Intelligent Risk Coverage for SMBs

"Why did the insurance broker, the car salesman, and the former DJ start a band together? Because they knew how to cover all the 'premium' hits while 'insuring' everyone had a 'smooth ride' on the dance floor!" (This joke was written by ChatGPT ;) )

A much better use case for modern technologies than writing jokes that probably not even VCs find funny any more is bridging the tech gap for small and medium-sized businesses. In fact, it is kind of humorous to see how much untapped potential in the small and medium-sized business (SMB) insurance market exists. SMBs account for 99% of businesses in the EU, yet they have historically been underserved, particularly so when it comes to insurance solutions tailored to their needs. In this blog post, we'll delve into the challenges faced by SMBs in accessing suitable insurance coverage, the immense opportunities in the insurtech sector, and why we decided to invest in SureIn - a forward-thinking company revolutionizing the way SMBs manage their risks.

The SMB Insurance Gap

The high degree of diversity among SMBs has been one of the primary reasons why incumbents have historically overlooked this market segment. Heterogeneity among SMBs is vast, ranging from retail-like businesses with quick decision-making practices and relatively straightforward insurance needs to mid-sized corporates with highly specialized demands. This "stuck in the middle" situation has left many SMBs underserved, as traditional insurance products targeting enterprise customers are often too complex and as a result may involve lengthy underwriting processes, extensive paperwork, and rigid structures that are impractical for smaller businesses. On the other hand, products and services aimed at retail customers lack the depth and coverage needed to adequately protect SMBs, leaving them exposed to various risks.

The SMB insurance gap has implications for both, insurance companies and SMBs. On one side, insurers are missing out on tapping into a potentially massive market with significant revenue-generating potential. According to estimates, the SMB insurance market is worth billions, and yet a substantial portion of it remains untapped due to the lack of suitable solutions. According to McKinsey & Company, the SMB insurance market in the United States alone represents a $100 billion opportunity, with only a fraction of it currently being addressed. In Europe, the SMB insurance market exhibits similar untapped potential. With millions of small and medium-sized businesses spread across the region, the demand for specialized insurance solutions is substantial. However, the lack of modern, tech-driven platforms and tailored products has prevented insurers from effectively penetrating this segment. According to McKinsey & Company again, the untapped potential in Germany alone lies north of €2 billion.

This gap stands in contrast to the increasing importance insurance- and risk-related themes play in SMB owners’ minds. COVID-19 and mandated insurance requirements in certain countries have compelled business owners to seek coverage for risks such as business interruption and liability. As a result, even the smallest of SMBs are becoming increasingly aware of the need for insurance, presenting a ripe opportunity for insurers willing to adapt to this evolving landscape. As awareness grows, the demand for tailored insurance products and services is set to soar.

Putting the Tech in InsurTech – The opportunity for an Insurance Operating System tailored to the SMB

As the backbone of economies worldwide, SMBs play a crucial role in driving growth and innovation. Yet, they face unique challenges when it comes to obtaining suitable insurance coverage. To address these pain points and cater to the specific needs of SMBs, InsurTechs have a tremendous opportunity to leverage technology.

The insurance operating system of the future goes beyond a mere policy; it serves as a comprehensive tool that empowers SMBs to take control of their risk coverage. By providing a transparent, easy-to-navigate platform, business owners gain the independence to make informed decisions about their insurance needs. The system acts as a reliable partner, supporting SMBs in safeguarding their business and embracing opportunities for growth.

Why we invested in SureIn

SureIn caught our attention for several reasons, making it a clear choice for an investment in the insurtech space. One of the standout aspects of SureIn is its team, which brings a multitude of different perspectives to the table. Daniel, with his extensive insurance expertise adds industry knowledge. Max's deep-rooted sales and operations expertise, garnered from various roles in German startups, fills a much-needed gap in the team. The product team, led by David Schara, previously building products in much more creative industries, an outsider to the insurance industry, brings a refreshing breath of fresh air, creativity and innovation into this sometimes-outdated sector.

When we first encountered SureIn, they were already active in the gastronomy vertical, working closely with numerous restaurants, bakeries, and ice cream shops. Their impressive growth rates, quasi non-existent churn rates, and promising LTV:CAC ratios showcased their ability to deliver significant value to the insurance market. However, what truly impressed us was the resounding positive feedback from their existing customers. One loyal customer shared, "Only after I migrated all my insurance policies to SureIn, I was confident that my business was sufficiently covered. It simply makes sense to have all this information in one place and not having to browse across dusty old paper folders, to then have endless phone calls and send a fax when I want to file a claim."

SureIn's verticalized approach makes perfect sense in the insurance landscape, enabling them to build expert status, deep domain knowledge, and deliver exceptional content tailored to specific industries. By focusing on vertical markets such as gastronomy, they can fully understand the unique needs and challenges faced by businesses in these sectors, ensuring that their offering is precisely tailored to address these pain points.

Further, SureIn's potential for further growth seems immense. The startup approaches its 1000th customer, having recently expanded its presence across multiple customer verticals. The broker model SureIn currently leverages not only allows to scale up quicky, it also offers significant room for further growth, and enables the company to accumulate vast amounts of valuable data. This data-driven approach positions SureIn to cater to the escalating demand for specialized SMB insurance products.

SureIn and xdeck

Our journey with SureIn began even before our investment, as we had the privilege of collaborating with the team in the xdeck accelerator. During this time, SureIn's already functional product, but especially its well-rounded team not only impressed us but also resonated with many of the corporate and entrepreneurial partners of our network. Introductions made during this period have already led to initial partnership pilots and even attracted Business Angel investments.

For us, it was a natural progression to deepen our ties and to continue offering operational support, leveraging the expertise of our platform setup to assist SureIn in navigating the insurtech landscape.

"When we raised our pre-seed round, it only made sense to deepen our collaboration with xdeck as we already knew what kind of investor they will be. The xdeck accelerator already helped us during the early days of SureIn. Having the team now also as an active investor allows us to continue gaining operational support.", says Daniel Dierkes, Co-Founder and CEO of SureIn.