main one being the addressable market of VC backed startups is tiny and probably not worth that much to corner unless your revenue per customer is massive. And the other problem is that it's not clear you're actually learning anything if you're not really exposed to the wider marketplace.

They'd counter by saying they're getting good at their business and achieving scale and building a great product, and that expanding beyond their own bubble eventually will be easy once they get that product built up.

Maybe they're right. But until they do it's hard to consider any of the companies employing this model to be successful yet.

TuringNYC said 5 days ago:

I had a startup that I operated for 3yrs full time. Once, we almost lost a deal because we could not get E&O and Liability insurance in time. The process was backwards -- heck, faxing applications in this day and age?

I have not used Vouch, but I know that insurance is vast and a very messed up industry. It is unrealistic to think they can solve all problems as a tiny company. However, it is heartening to see them try to solve some problems, at least for some people -- hopefully this spurs change in the industry. I wish them luck on their particular effort.

Honestly speaking, even if the underwriting approval process takes months, there is no reason in 2019 that ANY insurance company should direct you to faxed forms, as some incumbents do. Even if no other problem gets solved, e-applications would be a huge win.

Also, to be fair to this company, sometimes, what you underwrite is not up to you. This small company (not sure how they are structured) is probably not holding the risk. They either broker the risk, or take it on and later bundle it away. That means they are forced to only accept applications they can actually offload after origination. Don't hate the player, hate the game.

philipkiely said 6 days ago:

This is also something you see with some other corporate products for startups, for example, Brex explicitly says "Credit limits are based on the cash you've raised and/or equity in your company" [0] while Stripe instead asks about revenue [1] (I assume because they're in a unique position to verify it). I guess different b2b companies are looking to serve different kinds of businesses (shocking conclusion, I know).

All of that said I definitely agree, as an outsider, it seems like a bootstrapped business would have a lower risk profile, but a venture-backed business would have faster growth potential and thus be worth more in premiums, so maybe that's their reasoning?

[0] https://brex.com/startups/ [1] https://stripe.com/corporate-card

unlinked_dll said 6 days ago:

I'm not sure that bootstrapped businesses have a lower risk profile, at least depending on what the other business views as risk.

VC backed companies have a route to capital and lines of credit if they tank. What is Brex/Vouch going to do if your bootstrapped business tanks? Take your house?

philipkiely said 6 days ago:

That's a good point, and bootstrapped businesses (in the US at least) are generally incorporated in a manner that protects personal assets, so the provider would not even be able to go after the owner's house in most cases.

TaylorGood said 6 days ago:

If I recall, Brex says their minimum is $10K/rev per month

bberenberg said 6 days ago:

Hiscox will insure you. Or you can also go to Chubb for stuff like Cyber and Workers Comp.

poulsbohemian said 5 days ago:

+1 for Hiscox. Was half the cost of the policy I had with The Hartford. I've needed these types of insurance since 2005, and perhaps I've just been lucky but I'd say finding insurance coverage was easy.

said 6 days ago:
[deleted]
csomar said 5 days ago:

I concur with this comment (https://news.ycombinator.com/user?id=CPLX)

In my opinion, Insurance has lots of paper-work and is a time-sink because the insurance brokers/companies needs to do lots of due diligence to determine the counter-party and the risk at hand. You are selling something that could potentially be worth $100k for $300/year, you better be right that the litigation is not happening, at least not that often.

These guys do not do that, and it is not clear how they do for the counter-party risk and insurance fraud. Instead, for now, they'll just accept their friends who have a common risk-profile and are easier to serve/predict their liability. After they raise a few rounds, they might get to the actual problem and try to solve it.

TuringNYC said 5 days ago:

I don't buy this argument. I agree it is complex, and I agree due diligence is required. But that does not mean all parts of the process should purposefully be designed to be arduous. You can have a smooth (electronic) application process and abstract away the complexity. Perhaps have a workflow system to capture more documents (electronically) rather than having random requirements for faxes, etc.

codegeek said 6 days ago:

I also wonder why the funding amount is more important than say revenue for past 3 years ? I assume they only want to deal with "startups" that fall within PGs/HN definition (hockey stick growth possibility). Very interesting but not sure why this matters for business insurance.

phonon said 5 days ago:

That doesn't seem to match with their filings (in CA at least, where all[1] underwriting criteria must be disclosed in their filing). Might want to ask them to confirm that...

