Cyber risk has become an increasingly important issue for small and medium-sized businesses around the world. Many companies try to avoid and mitigate cyber risks, but they rarely discuss transferring these risks to third parties.
That’s why Stoïk is launching a cyber insurance product designed specifically for small and medium-sized businesses. The French startup recently raised a Series B round of 25 million euros (about $27 million at current exchange rates).
In many ways, Stoïk follows in the footsteps of Coalition or At-Bay. However, rather than selling insurance products to U.S.-based companies, Stoïk focuses only on European companies.
By purchasing insurance from Stoïk, your business will be covered in the event of a cybersecurity-related claim. For example, if a company has to stop production or close temporarily due to a cyber incident, Stoïk can compensate for lost sales (gross operating margin) during that period.
Stoïk currently targets companies with an annual turnover of less than €750 million and has a coverage limit of €7.5 million. Currently, the company operates in France, Germany, and Austria.
The startup chose this specific industry because cyber insurance is more complex than other types of insurance products. For example, Stoïk has established a small in-house crisis management team to respond to incidents and support data recovery and crisis communications.
“There have been 12 attacks on our portfolio since the beginning of the week, including a major attack,” co-founder and CEO Jules Veyrat told TechCrunch last week. “We mobilized people in the Lyon region for a ransomware attack that paralyzed an industrial company.”
When customers sign up, they will receive an overview of their cyber risk exposure. On startup, it monitors DNS records and searches online databases for password leaks associated with this domain name. Stoïk can also perform internal checks and recommend changes to your cloud and Active Directory configuration.
“Our thesis is to insure businesses. Moreover, we will help them better protect themselves from cyber attacks. That makes them happy and allows them to get more for the same price. And we are happy because we have well-protected policyholders and we have fewer claims than others,” Veyrat said.
There are still some similarities across the insurance industry. Like other insurance companies, Stoïk must ensure it does not allow too many bad apples into its customer portfolios. This is because it can have a significant impact on a company’s loss ratio.
“The job of an insurer is to select risks. So who should we accept, and under what conditions? How well do you understand cyber?” Bayrat said. “In other words, are you willing to acquire a €50 million industrial company that has no offline backup strategy? This is just an example, but it is a question we ask ourselves every day.”
Stoïk acts as Managing General Agent (MGA). This means working with insurance and reinsurance companies to cover risk. Stoïk creates its own rates, products and policies, but outsources the risks to larger insurance companies.
One such partner is Tokio Marine HCC International, the only new investor in the Series B funding round. The remaining round is comprised of existing investors. Alven is leading the Series B with also participation from Andreessen Horowitz, Munich Re Ventures, Opera Tech Ventures and Anthemis.
Stoïk does not sell insurance products directly to customers. Instead, they work with third-party insurance brokers that already have relationships with SMBs. To date, Stoïk has attracted 1,000 insurance brokers.
By the end of 2024, Stoïk will have 5,000 insured people. This represents €25 million in insurance premiums. Stoïk plans to increase customer sign-ups in the future. Going forward, the startup plans to expand to new countries every year, starting with its first entry into the European market in late 2024 or early 2025.
