We are excited to be investing in Thinksurance, Germany’s leading digital insurance marketplace for commercial lines. The Company has established a crucial position as the infrastructure layer that connects insurers and brokers, and is transforming the purchase of insurance by small and mid-market companies.
Thinksurance was founded by a strong management team led by Florian Brokamp, who saw the opportunity to transform the broker experience in commercial insurance while working at McKinsey. They founded Thinksurance in 2016 and have built the leading marketplace to digitally quote, bind and issue commercial lines policies in Germany.
The market for commercial insurance in Germany is worth €30bn in gross written premiums (GWP) annually. Roughly two-thirds is with small and medium enterprises (SMEs) or mid-market businesses. For insurers, small and mid-market businesses represent attractive risks from an underwriting perspective. By contrast, large enterprises are often able to use their size to negotiate and drive down prices, while loss ratios remain healthier for smaller companies. Consequently while insurers like SME business, brokers can struggle to cover this segment profitability given the time needed to source multiple quotes and provide advice for relatively modest commissions.
An additional challenge SME brokers face is finding carriers to place a risk within a short period of time, partly because insurers’ risk appetites change frequently. An insurer may, for example, seek to underwrite restaurants for general liability but not the accompanying property risk due to its location. Or it may wish to exclude restaurants that also operate as bars or nightclubs. In short, it is virtually impossible for brokers to keep on top of these changing preferences across lines of insurance and industry segments for multiple carriers. Furthermore, insurers normally have their own insurance application forms, forcing the broker to enter the same information multiple times to get multiple competing quotes.
Enter Thinksurance. The Company has built a platform that allows a broker to use a single, digital application for a business and push this out to multiple carriers by harmonising the question set and reducing it to the vital minimum. Moreover, in the case of some carriers, the broker can bind and issue the policy to their client entirely online.
Brokers and carriers have taken to the platform enthusiastically with >75% of brokers in Germany signed up to the platform and >90% of insurers. A broker can take a client through the quoting process digitally: from risk and need assessment, quote generation, all the way through to binding online. Insurers can specify their risk appetite and code their underwriting rules into the platform or connect their internal pricing engine via API. When an application comes in an underwriter can submit follow-up queries or approve risks directly through the platform, removing the traditional process which relies on exchanges of emails and even faxes.
The Thinksurance platform is being used by insurance companies to replace or complement their own distribution technology. Some of the largest insurers in Europe are using Thinksurance to create end-to-end digital journeys for both third party brokers and tied agents.
We believe Thinksurance’s proposition is transformative to the commercial insurance industry in Germany. We were previously investors in Bold Penguin, a similar SME commercial insurance exchange in the US market, which was acquired by American Family Insurance in February 2021. In that successful transaction, we had a front-row seat to the value creation that is possible when buyers and sellers of risk can be united on a digital platform. We believe Thinksurance will play a similar role in Germany’s insurance market – and the team will soon set their sights on selected other countries in Europe.