[1] http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200...

city41 said 6 days ago:

That's unfortunate. I was bootstrapping an idea a while back and once I had users, I really would have liked to have some insurance but was unable to get any. I was hopeful Vouch could be an answer to this problem.

techslave said 5 days ago:

for that profile you only need general liability which you can get over the phone quite easily. as this isn’t in the sweet spot if couch’s value add i can understand why they won’t serve you.

xenospn said 5 days ago:

Got really excited about this post until I read your comment. Bummer.

cj said 6 days ago:

One of the selling points of working with an insurance broker is that they go out and get quotes from multiple insurers, and then you compare the various policies + prices and pick the best one. (Also why the process is sometimes slow)

It looks like you're taking a very different approach of not comparing options from outside insurers and working with a single insurer instead. Why is it better to go through you than a more traditional broker (ie. https://foundershield.com/)?

sam-at-vouch said 6 days ago:

My experience has been that brokers can add a lot of value with mature companies, but they oftentimes over-complicate things for earlier-stage companies -- so making things simple, transparent, etc. is really key, which is what we're trying to do at Vouch. In addition, brokers sell insurance products that aren't tailored for start-ups. As a result, a lot of companies are either over or under-insured. And, on average, we're seeing our pricing as being very competitive relative to incumbents' offerings. We're not closed off to offering our programs through brokers, but for most start-ups we think this adds an unnecessary layer of cost/inter-mediation.

gen220 said 6 days ago:

I build software for a similarly-disruptive insurance-selling company that has evolved from aspiring to replace brokers to collaborating with them. It took us at least 5 years to fully reverse our strategy from being broker-antagonistic to broker-collaborative. It has done wonders for our business. Excuse my rant, but I hope somebody finds it helpful!

I'd offer a strong word of caution against the attractive idea of viewing brokers as rent-seeking middlepersons. As a seller, you are probably very well-informed on the relative quality of your product. From that perspective, it's a simple mistake to assume that consumers have better information than they do, and thus don't need a broker.

The reality is that insurance (just like any kind of financial instrument) is extremely complicated. Brokers are a individually-tuned filter of information, telling clients exactly what they need to make an informed decision. In the insurance industry, consumers can often get this value at no cost to them (the insurance carrier pays the commission). Premiums are priced identically, whether you purchase through a broker or not; so, as a consumer, why not choose a broker?

To help people (investors?) escape this mindset, I like to compare brokers to Certified Financial Planners. To the informed, CFPs seem like an embarrassing inefficiency in a marketplace that's vibrant with free information. In reality, CFPs provide a real value to a large segment of the population: decent returns, accountability and agency, a human to soothe them through tough times, and a filter for information that feels irrelevant to daily life. Most people want to think about insurance exactly once per year, for as little time as reasonably possible, and no COO got fired for purchasing insurance through a broker.

Bottom line, if your value prop to investors is selling directly to avoid commissions, you're selling them on:

(1) your ability to convince consumers that your information funnel is a better UX (arguable)

(2) your customer support is more versatile than a broker's (unless you're open to encouraging customers to go to a competitor, this is impossible)

(3) while you're accuring brand value to satisfy (1) and (2), you're comfortable with having a growth curve with a low ceiling.

Instead, I'd recommend seeing brokers as external salespeople. If you make a product that is easy to explain and sell, and develop a first-class broker experience (receiving commissions, viewing book of business, CRMing with clients), they will actively convince their clients to switch to you at that one time each year. Brokers already have a rapport of trust with their clients, that you can leverage, even as an upstart, to win market share.

More concretely, in our experience brokers can convince people to change their carrier more effectively than world-class marketing. I'd recommend visualizing your commission spend as marketing spend. Commissions and broker tooling are levers you can pull to grow faster and higher.

It's a harder-to-sell vision, because investors tend to see brokers as an economic inefficiency to be "disrupted" away. But, again in our experience, it's the only practical way to bootstrap some table stakes in the market.

