Regulatory Bottleneck in Insurtech
Carl Ziadé, co-founder of Gaya on the auto financing and insurtech opportunity
The real bottleneck in insurtech is not software, it is regulated market access. A founder can code a quote flow quickly, but launching a real insurance product means lining up carrier or reinsurance capacity, getting rates and forms approved, and setting up compliance and operations state by state. That is why insurance still moves on an institutional timeline, while banking infrastructure turned much of fintech into an API integration problem.
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In banking, infrastructure providers abstract most of the hard parts. BaaS platforms package sponsor bank relationships, compliance workflows, KYC, and card or account rails so a fintech can often start testing in weeks or even same day. That is the contrast Carl is pointing to.
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In insurance, even a digital first player like Lemonade still has to operate through licensed carriers, state supervision, and large reinsurance programs. The company describes being regulated in each state where it does business, and notes that reinsurance availability and pricing can limit new business growth.
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The practical consequence is that early insurtech advantage comes less from shipping app features, and more from stitching together capacity, filings, and distribution. That favors MGAs, fronting carriers, and agent facing software, because they reuse existing licenses and balance sheets instead of rebuilding them from scratch.
The next wave of insurtech will look more like infrastructure unbundling than brand new carriers. The winners will be the companies that compress launch time by pre packaging capacity, filings, and compliance, much like BaaS did for fintech, and then sell that speed to niche insurers, MGAs, and embedded insurance startups.