
Launch HN: Vouch (YC S19) – Business Insurance for Startups - sam-at-vouch
We’re Travis and Sam, co-founders of Vouch Insurance (<a href="https:&#x2F;&#x2F;vouch.us" rel="nofollow">https:&#x2F;&#x2F;vouch.us</a>).<p>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&amp;O), Errors and Omissions (E&amp;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.<p>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.<p>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&amp;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&#x2F;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.<p>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.<p>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: <a href="https:&#x2F;&#x2F;vouch.us" rel="nofollow">https:&#x2F;&#x2F;vouch.us</a>
======
joshkaufman
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.

~~~
philipkiely
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/](https://brex.com/startups/) [1]
[https://stripe.com/corporate-card](https://stripe.com/corporate-card)

~~~
unlinked_dll
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
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.

------
cj
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/](https://foundershield.com/))?

~~~
sam-at-vouch
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
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 :)

~~~
sam-at-vouch
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
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.

------
francescopnpn
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
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.

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

~~~
sam-at-vouch
Sorry for typo -- will amend!

------
koolba
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
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
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?

------
gortok
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
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.

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

------
kposehn
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
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
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?

~~~
m_ke
Same question for Delaware corp based in NYC.

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

------
lightskin_kanye
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
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](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](https://filingaccess.serff.com/sfa/home/CA)

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

How do you guys compare?

~~~
sam-at-vouch
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
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
"Launch HN" just means launching on HN. YC startups each get to do it once.

------
jbduler
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://www.statenational.com/fronting/)
[https://interactive.web.insurance.ca.gov/webuser/Licw_Agy_De...](https://interactive.web.insurance.ca.gov/webuser/Licw_Agy_Det$.STARTUP?Z_ORG_ID=386926&Z_AGY_LIC_NBR=0M81262)

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...](https://interactive.web.insurance.ca.gov/webuser/licw_endorsees$.startup?Z_ORG_ID=386926)
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...](https://interactive.web.insurance.ca.gov/licensestatus/licstatus?event=checkLicenseStatus&function=getCEDetail)

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

------
helad
Interesting!

------
ksnieck
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
" _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](https://news.ycombinator.com/newsguidelines.html)

~~~
bberenberg
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.

