Insurtechs: Leading Digital Transformation in the Insurance sector

The insurance industry has not seen much innovation over the last few decades. The few innovations on the market have not come from the big insurance companies, but from small Insurtechs (Insur for insurance and tech for technology) offering new approaches to industry problems.

Insurtech as response to the lack of innovation and user-centricity

Starting as a sub category of Fintech, Insurtech today is a category of its own. In 2015 alone, more than USD 800 million was invested in Insurtech start-ups. In 2016, the investment will be even higher. We are about to witness the start of an enormous revolution in the insurance industry.

Within the Insurtech universe so far, six segments have been established: Contract Management/Brokerage, Peer-to-Peer Insurance, Spot Insurance, eCommerce Insurance, Health Insurance and Usage Driven Insurance. Insurtech companies have one thing in common: the focus is on the consumer. Digitalisation is just a tool to make it happen. So far, the user experience in the traditional insurance industry has been largely unsatisfactory. Insurtech seeks to address that.

First-mover Friendsurance

Friendsurance was one of the first start-ups to change the insurance market. In 2010, the Berlin-based start-up launched the first peer-to-peer insurance. The idea was inspired by insurance in its original form, when small groups of people such as village communities supported each other in the event of a loss. This was easy and efficient, but the extent of coverage was limited. Today, big insurance companies can cover claims of any amount, but marketing, administration and fraud generate high costs. Against this backdrop, Friendsurance developed a peer-to-peer insurance model that incorporates smaller groups into bigger insurance pools and rewards claim-free years with a cash-back bonus – ie a claims-free bonus. This is how insurance becomes more affordable and fair.

The business model: Sharing economy applied to insurance

Based on a sharing economy approach, policy owners with the same insurance type get together online in small groups. To get access to the claims-free bonus, Friendsurance adjusts your insurance contract. For this purpose, a deductible is added in your contract or your existing deductible is increased. Compared to just having an insurance rate with a high deductible on your own, you enjoy a huge advantage with Friendsurance: in the event of a claim, you do not have to carry the deductible alone and still benefit from low fees – that is because higher deductibles cause lower insurance fees. The difference between the old and the new fee goes straight into the cashback pool. If there are none or just a few claims, everyone gets back a share from the cashback pool in January of the following year. In case of a claim, the damage is paid out of the pool. If claims are higher than the deductible, the standard insurance company steps in. In case there is insufficient money left in the pool to cover a claim, a stop-loss insurance covers the rest. As a result, policy owners always enjoy full coverage and will not incur any additional costs.


Today Friendsurance has a six-digit number of customers, which is the size of a middle-sized German insurance company. So far, more than 80% of users have received some of their insurance fees back. In the property insurance line, the average cashback was 33% of the paid insurance fees.

The claims-free bonus has already been awarded several times: In 2015, Friendsurance was declared to be one of the best digital innovations and received the UN World Summit Award. In addition, Friendsurance was listed as an Emerging Star in the global Fintech 100 list by KPMG and H2 Ventures.


Currently, the claims-free bonus is available on a range of retail products in Germany: private liability, home contents, car, home and legal expenses insurance. Users looking for new insurance coverage can find a range of different offers on The contract they buy will already have the Friendsurance concept built in, enabling them to receive cashback each year. Moreover, the concept can also be added to existing contracts very easily, creating the most convenient way of saving insurance fees – without any change in coverage, insurance fee or provider.

Cooperation with insurance companies

As Friendsurance's business model was completely new, it took some time to convince the insurance industry to cooperate with them. The founders had to invest a lot of energy in relationship building – eg it took one year to establish the first partnership with an insurance company. Six years later, Friendsurance operates as an independent insurance broker in the German market with about 70 domestic insurance partners. They profit from increasing customer satisfaction and customer loyalty. At the same time, they benefit from reduced processing costs for small claims and reduced insurance fraud as it provides a clear financial benefit for careful and fair behaviour.

