As funding in the insurtech vertical continues to surge and the
current crop of insurtech companies grows and matures, a common
dilemma facing the successful companies is whether to move from
being just an insurance producer (i.e., an insurance agency,
brokerage or managing general agent), licensed to sell, negotiate
and possibly underwrite insurance, to becoming a fully licensed
insurance company. The high-level business considerations are well
known: Decision-makers must balance the rewards of a company's
ability to control more aspects of its business and capture more
value against the substantial amount of time and capital it will
take to form a new insurance company or acquire a shell insurance
company. What is less well known to venture capitalists and
technology entrepreneurs coming into the insurtech space is how the
structure of venture-backed companies can lead to unexpected
regulatory problems once an insurtech company decides to pivot from
being a licensed
