Cole Riccardi’s Journey From Investment Analyst to Insurance Innovator

Episode Overview

Cole Riccardi is a dynamic entrepreneur and the visionary founder of Authentic, a pioneering company in the insurance industry that specializes in building and managing captive insurance programs for small businesses and affinity groups. Born and raised in Madison, New Jersey, Cole’s journey began on the East Coast, where he developed a strong foundation in teamwork and leadership as a lacrosse player at the University of Notre Dame. After earning his degree in finance, he embarked on a career that would eventually lead him to the cutting edge of financial services and insurance innovation.

Before founding Authentic, Cole honed his expertise at Aquiline Capital Partners, a financial services investment firm with a strong focus on insurance. During his six years at Aquiline, Cole delved deep into the intricacies of the insurance sector, gaining invaluable experience that would later inform his entrepreneurial endeavors. It was during this time that Cole encountered the concept of captive insurance through a family member’s successful venture, which sparked his interest and ultimately inspired him to create a solution that could benefit small businesses on a broader scale. His background in finance, coupled with his growing passion for innovative insurance models, set the stage for his leap into entrepreneurship.

In 2022, driven by a relentless passion for reimagining the insurance landscape, Cole founded Authentic. His vision was clear: to make captive insurance accessible to small businesses by simplifying the complex process of setting up and managing these programs. Under his leadership, Authentic has grown rapidly, serving over ten platforms and earning the trust of small businesses across various industries. Cole’s innovative approach and deep understanding of the insurance market have positioned Authentic as a trailblazer in the field, and his commitment to helping small businesses thrive continues to drive the company’s mission forward.

Episode Transcript

Kevin Rosenquist: Hey, welcome to Pay Pod, where we bring you conversations with the trailblazers shaping the future of payments and fintech. My name is Kevin Rosenquist and thanks for listening. After watching a horse stable band together with other horse stables to launch a captive insurance program, Cole Riccardi was fascinated by the concept. He couldn’t get it out of his head, so much so that he left the stability of his job and founded authentic, a company that helps businesses build captive insurance programs. Don’t know what captive insurance is? Neither did I, but he explains it very well. If I could understand it, I’m sure you can too. So please welcome Cole Riccardi. You’re originally from new Jersey, right?

 Cole Riccardi: That’s correct. Madison, New Jersey.

Kevin Rosenquist: You played lacrosse at Notre Dame. I saw you, , you East Coast guys, you love your lacrosse?

 Cole Riccardi: That’s right. Yeah. A little bit about our bed and, , obviously have to get the shout out to another dancer there. , back to back championship round. They just brought it home over Memorial Day. So very proud.

Kevin Rosenquist: Alone I saw that yeah I’m a big football fan. Everyone who listens to this show knows that they’re probably sick of me bringing it up, but, , whatever. I’m the host. I can do what I want. , I’m. I’m originally from Chicago, so I knew a lot of Notre Dame fans, and, , , so I didn’t like all of them, though. So I’ve always had kind of a love hate relationship with the Fighting Irish. But I think a lot of people feel that way with Notre Dame football.

 Cole Riccardi: It’s funny, I did not grow up as part of the Notre Dame cult following. And when I got there, it was a little bit of culture shock, right? Everyone knew, like all the fight songs and all the cheers and, you know, I was sort of thrown into it. But it was an amazing place once I, you know, got up to speed with with everybody else who had grown up, the Notre Dame Jerseyans, they were two years old.

Kevin Rosenquist: Yeah, there’s a lot of those people, too. Like, it’s like that. The cult is the cult mentality is passed down from generation to generation. I guess it’s kind of ironic. We’re saying cult when we’re talking about a Catholic school.

 Cole Riccardi: Holy. Exactly.

Kevin Rosenquist: That’s for another podcast.

 Cole Riccardi: Yeah, exactly. And  my name ends in a vowel. So I’m, , you know, I didn’t really naturally fit into the Irish Irish Colts, but we got that after four years, so that’s awesome.

Kevin Rosenquist: So, so what was the motivation for founding authentic in 2022? I understand you’ve got a good founding story.

