Takeaways:
- MGU and fronting company leverages efficiency to expand
- Bamboo applies AI to finding risks and inefficiencies
Bamboo Insurance, a Utah-based managing general underwriter (MGU) and fronting insurer, is deploying more AI tech after receiving new backing from acquirer CVC Capital Partners.
The company is increasing the responsiveness of its products,
CVC acquired Bamboo from White Mountains Insurance Group in 2023, after which the company expanded into California and Texas, with plans to add many more states and regions of the U.S. Bamboo also plans to cover more types of properties, and to launch a new digital platform next month.
John Chu, CEO and founder of Bamboo, spoke with Digital Insurance about how the company has grown and its use of AI.
This article is excerpted from a longer interview and edited for clarity.
How has Bamboo taken on more underwriting and fronting business?
We've delivered the core underwriting and sophistication of our tech through our products. We've built great distribution. Customer-service representatives can get through our system in two minutes; the average in the industry is about 15 minutes. We collect 200-plus attributes, compared to others that collect 40 on average. This allows us to create differentiated products for agents to sell, because we leverage these attributes and build them into our products. Our agents love our underwriting model and understand it. It's a combination of building the right distribution and the right products, then having our capacity partners support providing the breadth to do that.
How have digital and AI technology advances changed Bamboo's offerings and services?
We're fully embracing AI. We use it on the front end to interact with our agents and policyholders. We use AI a lot in our underwriting model to identify risk.
There's no reason why we couldn't triple in size and maintain our same headcount by leveraging the tools and AI to give us that efficiency, while continuing to use AI to increase our relationship with our claimants and policyholders and agents.
How did Bamboo react to the changes happening in the California market?
Being a new entrant, we didn't have the legacy issues. A lot of the issues in California were
The way we entered the market and the speed of how we've done things has allowed us to effectively compete better. We've been able to make sure our distribution, technology and capacity partners are all happy and excited to partner with us.
What are the big challenges for MGAs in the market?
MGAs are probably the fastest growing segment within the industry. It's going to be 20% of the market in the next three to five years. They're going to be a substantially bigger new business driver of the industry. MGAs will continue to grow, as long as they can win on the front end and continue to out-segment and underwrite on the back end.
How are MGAs becoming category killers?
There are probably 35 fronting arrangements out there. Some do personal property coverage. A lot of them are focused on commercial and auto insurance. Cyber is also big in this space. A lot of ancillary products that are not core to what carriers do have picked up tremendous steam within the MGAs.
MGAs and fronting papers are continuing to pick up share because of speed, execution and singular focus. Large insurers like The Hartford and Travelers have 38 to 40 lines of business. We have one business. All I think about is personal property. They have a lot of mouths to feed, so there's a lot of allocation and a lot of competition for capital and resources. Our singular focus gives us an advantage in areas where we compete.