Anyways, hope whoever else reads this finds this insightful. Just my two cents; I think you all have a great vision, and I wish you the best! Learn from our hard-earned mistakes, please :)

grvdrm said 6 days ago:

Interesting comments. Wanted to add some thoughts from an insurance guy view:

>> Instead, I'd recommend seeing brokers as external salespeople. If you make a product that is easy to explain and sell, and develop a first-class broker experience (receiving commissions, viewing book of business, CRMing with clients), they will actively convince their clients to switch to you at that one time each year. Brokers already have a rapport of trust with their clients, that you can leverage, even as an upstart, to win market share.

I think there are two (or more) positive aspects to the Vouch approach:

1. Vouch's distribution is fueled (in part) by relationships with investors (e.g. YC). YC's twice-yearly batch is a wonderful source of start-up business. I don't by any means think it is the only source of business, but that relationship is a positive for Vouch. I've not been through YC but imagine they're happy to recommend Vouch to the folks they're coaching through the year.

2. Intermediaries are rightly lambasted for many reasons, but I think it's silly to assume that the entities that control distribution are doomed. I agree with you that brokers can be valuable, but I think their value to Vouch is different. It isn't to help funnel business in the door (though perhaps that will come), but instead they are partners that can help Vouch scale its offering as start-ups grow and require more complex insurance. Vouch helps create a distribution channel the brokers today don't do a great job servicing, and it enables the business of those brokers when/if the underlying businesses are ready.

sam-at-vouch said 6 days ago:

Thanks for the thoughtful post -- let me expand on what I wrote previously, as I want to be clear: our goal is not to disrupt brokers; rather, it's to build new insurance products that uniquely meet the needs of high-growth technology (and over time, other entrepreneurial) companies. Our view is that brokers are very valuable for some clients -- and for certain other companies, especially very early stage ones, it's more hit or miss -- my experience is that's the case because it doesn't make sense for most brokers to serve small commercial accounts. We're very open to working with brokers over time for some clients/products/etc. Thanks again for the thoughts.

caro_douglos said 5 days ago:

Thanks for expanding. Brokers that work in brick and mortar have their place. Based on reading about your company I would make the pitch that the customer wouldn’t hire a defense attorney to incorporate your company (though you could and not that they wouldn’t do a good job) and likewise you wouldn’t hire silicon legal to defend you in a criminal trial. The last thing you want would be a broker or ultimately an underwriter that is unfamiliar with your business model that fights tooth and nail with you on simple stuff that the Hartford would take care of in a heartbeat.

rishirishi said 6 days ago:

We're in a very similar business. And have embraced the existing broker network. gen220 -- mind if I ask what company you are part of?

grvdrm said 5 days ago:

I'd love to hear as well!

gen220 said 2 days ago:

Sorry, saw this late! :)

With the normal disclaimer that opinions, views, and hot-takes are obviously my own private ones and not those of my company,

I work at https://www.hioscar.com.

francescopnpn said 6 days ago:

It would be interesting to know a few technical/regulatory details.

1- You say you're live in 8 states. Which ones? 2- Did you have to obtain 1 license per state? 3- How much time did it take to obtain each license? What it entailed? Was a prerequisite being a US citizen or being a US company? 4- are/will your employees that deal with the sales legally required to be individually licensed agents? 5- "Pricing depends on a variety of factors including policyholder location". Could you elaborate on the regulatory aspects, if any, of this?

sam-at-vouch said 6 days ago:

Hi -- thanks for the questions, to each: 1) we're live in CA, OR, UT, CO, IL, MI, OH, IN and MI (so 9 states); we'll be launching in many more over the coming months; 2) insurance licensing happens at three levels -- for the entity (i.e. our insurance subsidiaries), for the program (the insurance products we've launched) and for people involved in selling/distributing the product. 3) Program approvals range from a few weeks to up to 9-12 months, depending on the state (in the U.S. insurance is regulated primarily by the states). There's no requisite to be a U.S. citizen to get insurance licenses, at least as far as I'm aware; and 4) yes, all of our people involved in selling (or in insurance-speak "producing") are and will be licensed.

francescopnpn said 6 days ago:

Very much appreciated & good luck with this. I edited my original post and added a fifth question.

hentrep said 6 days ago:

Just a heads-up that you’ve listed MI twice here.

sam-at-vouch said 6 days ago:

Sorry for typo -- will amend!

koolba said 6 days ago:

Who provides the underwriting? (I’m assuming you do not have anywhere near the capital to do it yourselves)

Have you paid any claims out yet?