 Cole Riccardi: I’ve been told that, yes. Yeah. So I was very fortunate to work at a firm called Aquiline Capital for six years. It’s a financial services investment firm. They do a lot of insurance. I spent a lot of time looking at insurance investments and, , you know, that kind of allowed me to in a pretty deep knowledge of, of the sector. But the founding story that everyone really likes to hear is, I, I have some family in the insurance states that set up what’s called an association market. And essentially what that does is allow small businesses to buy insurance from their association instead of buying it from State Farm or Liberty Mutual. Okay. And so if I’m a restaurant and I’m a member of the new Jersey Restaurant Association, and that association has a captive insurance program, I could actually buy insurance from my association. And all of the profit of that insurance program can go back to the restaurants. If none of my restaurants in the new Jersey Association have claims that profit can’t come back to us. So it really is kind of this like community based. I kind of view it as like back to first principles of insurance, right? Where similar businesses or individuals would pool money together for a rainy day. And if that money didn’t get distributed via claims, it went back into those members in the form of profit. So I had a family member about set up one of these association captives or horse farms or actually horse stables, and someone in his network ran a stable and they were overpaying for insurance, traditional carrier market.

 Cole Riccardi: And so he said, I’m going to set up an association captive or an insurance program that would allow all of these stables to buy insurance through our own association capital program. And because we had a network in that space, everyone sort of knew and and trusted one another, and they were aligned from an interest standpoint. And they’d gotten a check back every year from their insurance program. And so instead of, you know, putting a half $1 million check to State Farm every year to insure your stable, you can write a check to your association. Captive brethren can literally buy insurance through your association, and if it does well, you can actually get a check back at the end of the year. Or your rates can go down over multiple years. And so that is my challenging story. Is witnessing a ballet member set one of these up. And I became obsessed with the model. Right? I sort of thought, wow, this is sort of, you know, back to the early days of the insurance. And I viewed this model being taken outside of just associations, or I guess I should say, I had a different definition or association. And so the light bulb went off when I bought through vertical software companies.

 Cole Riccardi: Right. Like they, they touch like businesses. Why can’t they start a capital program? Franchisors they touch like franchisees. That’s similar to an association, right? And there are all of these kind of different affinity groups that I thought you could take this infrastructure to. And that’s really when the light bulb turned on. And so I started kind of mapping it out and realized that it was possible, sort of based on the six year rights that an insurance investing And I left aquiline a little under two years ago and, , we we raised our venture round some of my former aquiline coworkers, participated in slow Ventures, led led Betsy Brown, very fortunate for their partnership and belief in the early days and helps over yeah and spotlight great partner early on like yeah it’s  good. Very impactful. Yeah. It took us over a year to put this infrastructure together, which there are a lot of moving pieces like reinsurance and capital and pricing and all of these partners that we’re working at. Right? We’re essentially setting up their own insurance program for them or their own insurance capital for them. So in order to make that super turnkey, there was a lot that had to be built for the first year, year and a half. But now we are live with over ten platforms and allowing their members or their small businesses to buy insurance from it.

Kevin Rosenquist: What kind of insurance are we talking about?

 Cole Riccardi: Great question. So today we sell a business owner policy. Every gym, every restaurant, every salon like that. That’s really who we focus on today on authentic. They’re required to show proof of insurance. You release them their landlord, the insurance that they are required to have as a business owner policy. And that covers your liability and your property and in some cases, your professional liability. If you have trainers getting in fights, for example, and the Gita states, so we allow any of these platforms like Mindbody. Right. They’re selling a business owner policy branded as Mind Body. So there are 40,000 chains as opposed to those Jen’s buying insurance once again from State Farm or the Hartford. They can just click and buy it right in their mind body platform. Okay.

Kevin Rosenquist: Okay. So let’s say I’ll use an example. I’m opening a bar this fall.

 Cole Riccardi: Got help?

Kevin Rosenquist: Yeah. And , what? So if I couldn’t just come to you and do something like this, we would have to make some sort of association, some sort of group of like minded businesses to get involved together. Right.

 Cole Riccardi: Hopefully we will.

Kevin Rosenquist: Reach you and at a.

