Obsidian partners with Loop on new personal auto program
Fronting carrier Obsidian Insurance has signed a deal with InsurTech MGA Loop to launch a new personal auto insurance product powered by artificial intelligence, Inside P&C has learned.
The new partnership includes a panel of key reinsurance companies that will support the program by providing capacity to the MGA.
Headquartered in Austin, Texas, Loop determines premiums through the analysis of drivers' behavior on unsafe roads combined with telematics data.
“We are thrilled to partner with such a progressive and innovative organization,” said William Jewett, Obsidian CEO.
"We worked very closely and collaboratively with Loop throughout the development of the program and have been very impressed with how they think about and approach the business,” he added.
“The way in which they can determine rates for many insureds that more accurately reflects potential exposure and ultimate loss cost has the potential to meaningfully change segments of the personal auto insurance industry."
Loop currently provides its services in Texas but is planning to expand its underwriting operations to other states across the US.
“We are grateful to align with a fronting carrier who prides themselves on industry expertise, operational excellence and innovative underwriting solutions,” said Carey Nadeau, Loop co-founder and co-CEO.
The new partnership with Loop marks the latest step in Obsidian’s expansion plans, which have accelerated in recent months through a series of deals.
In August, the PE-backed fronting company signed an agreement with SafeLease Insurance to launch a tenant protection program focused on the self-storage market.
Earlier this year, Obsidian launched a partnership with Platinum Specialty Underwriters and its MGU division WestPro to provide a coverage program for bars in more than 12 US states.
The fronting carrier is backed by private equity firm Genstar Capital, which invested $100mn into the carrier in March of 2020.
In recent years, fronting carriers have proliferated and expanded MGAs’ options for sourcing capacity as they pass the bulk of their underwriting risk directly to the reinsurance market.
Industry executives consider this boom in new partnerships as “the golden age” for accessing capital, as more efficient capital costs drive new fronted paper deals.
The emergence of fronting carriers such as Obsidian has helped MGAs capitalize on the market upturn as hardening environments usually mean a shortage of capacity for the industry.
In just a few short years, the number of fronting companies – both pure fronts and hybrids – have swelled from about two or three to about 20 today.
Speaking about this issue at the Inside P&C North America conference last September, industry veteran Simon Hedley said “fronts” are having a dynamic effect on the most entrepreneurial segment of the industry.
“The fronts are having a material effect and business is absolutely roaring within the MGA program space at this point in time,” said Hedley, the CEO of Acrisure Re.
“And part of that story is the fronts are giving that business the ability to reach the reinsurance market,” he concluded.