Here are five critical elements to address as a Retailer, Manufacturer, Insurtech, Solution Provider, or FinTech when using insurance to back warranties, refunds, service level agreements (SLAs), and performance guarantees for products, services, or SaaS platforms.  There are several other items, but these five are at the top of the list:

1) How did you determine your offering wasn’t creating an insurance program?  Just because you call it a warranty or guarantee doesn’t mean it isn’t insurance.  Properly structuring a program includes how you promote, document, and market it; these are critical elements.

2) Does the proposed structure have too many layers of cost?   Some solutions involve fronting carriers and various reinsurance structures, such as forming a captive or using a captive cell.  Make sure these layers, and the frictional costs they create, add value, provide the coverage your business requires, and don’t require excessive capital.

3) How do you demonstrate to your client that they are protected?  Your company being “backed” is only of value to your client if the backing is absolute, including bankruptcy of your company, and your client has access to coverage if it is needed. 

4) What type of policy delivers what you are seeking?  The notion that a CLIP (Contractual Liability Insurance Policy) is the solution to everything is simply incorrect.   

5) Do you know your policy structure options for loss-cost expectations, carrier pricing elements, including carrier fees, target loss ratios, premium taxes, and underwriting participation?   Minor differences in any of these components can significantly impact your program and its costs.

The Meramec Secure® Platform enables the creation of customized solutions tailored to meet client demand for insurance-backed guarantees or warranties across a variety of products, services, and solutions.