Bitesize InsurTech: Liimex
April 28, 2017 Chris Sandilands
Liimex is a digitally-enabled German commercial lines broker. Its point of differentiation is to provide SMEs with digitally-driven advice not only at point of sale but throughout the policy lifecycle.
This is an early stage company (founded in 2016), which allows Bitesize InsurTech to segue nicely from April (which was German startup month) to May (which is SME broking month).
The company has just raised funding from Picus Capital. The “go live” is scheduled for the summer.
What problems are Liimex solving?
Founders Benno von Buchwaldt and Christian van der Bosch are basing their business on two hypotheses
- SMEs find the process of buying and managing insurance confusing and old-fashioned, often not knowing if they are adequately insured. They estimate that two thirds of German SMEs have outdated policies or crucial coverage gaps.
- Other industries and companies as complex as commercial insurance brokers, which the Founders reviewed during their time as private equity executives, have successfully digitized.
What is their solution?
Liimex describe their business as a “software-enabled service provider”. In other words, this is a broker that will have a great software platform behind it, rather than a digital business per se.
Liimex’s technology flags areas in which customers have insufficient cover. This is a dynamic process that evolves as the customer’s situation changes. (This is not dissimilar to the “insurance concierge” concept that we are seeing emerge in the InsurTech world, for example Brolly.)
However, there is still significant manual intervention. Output from the software is used by Liimex’s “experts” to recommend improved coverage options to their clients; these recommendations can be accepted in one click.
The Oxbow Partners view
Travelers’ recent acquisition of Simply Business for £400m (or 50x EBITDA) has brought SME distribution sharply into focus. The hypothesis is that micro SMEs should, as insurance buyers, behave a lot like personal lines customers yet internet penetration is much lower. Consider, for example, that Simply Business –the leading online broker for SME globally, has GWP of only around £100m – a fraction of the total UK micro SME market often valued at around £4bn.
It is, therefore, no surprise that we are seeing online brokers emerging in Europe, the USA and Australia/NZ.
But Simply Business also illustrates the challenges of the segment. Growth has been steady rather than exponential over the years – despite many commentators predicting “hypergrowth” in the early 2010s when SME online first emerged in the UK.
In our opinion, people overestimate the similarities between the SME and personal lines customer. In short, SMEs are much more risk conscious than one would expect. They want to know that they are covered for existential threats, and therefore often say in focus groups that they want to discuss their cover with a human being. It’s no coincidence, therefore, that Simply Business has a large contact centre despite being a digital business.
It feels like Liimex is focusing on the right things: building a technology-enabled business rather than a purely digital broker and helping SMEs understand their coverage better.
The dynamic to watch will be the speed at which they can encourage switching amongst SMEs vs. their business cash burn rate. It could be a long journey to scale.