Ethos Co-Founder and CEO Peter Colis on Rebuilding Life Insurance

One of the things that we do is really try to de-average

pricing to get the individual person the most accurate possible price that's personalized to them versus brushing them with a broad brushstroke, which either penalizes or subsidizes them at the expense of other people.

So if I'm approved for a life insurance, what happens next? Do you sell that policy to somebody else or do you hold it on your balance sheet? How does it work?

That's a great question.

Ethos is a no-balance sheet, no-risk-taking company.

So we work with six life insurance carrier partners today, and they hold 100% of the risk, and they guarantee the claim that will be paid upon the policyholder's passing.

So it's really a win-win for us because we don't have to grow surplus capital in relation with client and agent demand for our products, allowing us to scale much faster and at more attractive IRRs than we otherwise would have to if we were a life insurance carrier.

So does it ever have a situation that you approve somebody and then the other, the sixth life insurance partner don't accept it? So how do you manage that risk? Or do you only work with that framework?

Ethos has absorbed all the responsibility of pricing and deciding whether or not that client should be approved at what price.

binding them on behalf of our carrier partners legally.

So think of it as all functions of the carrier have shifted to Ethos except for the claims process and the investment portfolio management and the designation responsibility as the legal carrier entity.

your underwriting partners are taking the risk.

So how do you make them feel comfortable? Was there a situation ever that, you know, something happened and they didn't fulfill the, you know, because your underwriting was not, they were not comfortable with your underwriting and they didn't pay that life insurance or something like that.

Like, how do you make sure that you are not exposing your partners to a risk because they're going to get hooked with that life insurance policy if your underwriting is not perfect?

We view the carrier partners and ourselves as a shared ecosystem of profitability.

So we will always prioritize their target IRRs and their long-term profitability ahead of our own.

And that's reflected in the client pricing, in our compensation, and just how aggressively we risk manage the business.

So we're constantly looking at mortality and persistency in determining, do we need to ever refine pricing? Do we ever need to update the underwriting rules on a go-forward basis? And we have a lot of auditing programs that go into those two initiatives with carrier partners.

So think of it as just always on risk management to ensure that we're always protecting their IRRs.