 Cole Riccardi: Couple of different ways. But that’s right. We only work with art nerds at groups of small business students. And so, Matt, let’s let’s take, , let’s pretend you’re opening a Jimmy John’s right. So I know that’s not a bar. I just get, . So. So if you’re opening a Jimmy John’s, how about a Buffalo Wild Wings?

Kevin Rosenquist: That’s a.

 Cole Riccardi: Little wild. So I think my vision, which I actually don’t think we’re too far off from, is if you’re opening a Buffalo Wild Wings, Kevin will have the option to buy insurance from. Maybe to use toast. Right. So maybe you can. We’re not partnering with ghost today, but let’s use restaurant Group 65, for example. Right. So you’re starting a Buffalo Wild Wings and restaurant three 6065 is your operating system. You can buy insurance from restaurant 365 or if you’re starting a Buffalo Wild Wings and looking through the franchise disclosure documents, you can buy Buffalo Wild Wings insurance, right? May get offered to you from the franchisor, but it’s all offered to you from these platforms as opposed to you seeking out an insurance carrier directly. Right. And so authentic is essentially enabling that Buffalo Wild Wings insurance program. It’s enabling that restaurant 65 insurance program. And so I do think in maybe a couple of years time, , we’ll actually reach Heavens Bar through a couple of different channels, if that makes sense.

Kevin Rosenquist: It does? Yeah. Yeah, yeah. Definitely does. So, like, so does somebody come to you and say, hey, I want to start a group, I want to start an association. I’ve got X amount of businesses interested and we want to get involved with this. Can you help us start it.

 Cole Riccardi: That’s exactly right. And so we have some folks that come to us once again that they’re a franchisor. Or maybe they own 50 Buffalo Wild Wings, right? And instead of all of their locations buying into, they want to start their own group and maybe take it up the corporate or it’s big vertical software companies that publish a lot of restaurants. We also what’s really interesting is we have some local programs. So we have an office in Dayton, Ohio, actually, and we started a Dayton Main Street insurance program. So all of the businesses on Main Street and the Oregon district shout out to the Oregon district and dating. They can all buy insurance through a local program that’s powered by Authentic. But that’s exactly right. Someone with some group of small businesses would come to us and say, hey, I would like to start a cafe program.

Kevin Rosenquist: Okay. And so, so as far as captive insurance, it’s not something I’m super familiar with. And that’s when I was starting to kind of deep dive you guys. I was like, wow, this is crazy. I didn’t even because insurance is frustrating to a lot of people. It’s certainly been frustrating to me. And although after a recent hailstorm, I did get a new roof and siding. So I suppose it’s not all bad, but I mean, it’s so it’s there’s a lot of frustration in it. There’s a lot of people that’s like, hey, I never get my money back. I put all this money in, I never make claims, blah, blah, blah. So captive insurance is is a way that you can you can kind of get some money back and you can kind of be in control of it. How come it’s not more widely known about or available, you think?

 Cole Riccardi: Yeah, I think the captive model really aligns incentives, which is what we’re excited about, kind of like the whole local value chain. To answer your question, it’s really hard to set up one of these captives. And there’s a number of different ways you can set them up without diving too deep into the insurance technicalities. How do you want to reassure me? How do you want to capitalize it? How should we price everybody who’s doing the price it, who’s handling the claims right. So you need a lot of insurance expertise in order to perform. But we’re extracting all that away and just bringing all of that in a box, a really nice quick run in to have a great experience, and we’re bringing that to folks and saying, hey, we can start this program tomorrow, right? Like our seed to, to launch. And one of our superpowers right now where I’ve actually given someone a demo. And by the time the 30 minutes is over, we had their insurance link live in production and they could sending the link out to their small businesses for better visibility. So. But back to your question. All of the moving parts. It’s like the corral, all of those together and deliver it in a turnkey way, which is why it took us, you know, well over a year to to get our solution in place where we felt it was truly turnkey and truly scalable. Okay.

Kevin Rosenquist: Okay. And your background is in finance, correct?

 Cole Riccardi: That’s right. My background’s in in finance. I worked at an investment firm focused only on financial services, and we did a lot of insurance. But I’m very fortunate that my co-founder has spent over 15 years in commercial insurance. He’s an actuary as well. And so he joined me right out of the gate. I have an amazing head of engineering from Amazon, who’s really built all of the infrastructure technology that we use, and our head of product is also amazing. We spent more than ten years in the commercial insurance space as well. So I’m sort of finance. And then we have two other insurance operators on the leadership team and then one engineer with goggles. Okay.

