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:
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:
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.
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!