Stonestep raises $4 million to provide ‘micro insurance’ service

Stonestep has raised $4 million to offer “micro insurance as a service.”

The Zug, Switzerland-based startup is one of a number of companies trying to disrupt the traditional insurance market. The funding comes from XL Innovate, an insurance tech venture fund.

The company said the financing will allow it to establish its footprint in Asia, beginning in Myanmar, and gives the company access to the global skills and insurance capacity of XL Catlin, a global insurance and reinsurance company. As part of the round, Sarah Street, a director at XL Innovate, will join Stonestep’s board of directors.

Insurance today is optimized for households with tens or hundreds of thousands of dollars in assets. Yet in many emerging markets, household assets often add up to less than $5,000. For the typical middle class in emerging markets, smartphones, appliances, basic legal assistance, and medical care represent steps to a better life. But in most cases, households have no safety net in case of loss. Insuring such events and products, economically and practically, requires a completely new approach, the company said.

Stonestep streamlines the insurance process to offer risk products, often for the very first time, at mass market prices. The company partners with mobile network operators, retailers, and financial service providers that have an existing distribution presence. Working with these partners can reduce infrastructure costs, and it opens the door to insurance services that are accessible to even the most geographically remote or disadvantaged consumer.

Stonestep’s next generation insurance platform offers integrated sales and customer experience tools, allowing clients to more easily add insurance services alongside their usual product offerings, while promoting brand loyalty and generating additional revenues for their businesses. With tailor-made apps to help distribute policies and administer claims, there is no need for new operational structures on the part of companies, or new behaviors on the part of consumers. Furthermore, Stonestep’s platform offers concrete services to resolve customer needs directly and quickly, reducing the frictional costs associated with traditional insurance.

Stonestep’s founder and CEO, Brandon Mathews, has built large businesses for AIG and Zurich in Latin America that continue to serve tens of millions of customers. Stonestep is now taking these insurance models to the next level through the use of technologies such as smartphones, microfinance, and digital crypto-contracts.

“For most people around the world, life is extremely risky: if people lose their home, they’re not checking into a hotel,” Matthews said in a statement. “If they have an accident, there’s no ambulance. Stonestep’s unique insurance platform can cover such risks for emerging consumers, and XL Innovate’s investment will help us implement this solution, beginning in Asia. Micro insurance as a Service is a sustainable business model that can catalyze economic growth for all levels of society.”

Stonestep was founded in 2012 and has 10 employees.

“Reducing vulnerability of emerging consumers is good not only for individuals and communities — it’s also good for companies which rely on emerging markets for growth,” said Sarah Street, director at XL Innovate. “Stonestep’s team members are industry leaders who have pioneered some of the industry’s most successful methods. We are excited to collaborate with them as they accelerate the growth of this business in Asia.”