In my experience these insurance products (ex: E/O coverage for bespoke software services) are a checkbox on a requirements doc for dealing with large companies. They’re never invoked and it ends up being a private tax. All the customers care about is if you have coverage and if the underwriter has a minimum rating or is from a preapproved list.

sam-at-vouch said 6 days ago:

We worked closely with our reinsurance partner (Munich Re) to develop our underwriting and pricing framework. They are back-stopping any claims associated with our policies, and are one of the two largest and best-rated re-insurers in the world.

We haven't paid out any claims yet -- our oldest polices are only about three months old -- but have built out a claims management approach to ensure we're doing the right thing for our members (while also of course making sure there isn't claims fraud).

In terms of where these policies are needed -- you're right, in some cases business insurance is a requirement to close contracts (E&O and Cyber are frequent contract requirements) but in my own experience other lines are really valuable. I've seen meaningful property claims in other businesses I've been involved with, and there are good reasons to have EPLI and D&O as well.

Thanks for the comments.

lightskin_kanye said 5 days ago:

Thanks for the response to my other question! I have another though

Your filing indicates a 10% discount for a data sharing agreement. Can you expand on what data my business would share with you to be eligible to get that discount?

relaunched said 6 days ago:

If nothing else, many startups that have raised seed and A rounds don't have the proper insurance. It's typically because many founders are uninitiated and don't see the value and aren't required to get it.

I couldn't imagine anything more important, from a protect my investment POV, than making sure a bunch of no significant corp experience founders / execs have the proper E&O coverage (among other coverage).

sam-at-vouch said 6 days ago:

Thanks for the feedback and very much agreed: for many companies, E&O is a critical coverage and one that founders may not know much about. It's a core part of our offering for companies that have launched product and are scaling. Thanks again for the thought.

tempsy said 6 days ago:

I think a missing opportunity is just content on what startups typically need and what each insurance covers without needing to sign up e.g. add some breadcrumb nav flow.

The font on the "startup insurance" page with the information on each type of insurance is too small and looks like fine print rather than essential information for anyone looking to see what your product does or offers.

sam-at-vouch said 6 days ago:

Thank you for the feedback. We agree -- education is key here. Thanks also for the feedback on the font; we'll see what we can do to make that better/easier to read. Thanks again.

gscott said 6 days ago:

I work doing adverting for an insurance brokerage full-time and everything is lacking any obvious principle of organization.

I feel this is partly due to the 1-to-1 selling style of most insurance salespeople... it moves like molasses in a digital world.

Another issue is the wholesale price. You need to be selling a lot of a particular type of insurance to get the best pricing for your clients.

Having the market to place insurance is important. Many small commercial insurance brokerages end up having to send things to a "General Agent" who has more markets then you do but marks up the policy higher so now you are not as competitive.

Advertising is tough, very competitive. Especially now with all of these funded to the hundreds-of-millions companies like eBroker and others coming on board.

I went from sending about $18-$22 per click for commercial insurance keywords on Google Adwords 3 years ago to upwards of $28-$35 per click now.

sam-at-vouch said 6 days ago:

Thanks for sharing your experiences and agreed w/ the pace of change in insurance generally. Our view is that by building an insurance provider end-to-end using software we can take out a lot of this friction and better adapt to our clients' needs. Thanks again.

bberenberg said 6 days ago:

Getting insurance has been by far one of the easiest back off tasks we deal with (Hiscox / Chubb). The upsides you offer seem fairly low compared to having a low trust insurance vendor. Do you have an insurance rating?

sam-at-vouch said 6 days ago:

Thanks for the question: our policies are backed by Munich Re, which is an A+ rated (by AM Best) reinsurer.

kposehn said 6 days ago:

Your questions around which types of companies you insure are very narrow - are you only focused on a specific set of startups or are you able to insure more broadly yet?

sam-at-vouch said 6 days ago:

Right now we're focused on providing insurance for technology start-ups (so think software, internet, fintech, digital health, etc) but we're planning broaden this so we can serve a much wider range of companies over time. Thanks for the question.

xhvnut said 6 days ago:

Can you serve a company "based" in California in that all employees are here, even though it's a Delaware C corp with foreign registration in CA?

