Actuaries in Nontraditional Roles

By Minyu Cao, ASA, CERA

Laura Bennett, FSA, Co-founder and CEO of Embrace Pet Insurance, has created a new application of actuarial science in pet insurance. In fact, she was the first actuary to develop a risk-based pricing model for cats and dogs. Today, her company insures more than 60,000 cats and dogs in the  US and has about $32 million in annualized premiums.

To learn more about her journey, Laura and I had breakfast together at the 2015 SOA Annual Meeting. Laura is a typical actuary, intelligent, determined, and data-oriented and it was easy to see why she has been successful.  She is also very personal, straightforward and inspiring.

As Laura herself puts it, “There were tons of times I didn’t think I could make it. It was the determination and some good luck [that guided me through], I suppose. But you make most of the luck that comes your way.”

Let’s unveil her story.

What does your company do and why it is different from others in the same field?

The purpose of Embrace Pet Insurance is to extend cats’ and dogs’ lives. We do that by providing the best pet health insurance experience to pet owners who never want to have to make a choice between their family pet and their finances. Embrace provides a flexible and comprehensive pet insurance product that covers accidents, illnesses, and even wellness care for cats and dogs.

How did you start your business in pet insurance?

I worked at Canada Life in Toronto and Dublin for 12 years and gained experience in a wide variety of actuarial functions. One day I asked myself, “What do I really want to do with my career?” Surprisingly enough, I found myself interested in running a company but I couldn’t see myself pursuing this goal in a traditional insurance environment. So I decided I needed to leave insurance and find something that suited my nature more.

To that end, I started the MBA program at the Wharton School of Business at the University of Pennsylvania in 2001. Right at the beginning of the program, one of my friend’s cat got sick and she spent over $5,000 on the medical bills. Since she is from the UK, she said to herself that she should have had pet insurance because it was very common in the UK. When she looked at pet insurance in the US, she found that there were only three companies offering pet insurance at the time, and the coverage and experience were very poor.

Long story short, we decided to put together a pet insurance business plan for the Wharton Business Plan Competition. As I became involved in this project, I realized that pet insurance was the perfect place for me to expand my skills and run a company. It was an area of insurance that never had actuarial science applied to it, the products were naively priced, and the product design was very poor, leaving me ample room to develop and improve on this product. In 2003, we won the Wharton Business Plan Competition and when we graduated from the MBA program, my business partner Alex Krooglik and I decided to take this idea further and founded Embrace.

What is unique about your company?

We are very data driven. Typically, MGAs (Managing General Agents) focus on writing a lot of business because that is what their commission is based on, but we’ve always been interested in building all aspects of the company, from sales to efficiencies to appropriate loss ratio. We partner with our insurance underwriter, but we drive the pricing of our products. Because I am an actuary, I can’t help myself wanting my loss ratio to meet the target. In fact, I was actually the one pushing the insurance company to implement our regular rate increases, which is almost unheard of for an MGA.

What is the most challenging part of starting a company?

One of the most challenging parts is to raise venture capital funding. We had to demonstrate our successes but in order to do that, we had to work out what didn’t work at first. It’s easy to have ideas about how you can market your product, but you can’t make people make a purchase. So you have to try a lot of different marketing approaches, many of which don’t work, until you finally find the one that does work and focus on that.

We finally found that working with veterinarians and having them influence their clients to purchase pet insurance is an effective way to market our products. Therefore, we used our success stories with veterinarians to convince venture investors to invest in us.

How has your background as an actuary impacted your business?

I wouldn’t think of myself heading up Embrace if I didn’t have the actuarial background. Having the actuarial background and the credential helped me establish credibility for funding and partnerships. The technical skills actuaries possess are also a valuable asset. Since we are a small company without the modelling resources of large companies, I built models to forecast our financials from scratch in Excel. We have also built a risk-based pricing model using generalized linear modelling principles.

How have the exams benefited you in what you are doing in your professional work?

When I first started studying for the exams, I didn’t have much of a study method. Then a mentor told me to count my study hours. I found it a great way to track how much I had studied and how much I could take off from studying. After I learnt to track my hours and to be disciplined in what I studied, I passed every single exam on the first try. The discipline of getting down and studying when you don’t want to is the biggest takeaway I learned from the exams. Frankly, that’s what entrepreneurship is all about – you often have to do things that you don’t want to do when you don’t want to do them, but you are the only person who can do them.

Your advice to the SOA candidates.

If you want to do it, do it right; don’t waste your time. Be committed to the exams and get through them as fast as you can. When you start working, work will always come in the way of your studying. But your peers and your boss will only remember that you failed your exam. They will not remember that you stayed late for work. Persevere and stay disciplined and you’ll be done in no time, even if it feels like it takes forever while you are going through it.

Minyu Cao is a member of the SOA Candidate Connect Advisory Group.  If you are interested in serving on this group or are interested in writing for the Candidate Connect newsletter, contact Xiaoyan Anderson at