Aviva, Capsule and Codat pilot new way to insure high-growth SMEs


Technology provider Codat and specialist insurance broker Capsule are teaming up with Aviva to pilot a new tech-led approach to ensuring high-growth businesses have the right level of cover in place.

Underinsurance is a hidden risk to high-growth businesses. Aviva research shows that 50% of all UK SMEs are underinsured. Capsule says that this rises to up to 80% in fast-growing companies.

Conventional business insurance works on static cover that is renewed annually. It is typically based on estimates such as turnover, profit and wages. However, relying on a yearly snapshot risks quickly outdated cover, leaving high-growth companies exposed to fast-evolving events that could stunt growth, or worse, put them out of business.

To directly address this underinsurance problem and offer cover that evolves with company growth, Capsule, Codat and Aviva are trialling a new approach. Capsule will enable Aviva to onboard and review clients faster using Codat’s API that connects SMEs’ business data to service providers.

It means growing businesses participating in the initiative will be able to share access to the data in their financial software – for example, in platforms like Xero, QuickBooks and Shopify – with Capsule. This will not only simplify the application process for these fast-moving businesses, but will provide a real-time view of a business’s size and performance so that Capsule and Aviva can proactively support customers with the right cover as they grow.

Thomas Wynne, CEO and Co-Founder at Capsule, said: “The hyper-growth startups that we partner with are constantly innovating and evolving. This not only impacts their insurance requirements, but it also means they have a different expectation of the service providers that they align with. The combination of one of the UK’s leading insurers, the leading financial API and the most agile insurance provider is a really powerful one. Startups can now upload their pitch deck, share their current policies and then share their financials instantly.”

Estimating accurate insurance needs for a fast-growing business is a major challenge for the insurance industry. If the sum insured is too low, it may reduce the amount they receive in the event of a claim. This is exacerbated in an inflationary environment where the cost of settling claims increases rapidly.

Wild, a London-based natural deodorant startup, grew turnover by 400% from 2020 to 2021. Head of Finance, Arthur Edson, says: “The challenge we face is correctly pricing high growth into our insurance policies. We need to ensure we are suitably covered throughout the year, even if turnover doubles in that period. What’s worrying is that if, for example, an insurer said they would only cover 50% of a major claim as we were underinsured, we may find ourselves without enough in reserve.”

Maria Crockart, interim SME MD at Aviva, said: “We are delighted to be working with Capsule and Codat to test this innovative proposition for high-growth businesses. By working together, we will make the right insurance cover simpler and easier to access whilst delivering certainty of protection.”

Codat’s technology securely connects data from all types of small businesses' financial software. It is trusted by over 250 banks, payments and software companies globally, and boasts an array of backers including J.P. Morgan, American Express, PayPal, and Shopify.

Pete Lord, Co-Founder and CEO (pictured), said: “Our mission at Codat is to make life easier for small businesses and buying insurance is one of those painful but necessary parts of running a business that is screaming out for a more digitised approach. As with many other manual processes, better access and flow of data is the key to improving the experience and outcomes for customers, carriers and brokers alike. We’re excited to be working with Aviva and Capsule on this project which will set a new precedent for the industry.”