Companies must insure themselves against certain risks specific to industries they operate in. For example, a retailer might need to insure itself for product liability in case a product malfunctions and causes an injury. Similarly, a hospital needs to insure itself in case a care provider makes a wrong decision that hurts a patient. While a horizontal solution would encompass insurance that's common to all companies in all industries, an insurance vertical consists of solutions that are specific to industries such as retail, health care and manufacturing.

The Importance of Insurance Verticals

Developing expertise in an insurance vertical is important for an insurance company and its customers. The customer wants to be confident that its insurance provider has enough experience working with other companies in the industry to include potential liabilities that might not be common in any other vertical market. Insurance companies assess risk and set rates based on their experience with similar organizations in the same industry. They must understand the risks inherent in an industry and set rates that are sufficient to protect the carrier as well as competitive with other insurance companies.