> Insurance firms sometimes cover extremely “long-tail” risks, such as alien abduction insurance.<p>That's not what "long tail" means in insurance. It does not mean unlikely, it means the claim might need to be paid out years after the period coverage was paid for. (Think current lawsuits about asbestos exposure from the 1970s).<p><a href="https://www.investopedia.com/terms/l/longtail-liability.asp" rel="nofollow">https://www.investopedia.com/terms/l/longtail-liability.asp</a>
This is a great read from Modern Treasury. One thing highlighted in this article that the industries not always talk about, is the concept of "Payment Ops". This is critical in FinServ organizations from my own experience. Any good and reliable payments infra is a function of technology, people, and process, and you need good tooling to streamline the whole workflow that involves engineering, finance, credit and compliance teams. Integrating with a payments API is only half of the definition of done.
Stripe Connect makes all of this stuff veeeeery easy. No need to test up trust/FBO bank accounts/etc. for client money - just allocate money to accounts held in the name of the correct parties.<p>Source: built a fairly large insurance company with zero client money accounts by using Stripe Connect<p>Disclosure - we are locked into processing card payments with Stripe only, but have no incentive to say nice things about them
I'm honestly surprised that Know Your Customer (KYC) and OFAC regulation aren't mentioned with respect to Claims. Besides solving for PCI complexity on the front end of payments, Stripe has a solution for both of these things issues on outward payments. Stripe is used by both Hippo, Lemonade and a few other more established insurance companies.