LARP – Revenue infrastructure for serious founders

You should read up on what a risk retention group is and how it works. To me, it's even worse than you think.

> For all we know startups are buying overpriced insurance from Corgi because they have a better brand...

Is this tongue in cheek?

> ...and are easier to deal with than Berkshire's army of underwriters.

Or they provide "insurance" for things that the world's most experienced insurers don't want to touch, or won't touch without a lot of underwriting. Which in itself is a red flag.

Yes, insurance is mostly a box ticking exercise for most startups. My concern with Corgi is that even after accounting for how unimportant insurance is to startups, they are so blasé about their underwriting that for the small number of startups that will eventually need the protection insurance offers, there is a substantial amount of exposure to Corgi going under.

A typical startup needs D&O insurance to satisfy their investors -> the startup approaches Corgi -> Corgi's sales team negotiate more comprehensive insurance that covers many more of the risks that the startup faces that would not be insurable by traditional underwriting -> the startup uses their insurance coverage to justify risk taking.

Historically, the type of risks startups took were of little legal consequence but that has changed with AI. The social and political appetite for taking down AI companies is only getting stronger. We're already seeing OpenAI and Character.AI subject to multiple lawsuits over teenage user suicide.

All it takes is a single large judgement against a single Corgi insured company to liquidate the whole Risk Retention Group and then any ongoing litigation that Corgi was covering, is suddenly uncovered, and uninsurable elsewhere. The potential fallout from a startup losing coverage mid-litigation could be substantial when that litigation is government sponsored, the corporate veil isn't very useful when a government is looking to make an example of a company.

Multiple Corgi customers are already involved in expensive litigation and while I believe that is not covered by their Corgi policies because it predates Corgi's launch, it is a sign that expensive litigation is well within the realms of possibility for their customers.

Your draft’s statement that “Corgi will help you share that risk,” combined with the question whether customers understand the risk of other companies in the group, does not merely describe RRGs in the abstract. It falsely implies that Corgi leaves customers exposed to open ended financial liability for other insureds. That implication is defamatory and false. RRGs are regulated insurance carriers subject to financial, reserve, governance, and regulatory requirements. They are not informal risk sharing clubs where policyholders unknowingly become responsible for each other’s balance sheets.

The RRG structure unique to Corgi. Major insurance groups use different insurer structures for different classes of risk because different risks are best served by different structures. Berkshire Hathaway, which the draft itself invokes, has affiliated insurance operations involving Risk Retention Groups in specialty liability markets, including medical and legal professional liability. That underscores the point: RRGs are a widely recognized insurance structure for specialty liability lines, and allow insurers to provide more tailored coverage options rather than issuing a generic policy.

The draft’s statement that Corgi “innovated with AI in a regulated industry by cutting corners” is also false and defamatory. Corgi raised millions pre-revenue and spent nearly two years building and obtaining regulatory approvals for its insurance operations, including approvals and requirements relating to reserves, pricing, liquidity, governance, and compliance. That is the opposite of “cutting corners.” Any allegation that Corgi used AI to evade regulatory approval, underwriting standards, reserve requirements, pricing controls, liquidity controls, or other compliance obligations is false.

Any article suggesting otherwise, including by implying that Corgi misleads customers, conceals the RRG structure, exposes policyholders to undisclosed balance-sheet risk, or uses RRGs and AI to evade proper underwriting or regulatory obligations, is false and highly damaging.

To be clear, if you publish these false statements or defamatory implications, Corgi will sue you personally and will pursue all available claims and remedies against you and any other responsible parties. Corgi has enforced its rights before and will do so again. You should not mistake this for an abstract legal reservation."

From their head of legal.