Last week, SingularCover, a two-year-old Barcelona-based insurtech startup, won the virtual fintech competition of South Summit, Spain's biggest startup event. The win guarantees SingularCover a spot alongside 99 other companies at the physical event this October in Madrid.
SingularCover beat six other finalists, which were selected from 160 international applicants. The competition’s expert panel of judges comprised tech and finance executives from companies such as Visa, Deutsche Bank and Nasdaq. They praised the strong growth potential of SingularCover’s target market, namely the previously little catered-for SMEs and self-employed, and its technology, whose AI capabilities allow the creation of products completely tailored to a user's business.
In less than 10 months since its formal launch in 2019, SingularCover has already gained over 1,600 SME customers across Spain. It now aims to become the biggest insurtech in south-western Europe and in Latin America, where the company has identified a lack of digital solutions and traditional insurance models, as well as unexploited total available markets of 25m–30m customers.
One year ago, the startup attracted €1.8m in seed funding from Silicon Valley-based Global Founders Capital, which once invested in Facebook and LinkedIn, and from prolific Spanish investor Antai Venture Builder, backer of Glovo and Wallapop.
There “exists a clear opportunity for improving the process of contracting insurance for SMEs and the self-employed. SingularCover is clearly positioned to provide this successfully,” Global Founders' Partner Christopher Priebe commented then.
In his pitch during the Virtual South Summit, SingularCover's CEO and co-founder Rafael González Montejano said that in insurtech, “quite clearly, SMEs are one of the most underserved segments in most economies, but ironically also represent a sizeable part of those markets.”
While other segments such household and travel insurance have largely moved online, the inability to provide a one-size-fits-all model for business insurance, and the complexity of catering to so many verticals and their differing characteristics and assets, has left the SME market less disrupted.
Underserved demand
The CEO said that in Spain there were 3.2m SMEs and self-employed people, with a 70% penetration rate, leaving an estimated €4bn–8bn in total available market. He argued that the offline model applied to date was “old-fashioned and not applicable to SMEs,” hence many simply didn't contract corporate insurance.
On the supply side, he noted that traditional insurers have not found the SME market attractive. There is a “lack of investment incentives for traditional insurance companies in a segment only worth 10% of its business," he said. Brokers also had little incentive to cater to the SME sector, which requires "a high level of specialization and a lot of effort in relation to its low commission rate.”
SingularCover has managed to lower expenses by digitizing underwriting and pricing, automating claims and using AI to tailor the quote. It can therefore provide “a full solution at a much lower cost and with much better customer experience,” according to the CEO.
The startup's pricing structure has three different tariff bands ranging from around €15 per month for the smallest companies and the self-employed, to tailor-made packages for each sector and the most common professions within each vertical.
According to the clients' requirements, the company selects elements of coverage from major Spanish insurance companies including Liberty Insurance, Caser, Generali, Allianz and Fiatc, which SingularCover counts among its partners and whose services it brokers. The company told CompassList that it brokers products from companies according to their area of expertise or competitiveness, for example using Liberty for the construction sector.
At the time of its seed funding, González Montejano commented, “We understand from our own experience that not all businesses have €500 or €700 at the moment, so we facilitate monthly payments without increasing that price.” Monthly payments with no hidden charges could be attractive to potential clients at a time of reduced cashflow, such as in the aftermath of the Covid-19 pandemic.
Users instantly receive an online quote with three different coverage plans upon answering a few questions that include: the business’ market vertical, the profession within that vertical, the company’s income and whether third-party civil responsibility insurance is required in addition to a personal workplace; and, if so, its size and characteristics.
A new client base?
Available subscriptions include a basic coverage model offering civil responsibility, a pro model covering theft and employer coverage, and a total coverage plan including materials insurance. Unlike traditional brokers, SingularCover does not attempt to upsell or ask questions that potential customers cannot readily answer. It also offers customers the possibility to cancel at any time.
SingularCover additionally provides telephone quotes in the case of less common verticals and professions. “We are not going to sell things that the user doesn't need, and as we have agreements with almost all the insurers, we can ensure that the user gets the best prices and always with no extra charges,” said González Montejano.
It is also notable that the company seeks to inform its clients of useful insurance-related matters via its blog and in its client assistance. “A full 85% of entrepreneurs don't know what type of risks they need to cover to ensure their business is covered,” he said.
González Montejano himself is a former manager at both Hapag Lloyds Insurance and Affionion. He decided to found SingularCover in mid-2019 with fellow online and offline entrepreneur Christian Hoffmann, now COO, after encountering similar problems and bad service.
“We have all tried to find the best coverage for our business and have always been left with the feeling that you are either served too quickly or that it doesn't matter if you are a bakery or a shoe store,” González Montejano said. “You are left with doubt as to whether the investment in which you placed so much hope, money and effort, is really protected.”
Besides covering existing demand for business insurance, SingularCover may actually be addressing new demographic groups who do not currently use traditional insurance models. The company is predominantly signing up millennials and 60% of its client base is female. In a 2018 study, only 14.2% of Spanish SME directors were women.
The next step for SingularCover besides expansion into Italy and the largest Latin American markets of Brazil, Mexico and Colombia is to offer life insurance and accident cover.
