Every year, over 400 million certificates of insurance (COIs) are issued in business transactions. Triangle-based startup Certificial is looking to manage them all.
Certifical CEO Pete Teresi has long been aware of the problems surrounding certificates of insurance dating back to the nearly 14 years he spent at insurance industry non-profit ACORD from 2002-2016, including as CTO. In the mid-2010s he began brainstorming what would eventually become Certificial with his future co-founder, Holly Springs resident Rob Blanchette.
Teresi’s company was a client of Blanchette, who worked in process transformation—making processes faster, better and cheaper. For certificates of insurance, Teresi’s proto-Certificial ideas seemed to do just that.
“When I met Pete six or seven years ago and he floated the concept of Certificial by me, it sounded like a great idea,” Blanchette said. “He really pitched all the value it creates to the insurance industry, and we hypothesized about what the value was to all other industries.”
Bootstrapped until its official launch in January 2021, Certificial received funding from multiple VC firms, including Triangle-based Cofounders Capital, in its mid-2021 Series A round.
Certificial looks to solve problems in the sharing and use of COIs—documents containing details of an insurance policy that prove in B2B transactions that each party has insurance—with a continuously updated, API-driven COI platform.
As “point-in-time” documents, traditional COIs operate in a way that is increasingly backwards in an ever-changing digital world. Even in 2022 as business is increasingly conducted online, COIs are often sent over fax, over email as PDFs or even as paper letters sent via snail mail.
Says Teresi, “When you think about B2B relationships and the life cycle of those businesses, they’re not necessarily point-in-time—but the certificate of insurance is. The problem with that is that insurance is not. Insurance can change at any moment. Coverage can lapse, claims can be processed—there’s a lot that can go on.”
By continuously monitoring insurance information, Certifical helps businesses make decisions based on updates down to a minute’s accuracy, not a year’s. This improves day-to-day workflows, warns companies of unknowingly getting involved in uninsured activities and helps prevent fraud.
Certificial looks to reach all stakeholders in the COI process—including agents, insurers, brokers and requesters—with its software.
Certificial’s software can allow businesses to set minimum standards of insurance and can send an alert if a supplier’s insurance lapses, is canceled or is reduced below the minimum standard. This allows businesses to reduce risk that many decision-makers or supply-chain managers may not have known was there.
“We’ve got examples where someone’s card access would get shut off automatically because they went deficient in insurance,” Teresi said. “That’s a connection that normally would never be made.”
On the other side of transactions, insurance suppliers can instantly send out updated COIs to clients with Certificial’s streamlined system, and can know immediately if their insurance is compliant with requesters’ minimum requirements. For insurance suppliers, Certificial is completely free.
The platform also benefits insurance agents and brokers, who can save time by allowing clients to issue COIs on-demand and by allowing single-click provision of COI updates, distributions, cancellations and reinstatement notices.
Certificial’s digital-first policy stretches beyond its business offerings and into its business practices—its fully remote workforce and its financers stretch from coast to coast, with Blanchette in the Triangle and Teresi in New Jersey. (The startup recently moved its official, legal HQ to the Triangle.)
What started as a business decision of necessity due to the pandemic has allowed the company to expand its talent pool, especially into a generation that fits Certificial’s future-focus: Gen Z.
“We’re building a Gen Z company with a baby boomer audience,” Blanchette said. “Most of the people in the insurance industry have been in it for a while, and they’re used to faxing these documents that ACORD had come out with in the 70s. It hasn’t been innovated too much. But I think that’s why we’ve been so successful. We’re just taking a wildly different approach.”
Certificial is planning a big year in 2023, looking to expand its full-time team of 15 to offload some of Blanchette and Teresi’s “many hats.” Certificial is also looking to expand its “Smart COI Network” to more partners, be they software partners, agency management systems, insurance, carriers, MGAs (managing general agents), industry associations or government and regulatory bodies.
From 2021 to 2022, Certificial has experienced a 100% revenue increase growth, and in 2023 Certificial is expecting hypergrowth of over 200%.
Their goals are ambitious, and they’ve got a lot of hard work ahead of them, Blanchette knows—but ambition and hard work is what it takes to manage 400 million COIs.