What if I told you it could be social, fair and reasonable? German P2P insurance pioneer Friendsurance has indeed made it its mission to achieve exactly that. Co-founder and managing director Tim Kunde shared with us how he and his team are going after insurance innovation.
This article is part of Your Allies’s entrepreneurship series. We profile entrepreneurs and their business concepts and give our view on their marketing approach. There’s always something to learn from real startup and business growth experience!
What was your motivation to set up Friendsurance and what mission have you set yourself?
“Our founding team realized that despite the way social networks have changed our lives, the benefits of the existing social infrastructure had not entered the insurance market at all. However, at its core insurance should be (and hundreds of years ago, was) a very social product were families and village communities used to help each other out in times of need. So our goal was to recreate this system of mutual support with modern technology and make insurance social, fair and reasonable again.”
Your Allies says… Friendsurance has applied the peer-to-peer principle to an industry that seems to have become alienated from its original idea (which is not dissimilar at all to what happened in the banking industry), with intermediaries taking the original role of the community. Germany is a prime market for insurance with consumers prone to German angst and taking out a higher than average amount of contracts per head than most other countries. Kudos to Friendsurance for tackling this complex but promising market.
What makes Friendsurance unique, unlike any direct and indirect competitors?
“Friendsurance has a very unique approach: Nobody else combines individual coverage from leading insurance partners with the possibility of obtaining back up to 50% of your annual premiums if you connect with your network and stay claim free. An integration of your immediate network that deeply into an insurance product exists nowhere else in the market.”
Your Allies says… And as far as we’re aware no such insurance offering exists either in the German market or elsewhere. Insurance cashback may not be a new thing to the UK but with Friendsurance’s “social insurance” offering the people connecting in groups to take out a contract seem to behave differently: Friendsurance experiences 40% fewer damage events on average than conventional insurers. Being able to offer such a tangible benefit as a first mover and still only player in a new niche market is the strongest combination of differentiating factors we’ve come across in the P2P space so far!
What is your business strategy to accomplish your mission?
“We want to show our customers that insurance can be fair, simple and transparent, and by doing so bridge the gap of trust that affects the insurance industry as a whole. We reach out to our target group of digital natives in informal language and make sure all customers benefit from Friendsurance in a symmetrical way. Our customers experience that they are not being sold to but they are always in the driver seat when choosing coverage that is right for them. And they thank us with unforced referral rates that are unheard of in the industry.”
Your Allies says… A novelty in the insurance sector, Friendsurance made the good choice to communicate with their users primarily via social media in a friendly (pun intended) tonality emphasising fairness and transparency. These factors as well as their sales approach are almost the opposite of the one people are used to from the traditional insurance industry. As with many peer-to-peer businesses the challenge will be to keep this approach up with consistency. Businesses who’ve been smart enough to create their own market will know it’s only a matter of time before a challenger appears. Being ready for that eventuality is a must.
What marketing strategy have you put in place to reach your business objectives?
“We work with a hypothesis- and test-driven approach to make sure we are meeting our customers’ needs with our product. We learned a lot in various iterations and we were able to bring the worlds of “insurance” and “social media” together. Since we are an online platform, we also use the classical online marketing channels such as SEO, SEA and Affiliate Partnerships. Most interesting from a distribution perspective is that we also grow virally, as there is a long term built-in benefit for customers to invite friends or family to build an insurance network and save on premiums.”
Your Allies says… Learning about and from their customers is something commonly regarded as a strength and competitive advantage of startups, an area they excel in compared to their traditional industry rivals. We advocate testing for marketing the same way, and again the startup culture and flexibility are the perfect breeding ground for targeted, and sometimes out-of-the-ordinary approaches to bringing an offer to the market with success. However, Friendsurance’s inherent “viral” product factor surely is a welcome boost to their marketing efforts. They’ve been active on the product side extending their range of insurance from home contents, personal liability and legal expenses insurance adding a competitive mobile phone insurance just recently. There’s still potential to increase fan and follower engagement on social media platforms – another opportunity for Friendsurance to capitalise on.
What was your biggest challenge in developing Friendsurance so far and how did you overcome it?
“The biggest challenge was – besides finding good investors – not only to convince customers of our model but also insurance partners. It was a process that needed a lot of time and effort for us to succeed. But we constantly listen to the feedback we get from our users and partners and we improve our product as well as the usability of our website. It is a continuous development that brings us closer to our customers and helps us to get better. Making Friendsurance as easy and usable as possible is thus a challenge we passionately work on each day.”
Your Allies says… Establishing a new niche market can simultaneously create the need for a lot of education and trust building, just like Friendsurance had to find. This is where startups have to juggle between the available funding – a challenge in itself – and the time and money it takes to convince enough users and the right partners to scale up while working on the product offer and platform. Making that customer focus their daily challenge should put Friendsurance in a good position to continue disrupting the insurance market.
We wish them lots of growth and success!
If you’re interested in innovation in the insurance industry you might like reading about Bought by Many who disrupt the way insurance products are developed using the power of the crowd.
Ready for even more inspiration from real-life business experience? Check out the complete entrepreneurship series!
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