sam-at-vouch said 6 days ago:

Hi -- yes, we can serve any company based in CA (or the other states where we're live, regardless of where that company is incorporated), so we should be able to help!

m_ke said 6 days ago:

Same question for Delaware corp based in NYC.

sam-at-vouch said 6 days ago:

We're sadly not live in NY yet but will be soon -- I'll let you know as soon as we are.

lightskin_kanye said 6 days ago:

1. Is your pricing publicly available on System for Electronic Rate Filings and Forms (SERFF)?

2. Are you justifying your pricing by saying “me too” and copying an existing competitor’s pricing? If so, which competitor is that? If not, how are you justifying your rates?

3. Are you hiring for software/product?

phonon said 5 days ago:

It (or at least the BOP part of it) is filed [1] in CA as STNA-132004682 (State National is the fronting carrier).

Filed Loss Ratio (including LAE) is 65%. Basically ISO rates and forms with exceptions...they also copied some Chubb stuff.

You can read the more interesting parts in this exhibit https://docdro.id/R1KyTdL

Looks like the major play here is that ISO has very little pricing granularity for tech companies (they are classified as "Offices (Not Otherwise Classified)") and that Vouch will focus on more differentiated pricing (based on policyholder sales, not as much on Limits).

D&O and E&O will be interesting...will look for that later...

EDIT: So that's STNA-132007333, and there they copied Rates and Rules from Great American, and use their own forms (which I'm guessing are somewhat similar as well).

[1] https://filingaccess.serff.com/sfa/home/CA

sam-at-vouch said 6 days ago:

Thanks for the questions. To each: 1) all of the programs we developed with our insurance partners are filed, and therefore available publicly 2) in any insurance program filing, it's important to justify rates in the context of projected losses -- looking at how similar products work in the market is an important component of how we did this, but we undertook substantial actuarial work as well to develop our pricing/rating 3) we are indeed hiring! -- https://www.vouch.us/careers#jobroles

notlukesky said 6 days ago:

So you are insurance aggregator or facilitator?

Who insures you in case of a big claim that exceeds your equity?

A calamity like say the Exxon Valdez?

A great service but startups will pony up in good faith, but what happens when the chickens come home to roost?

sam-at-vouch said 6 days ago:

We are an insurance program manager (or "MGA" in insurance speak), and our insurance programs are back-stopped by Munich Re, one of the largest re-insurers in the world. We very purposefully didn't set the company up as traditional broker, because then we'd be reliant on a bunch of old-fashioned and off-line partners, which would undermines the experience we're trying to create for our clients.

sahaskatta said 6 days ago:

We use NewFrontInsurance. I've also seen companies like Cover.

How do you guys compare?

sam-at-vouch said 6 days ago:

Both NewFront and Cover are digitally-enabled brokers -- they distribute existing carriers' insurance policies. We think highly of both of them, but we see a need to create insurance programs (including the digital experience and the underlying insurance products themselves) that will work well for early-stage technology companies, which is our focus.

johnloeber said 6 days ago:

In what sense are you “launching” today? In the news, you raised a 45m Series B recently. According to LinkedIn, you’ve been at it for 18 months already. So what’s new?

dang said 6 days ago:

"Launch HN" just means launching on HN. YC startups each get to do it once.

said 6 days ago:
[deleted]
jbduler said 5 days ago:

This is a BIG space open for changes.

Technically this is not a new entrant, just a different way to recycle capital. Munich Re (one of the top three reinsurers in the world) will provide reinsurance/capital to Vouch or anybody who could bring growth to them.

The post is a bit misleading. A lot of startups in that field use the standard bashing of “middlemen”, “making the process more efficient”, etc when in fact they are just another broker. Just about EVERY startup in that field uses the same language (Lemonade, MetroMile, etc…).

In this case Vouch is an agent of Standard insurance, a subsidiary of Markel, a company in the business of providing “Fronting” for large reinsurers: https://www.statenational.com/fronting/ https://interactive.web.insurance.ca.gov/webuser/Licw_Agy_De...

An analogy would be emails: you can go directly to Gmail, Yahoo or whatever or you may access all those emails on your Mac Mail or whatever . What matters is the provider behind (their tech, spam capabilities, etc.)

