Startups, a top market for insurers
Published on 19 de April de 2022
2021 has been the year of entrepreneurship and, without a doubt, the pandemic has been a crucial factor in it. According to Techcrunch, the global startup market has raised an all-time high of 158 billion in the last quarter. Every day two startups evolve into unicorns.
Considering this data is natural that investors are looking into them carefully. Among sectors, tech startups are the favorite ones for investors. But business angels are not the only ones. In April, Carrefour, the eighth-largest retailer in the world by revenue, which operates a chain of hypermarkets, groceries stores and convenience stores, announced the launching of a fund to invest in digital retail startups.
As small business owners, startups founders manage a lot at the same time. They are real multi-taskers and, besides the operational tasks, they have to bring passion to their project and motivate their team. Therefore, is common that they don’t have business insurance.
Why is important to have insurance for startups?
· A different structure, same old risks
Startups are different from the traditional businesses, but they also have risks to face. In addition to the traditional risks such as breakdowns, theft or accidents at work, etc. Tech companies face risks intrinsic to online businesses like data breaches or cyber-attack.
· The more you grow, the more are your risks
Growth is not exclusive to startups but, they are the masters of it. Because of that, is natural to think about their risk exposure when they become bigger. Depending on the type of business, the number of employees, if they work remotely or not… they will be exposed to different types of risks.
· Data is the new gold
The fact that data is the most valuable asset for a company is not the latest news anymore. Any business needs to protect their data, especially customers’ information. The consequences of a cyber-attack can be devastating for a company, especially tech ones. Not to mention the expenses associated to solve it.
· Insurance attracts investors and partners
Investors are aware of startups’ risks and often they require them to have insurance. In this sense, startups that are already insured demonstrate a higher degree of maturity and professionalism. Investors understand that their founders are aware of the risks they face and, far from ignoring them, they address them. So having insurance will be critical for an investor’s decision.
But not only investors appreciate the fact that a startup has insurance, some companies also require insurance before closing a partnership or signing a contract. For example, if the startup sells consumer goods via Amazon, usually they will de be asked for insurance.
The best insurance for a startup.
One of the most difficult and smart decisions for a startup is to choose insurance. Sometimes they have questions like: “What type of insurance does my startup really need?” or “What risks should cover my insurance?” etc. Here the big deal for insurers is to listen to their needs and get to know well their structure. This way, they will be able to customize and offer the best insurance product for them.
But, how to really know better a startup? Open Data is the answer.
During the last years, more and more insurance companies are using technology to improve their commercial processes. Using the right technology, insurers can automate procesess as underwriting. Moreover, having accurate data enable insurers to offer the best product and pricing for each startup.
At Wenalyze, we help insurers to automate processes with our fast-quoting underwriting system based on Open Data technologies and AI.
