Frankfurt The insurance start-up Wefox wants to increase sales by a further 50 percent in 2023 and break even. “The clear focus is the black zero,” said Wefox co-founder Julian Teicke in an interview with the Handelsblatt.
Despite the difficult economic environment, sales in the year that is coming to an end have doubled to around EUR 600 million and earnings have improved. The number of customers has risen to 2.7 million. However, the goal of breaking the three million customer mark by the end of the year was slightly missed.
At the same time, the current crises surrounding the Ukraine war, rising interest rates and high inflation have left their mark on the company. Like many other start-ups, Wefox had to adapt to the new framework conditions and change course over the course of the year.
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Wefox has postponed longer-term investments
“We have significantly reduced investments in innovations that will only pay off in the future,” explains the Wefox boss. “We only invest in products that can be profitable in the first year.” For Teicke, who usually prefers to talk about his ambitious visions for the future, this is a clear shift in strategy.
Instead of rapid growth, he is now focusing on cost discipline. Teicke does not want to comment on what this means for various projects, such as the development of a prevention product that warns customers of damage.
>> Read here: Will these 36 billion German start-ups get through the crisis?
The shift in priorities goes hand in hand with a cultural change in the company. Although profitability is the top priority, Wefox wants to increase sales by 50 percent to EUR 900 million in 2023. “The pressure to achieve more with the same resources is therefore increasing significantly,” says Teicke.
This also increased the expectations of the current 1,300 employees: “We have communicated very transparently that we will have to act faster in the future if goals are not achieved.” Not everyone is willing to give so much for the company, and will possibly leave.
This is also made clear by the sometimes harsh criticism that can be read on the employer rating portal Kununu. Some complain that the pressure is too high and that Wefox places more value on a positive public image than on a good working atmosphere. Nevertheless, Teicke is convinced that a more consistent performance appraisal will ultimately reward those colleagues who have always done a great job.
The processes have to adapt to the rapid growth
It is also important to Teicke to increase customer satisfaction. Every negative customer experience is one too many: “Due to the rapid growth of recent years, we have to adapt the processes so that we can become more efficient in customer service and claims processing.” The co-founder believes that he has built the right business model for this. Wefox does not sell its policies directly, but via consultants, brokers and other partners. In addition to Wefox Insurance, they also offer products from other insurers.
Wefox therefore generates the majority of its sales through commission income. The business of the in-house insurer was rather small and dominated by car insurance. According to Teicke, the premium volume more than quadrupled in 2022 to over 180 million euros and thus to around 30 percent of total sales.
However, the insurer is not profitable. “The very high claims ratio from 2021 has reduced, but is not yet at the level that we are aiming for in the long term,” says Teicke. The product range of Wefox Insurance is to be gradually expanded. The introduction of accident and term life insurance is planned for 2023.
Teicke intends to approach further international expansion cautiously. Wefox currently makes most of its sales in Germany, Switzerland and Italy. Business in Poland, Austria and the Netherlands also got off to a good start. “We’re looking at France, Spain and Great Britain. However, there are currently no plans to enter the market quickly,” says Teicke.
One reason is that 2023 could be even tougher for consumers than the current year. In addition, the uncertainty on the financial markets remains high, says the Wefox boss. He is therefore happy to have raised enough money in recent years. A new round of financing or an IPO is currently not in sight.
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