Vouch is an agent of Standard Insurance, not really a top player in the field of insuring tech. Chubb and Hartford are.

Vouch is thin on experience with only two endorsed agents (I assume the founders) who only got their license one year ago: https://interactive.web.insurance.ca.gov/webuser/licw_endors... And have no classes/credit or whatever to back up the fact that they can “provide advice” to startups: https://interactive.web.insurance.ca.gov/licensestatus/licst...

This is public information. The fact that they are licensed surplus lines brokers is a flag as they may place your business with “non-admitted insurers” instead of established insurers in your state (who have experienced claims people, insurance wording approved in your state, and backed by state guarantees). “Non admited insurers” is an opaque field of various insurers, some are good, some are just shabby. Just be aware.

Most of the time you will be better off with admitted insurers (Hartford, State Farm, Chubb) for a number of reasons: they have the experience, they pay claims promptly, and are cheaper. The state will keep an eye on them if they don’t pay claims promptly.

I assume that Vouch will also farm out the claim process to contractors. I just don’t know.

I am not saying that Vouch is good or bad, just be aware, don’t buy into the BS and be an informed buyer.

Buying from a mid-size insurance broker provides some piece of mind: they know what they are doing, have the equivalent of a large enterprise team dealing with big, publicly traded tech companies, and they can call on those in house folks to help if needed or if you have a claim that the insurance company “initially” denied. They can apply “gentle pressure” because they have buying power.

Of course if you deal with Vouch, an agent of Standard Insurance, your options are limited if you get in trouble.

You may think “I will sue them”. You don’t sue insurance companies, or very rarely (and only if you are a consumer, not a company) because they have in house counsels they pay $50/hr against your $1,000/hr lawyers.

phonon said 5 days ago:

I think you're a bit too pessimistic/cynical...

1. It's State National, not sure where you got "Standard" from.

2. Vouch is acting an MGA/Program Administrator, including being involved in underlying insurance product/actuarial design. This is WAY different than being a regular broker/agent. (It's essentially the difference between sales, and sales and operations.)

3.State National doesn't have a reputation for anything--that's what makes them a fronting carrier! Besides providing the paper/AM Best Rating/filing assistance they are not involved in the day to day.

4. Being Surplus Lines Licensed is not a red flag; if they want to offer (possibly in the future) additional options for hard to place risks, then it's being used appropriately. If they are using it just to be able to offer "something" when they know, say, Hiscox would be happy to cover them, then I'm not enthused.

5. Having only a few licensed producers on stuff is not unusual for now; they may be sharing staff with a partner/TPA, plus they may have a large inhouse underwriting team. With so many coverages being offered though, they do need a larger staff than normal to be proficient.

6. It's quite likely that being focused on a narrow class means they can be more responsive/flexible and better able to price risk. I assure you the Hartford does not care at all about the VC funded tech startup market. Program business can be very lucrative AND beneficial to those being covered. Some brokers (large or small) have NO IDEA how to handle tech startups; if Vouch proves itself they may eventually try to place business with Vouch.

7. Some insight in how they will handle claims would be good, I agree--ESPECIALLY for D&O and E&O where legal assistance is critical (and specialized). Being able to offer/get your filings approved for many different coverages is only a piece of the puzzle...you need experienced people on the claims side, irrespective of the bare ability to "pay claims". The fact they don't even discuss claims handling on their site makes me sad :-(

8. Oh, insurance companies get sued all the time for denying claims, not that you want to be in that position...

PS You founded Esurance? Cool!

jbduler said 5 days ago:

Thanks for the clarification. Sorry about sounding cynical, that was not the intend. I have just seen a lot of BS over the years and I super careful trying to understand what is behind that smokescreen. Good luck with the venture!

phonon said 5 days ago:

Oh, I'm not affiliated with Vouch! Just an interested observer...

helad said 5 days ago:

Interesting!

ksnieck said 6 days ago:

i see they are trying to make a derivatives market for startups...

bubble isn't growing fast enough... need more leverage...

someone build a longer 2x4

dang said 6 days ago:

"Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something."

https://news.ycombinator.com/newsguidelines.html

bberenberg said 6 days ago:

He could have phrased it better, but reading the initial post reminded me a bit of banks trusting AIG to insurance their high risk investments.