Kevin Rosenquist: And so you said you mentioned something about like a kit in a box, I think, or something like that. And I think I saw on your website maybe there somewhere I read like, like insurance in a box or something like that. , I say, I say.

 Cole Riccardi: Captive in a.

Kevin Rosenquist: Box. Captive in a box.

 Cole Riccardi: Unfortunately, that before we have this at the conversation, that usually means something to like, want to send people that I talked to. But yeah.

Kevin Rosenquist: Captive in a box. Could be could say something. Maybe captive insurance in a box would be better. Just to say that people don’t think you’re kidnaping people and hiding biting them. I mean.

 Cole Riccardi: Yeah, we should, , maybe we’ll make that change today on the site. Now that you say it. Yes. I think you know what we’re really spending a lot of time on now that we’ve raised the series A, we’re ready for scale. We’ve got a number of platforms that are up and running, is really delivering this message and a super clear insight way. Right? I think if we’re able to spend time with folks on on some type of interview like this or on a zoom call that they very naturally or after a few minutes and understand what we’re doing, but distilling that captive in a box message down to a few sentences where someone who doesn’t know much about insurance, right, really understand it. And so we spent a lot of time on that. We’re getting there, but it’s always nice to point to other platforms that are doing it, and folks can go have a look for themselves.

Kevin Rosenquist: So if you’re first starting out, you know, let’s say I came to you with a group and we wanted to do this. Is there a big upfront payment? You know, as far as like I mean, how do you what if there’s a big claim early on in the, in the, the tenure. Like how does that work.

 Cole Riccardi: Yeah. Great question. Then. So we do like some level of scale. It doesn’t have to be huge.

Kevin Rosenquist: There goes Kevin’s bar. Let me tell you that.

 Cole Riccardi: Well, the, , the economics, you know, we basically had an option for folks that are really large, and then we have an option for folks that aren’t quite as large. Okay. And so the economics that you can get back are slightly worse if you’re smaller. But it’s to mitigate that risk, right? The other thing, you know, and people in your program, I mean, we spend a lot like 30 to 50 people, but let’s say you have 30 to 40 people. And there’s one massive claim, right? So we have sort of additional reinsurance for the smaller folks that we take out to mitigate that risk. And once again, a lot of it comes down to how you structure structured on on the back end. So we’ve got all of our programs reimbursed. And then we also work with third party capital partners or credit funds that put up the regulatory capital. So typically if you wanted to do this, you’d have to write a big fat check just to start write that as a trust account. The regulator approves it. So we take care of all of that on the back end. If you do have an early claim or a horrible loss ratio, meaning you have a ton of claims and way more claim payments than the premi coming in, your capital isn’t at risk. You wouldn’t get anything back. And then, you know our reinsurers and capital partners. If everyone across the authentic across our customer base did poorly, they would have some questions for us. To answer your question, we have balance sheet partners and reinsurers on the back end that are there to absorb that risk.

Kevin Rosenquist: Okay, okay. That, you know, that makes sense.

 Cole Riccardi: Yeah.

Kevin Rosenquist: So one of the things that people desire when it comes to traditional insurance is when they have to make a claim that they’ve got an advocate, they’ve got someone in their corner, they’ve got someone who could help them through the process. Is that do you guys take care of that part?

 Cole Riccardi: So like most companies we work with as a third party that’s there, we work with an offset. Reserved. But I think what’s unique about our model as well is because it’s like it’s an exchange that during these programs and if they have questions about purchasing or plans, we know anyone coming through the Buffalo Wild Wings planning portal is a Buffalo Wild Wings, right. So we could get at what some of the frequently asked questions or what the issues are. Or typically with a Buffalo Wild Wings specifically. Right. As opposed to just having it’s like really wide top of funnel, like, hey, please tell us what you’re famous. We have a much better claims experience. Heaven goes in to file a claim and we say, hey Kevin, we know Buffalo Wild Wings has been having issues with their fryers. Like click here to talk to someone who just handled another fryer. Fine. Okay, so we can really kind of create a better experience because of this community based or affinity based approach.