P2P is gaining ground

When Friendsurance launched its peer-to-peer insurance model in 2010, it was unique. Friendsurance spent five years as the only supplier in the market before the British provider Guevara launched a comparable model for car insurance in 2014. Within a few months, 14 more peer-to-peer insurance projects emerged in seven countries: Columbia, France, Great Britain, Netherlands, New Zealand, South Africa and the USA. Now a segment solely for peer-to-peer insurance has established itself within the Insurtech universe – with Friendsurance as segment leader. P2P insurance is not a short-term phenomenon. Friendsurance is expecting that, in the long run, peer-to-peer insurance will replace individual insurance. On its sixth anniversary, Hong Kong-based Horizons Ventures, the private investment arm of Mr. Li Ka-Shing, and others invested USD 15.3 million in Friendsurance. The firm intends to use the fresh capital to grow further in the German market and expand internationally. The first expansion target for 2016 will be Australia.

The insurance industry still deals too much with itself instead of the customer

The main beneficiary of the Insurtech revolution will be the consumer, as Insurtechs will play a substantial part in making insurance more customer friendly in the coming years. According to the “Digital Satisfaction Survey“ by Boston Consulting Group, the insurance industry is ranked number 14 out of 16 industries in terms of customer satisfaction. The insurance industry can learn much from digital companies – especially in terms of customer centricity. Insurtechs work in a very customer-focused way - beginning with the identification of target groups, user tests, up to product iteration.


When traditional market participants see innovation, they often ask themselves, “Will this harm me?”. They rarely think about how to use innovation to create a benefit for their users. They try to protect themselves by using regulation as a barrier to entry, thinking that this “protects” them and no outsider would enter the industry. Regulation in the insurance industry is a reaction to misbehaviour by the traditional players in the industry. By definition, regulation cannot be a problem for user-centric companies.

The reaction of the insurance industry to new innovative companies is revealing as well. The first reaction is, "Will this become dangerous for the traditional players in the industry?" Instead, traditional players should ask themselves, "What can we learn that will help us become more user-centric ourselves?".


Sebastian Herfurth

Managing Director and Co-Founder, Friendsurance

Sebastian Herfurth is a lawyer, entrepreneur and Insurtech specialist. From 1998 to 2006, he studied law in Freiburg, Bonn and Hong Kong as well as Chinese in Beijing. During his legal clerkship from 2007 to 2008, he hunted white-collar criminals at the Department of Public Prosecution in Frankfurt, worked for the Federal Ministry of Economic Cooperation and Development in Berlin and analysed the political and human rights situation in Iran as a member of the German Embassy in Tehran. Eventually he joined the private equity group of the international law firm Freshfields Bruckhaus Deringer in Frankfurt and Hongkong. In 2010, he founded the disruptive Insurtech startup Friendsurance together with his co-founders Tim Kunde and Janis Meyer-Platt. Within six years, the three founders have built up a company with a six-digit number of customers, approximately 70 insurance partners and more than 80 employees. Today, Sebastian Herfurth is responsible for investor relations, insurance cooperations, legal matters, finance, business intelligence and controlling. He is married and lives with his wife and two daughters in Berlin-Mitte.

Eva Genzmer

Head of Corporate Communications, Friendsurance

Eva Genzmer is a PR professional with more than ten years of experience. From 1990 to 2014, she studied communication science in Düsseldorf, Davis/California and Erfurt. From 2004 to 2009, she worked as PR consultant for Ketchum Pleon and fischerAppelt, two of the largest communication agencies in Germany. As PR consultant, she was responsible for diverse clients, among them the German insurance company CosmosDirekt as well as the airlines easyJet and NetJets Europe. After five years on the agency side, she switched to the company side. From 2009 and 2014, she was press spokesperson of Skandia Lebensversicherung, which was part of the international Old Mutual Group at that time. In 2014, she started at Friendsurance and built up the media relations from scratch. Today she is responsible for the communication strategy of Friendsurance in Germany and worldwide. One of her achievements is that Friendsurance was awarded as one of the best innovations by the initiative “Germany – Land of Ideas” in 2015. Eva Genzmer is married and lives with her husband and her daughter in Berlin-Mitte.