Kevin Rosenquist: I would imagine slippery floors. That would be the problem that grease flying around all over the place.

 Cole Riccardi: That’s right.

Kevin Rosenquist: I mean, just walking in there, you smell like you’re like, whoa, there’s a lot of frying happening in here. That’s, .

 Cole Riccardi: Yeah, that’s, . I’ll have to now. Now I’m showing spray was running, and I’m curious what the, , the most common claim that, . Yeah. I’ll have to go check that out. Circle back. Yeah.

Kevin Rosenquist: We like to take my son to the trampoline park in town. He loves jping around like a knucklehead there. And I’ve. Every time I’ve gone there, I’ve always just like I can’t imagine the insurance in a place like that.

 Cole Riccardi: Yeah, we do get a lot of inquiries for that. We’re not comfortable underwriting like it’s trampoline park. Right. We just feel like there’s probably not going to be a lot of leftover money to go back to that association, so. Very good. And so that’s why we are today focused largely on like Main Street small business rehab rat dog skin salons, retail. Those are all down the middle for us because we want volatility a little bit more predictable of a loss ratio.

Kevin Rosenquist: Plus a lot of the there’s a lot of businesses in those categories that all kind of have the similar same needs and stuff. I mean, there’s not a whole lot of different trampoline parks, you know, there that would could band together. But restaurants. Yeah, I mean, Main Street in my city. Like, I mean there’s tons of restaurants down there and yeah, I could totally see that working for that kind of a thing.

 Cole Riccardi: Where are you based again? Kevin?

Kevin Rosenquist: I am just outside of Boulder, Colorado.

 Cole Riccardi: All right. Maybe we start a Boulder restaurant program. Let’s do it.

Kevin Rosenquist: I’m in Kevin’s bar. First client I so we mentioned your degree was in finance. You started your career as an analyst. Did you always have aspirations of being a founder?

 Cole Riccardi: Yeah. Back to my founding story. When, when the light bulb sort of initially went off, I just became so obsessed with the idea that I actually couldn’t do my day job. , so I wasn’t actively really hunting to become a founder. I wasn’t writing all my ideas down and reading notebook.

Kevin Rosenquist: Every entrepreneurship book out there and stuff and. Yeah, yeah, I.

 Cole Riccardi: Mean, I always thought , to be a good investor, you have to understand business better. So I did read a lot of these, like, operating books and stuff like that. It’s the insert my skill set. But man, it was kind of different, like for certain different people when, when I had this idea and I just couldn’t shake it out of my head. And then, you know, I got kept just trying to poke holes and poke holes. And as I was trying to poke holes, I would just get more and more excited. , and, you know, I would at first, you know, nights and weekends write down thoughts and ideas and business plans and stuff like that. And that really just completely overtook my brain. And ultimately I had no choice but to go but to go pursue that. It wasn’t always the, , I need to found a company in Spain. But, you know, the idea stuck with me stronger and. Yeah, really, anything I really couldn’t get out of my head. And so it was kind of this, this very strong pole, I guess. And, .

Kevin Rosenquist: Well, that’s kind of cool, though, because instead of instead of being like, all right, I want to find a company, what can I do? You were like, oh my God, this is a great idea. I better found a company. And that’s kind of cool because then you have the passion going in instead of trying to find something you’re passionate about.

 Cole Riccardi: Yeah, 100%.

Kevin Rosenquist: And, you know, I.

 Cole Riccardi: Do think I had a great vantage point, I guess, to understand what the difficulties were in starting an insurance company. But yeah, the point of this one was incredibly strong. And , yeah, the, , it really gave me no choice. But I also did, you know, think quite a bit around my risk appetite and, like, where I am in my career. And I felt like it was the right time as well, personally, to take a big swing. This is kind of like when I was doing the reflection after I had the idea. And do I want to quit my cushy job that all this? Yeah, totally. Totally. I think there is definitely like an armchair test moment where I thought about myself and the rocking chair and like 80s or 90s or whatever that one’s about. And, , you know, it’s like the Bezos regret minimization thing, right? , no, I figured, , they taking a swing is something I would smile back on at that point in time. So decided to get that is.

Kevin Rosenquist: Entrepreneurship and leading coming naturally to you.

 Cole Riccardi: It’s funny because I actually don’t. I don’t feel all that different. That’s good.

Kevin Rosenquist: That’s good.

 Cole Riccardi: Things in prior lives. You know, I, I do think a lot of my job is telling a story. It really changes quite a bit. Right? I mean, in that early days, it’s hiring and then sales and then optimizing the reinsurance and all these things though, like, people just want to hear the authentic story to different degrees, right? Where I think if you are so talking about something, telling that story 20 times a day like this excites you, and I really feel like work. It’s not this thing that I’m upset. I like trying to like truly, obviously and improve upon, so to speak. Or otherwise said, like, I’m not constantly feeling like I’m an operator in some conceit because I’m really just working on this idea. I’m stuck in my head for many years now, right? And like the ways I keep the pitch if I’m talking to or reinsurer wanting to head in a wide range. But at the end of the day, it’s been in my head for, you know, every hour, every day. So, you know, I would say that it’s, , it comes somewhat natural, if that’s how you’re saying it has been occupied for so many years. So.

Kevin Rosenquist: And side note, Buffalo Wild Wings not a sponsor, but if you guys are listening, we can be bought. So, , and if you need insurance. Yeah, if you need insurance, if you need a plan.

 Cole Riccardi: We can both benefit.

Kevin Rosenquist: There you go I like this I like this as far as captive insurance goes, is there room for it to expand into areas like health insurance or things like that? Is that a possibility or is that just too different of a model?

 Cole Riccardi: No, you definitely want to get there. , part of my vision is a company that crosses the chasm from property and casualty insurance. And it’s a health insurance. , health insurance who exists today. A lot of folks will use outcomes of the way to sell future, so we don’t have to go too far down the rabbit hole there. But if folks do want itself out of it by reinsurance, usually they use a captive structure. So they like set up their own insurance companies. That’s really what a captive was, right? Right. It’s your own insurance company that’s owned by one member or multiple. And that’s in both health insurance premi and the controlled property casualty premi. So while it sounds like a really big mission to go from business centered policies, health insurance, we’re actually already in terms of our set up today with capital reinsurance, it would be, you know, there would be some adjustments in the value chain, but it wouldn’t be an entirely new business model for us, if that makes sense.

Kevin Rosenquist: Yeah. Yeah. No it does. I mean that to me that that would be a huge a huge advantage for, you know, a small business being able to offer insurance through a captive as well if possible, just because, you know, I think about like, you know, for small businesses getting company insurance is very difficult. You know, I’ve tried to do that for small businesses that I’ve been a part of that I’ve, that I’ve managed and and it’s just they just don’t they don’t really want you when you’re really small. So the options are very, very limited for people. So yeah, I could see that being a huge value add for, for a small business, a network of small businesses down the road.

 Cole Riccardi: Yeah. That I mean that’s really what we want to get to. Right. Extracts all of the headache and related confusion around insurance aware because once again I think that you’re starting to buckle a wild rates and you’re offered a Buffalo Wild Wings insurance policy. You know, that’s probably a pretty good policy for a Buffalo Wild Wings, right. Similar with mind audit. Like if I’m starting a name or logo studio, I feel like the mind body insurance policies probably crafted towards them says if I call a carrier and they ask if I want Dell or answer property, right? I don’t know, but I buy it for mind body probably prepared for again, it’s what.

Kevin Rosenquist: You did, you know it’s what you need.

 Cole Riccardi: Exactly. That makes sense. And we take all of that. You shouldn’t headache and paperwork away and make it, you know a seamless like buy experience.

Kevin Rosenquist: That’s awesome. Well cool I, I think I need to go grab some wings, so, . Me too. Okay. It’s really good now, but, , thank you so much for being here and explaining this. This is, like I said, this is something I’m not real familiar with, and I wouldn’t doubt that a lot of our audience is is unfamiliar with. So thank you for explaining it. And, , love the model. Hope it, , hope it continues to expand for you.
 Cole Riccardi: Thank you so much, Kevin. Really appreciate you having me on.