Why We Invested: Brick

The Pre-Seed round was led by Verve Capital and included Newlin Ventures, WOW Participações and angel investors from the insurance market.

In Brazil, more than 70% of cars circulate without insurance. If you add the number of drivers who have inadequate coverage and will not be assisted in the event of an accident, the percentage exceeds 90%. This is a market responsible for R$150 billion every year in the country and with the potential to double its size. When it comes do GDP, the world average of insured vehicles is 7.9% - while in Brazil it is still only 4%.

Insurance can be expensive if you only use your car a few days a month, for example. Post-pandemic dynamics such as the home-office have also changed people's routines. But what if you could have the vehicle insured only on the days you decided to use it? Interesting? Between the almost 90% of "non-insured" in Brazil, how many would have a policy in these terms?

It was with this "pain" and opportunity in mind that young entrepreneurs from Curitiba created Brick Seguros. Using a new regulation implemented in 2019 in Brazil, the startup intends to offer customized insurance, in the Pay-Per-Use model. The company's purpose is to transform insurance into something simpler and more democratic.

Brick started operations in early 2022, creating a driver rating system that provides up-to-date information for car rental companies. The full driver risk profile report helps their customers minimize operational risks and prevent fraud, resulting in fewer claims and making fleet insurance cheaper. Since its launch, the company has seen growth of over 30% per month, and currently has more than 150 customers, with approximately 25,000 vehicles.

They want to become a car fleet insurer focused on rental companies ('Rent a Car' - RaC) and change the way these companies insure. In the current model, rental companies need 1-year policies to have their fleet insured 24/7, even during idle time. Brick wants to offer a Pay-Per-Use model, where RaC companies only pay for the time the car is actively rented/used.

The startup plans to generate revenue through a combination of flat rate + rate per kilometer driven. Brick's GTM (Go-to-Market) strategy is twofold, with new contracts closed via Outbound Reach and also through partnerships. They initially offer two products: Background Checks and Minor Damage Insurance. The Minor Damage Insurance includes insurance for windows, windshields and tires and already serves 8 RaC companies. Brick is also talking with insurers to become a Managing General Agency (MGA).

The insurtech raised capital to support its growth and create a structure such as MGA, in which an established insurer lends its balance sheet and assumes the risks  -  leaving the startup responsible for pricing and selling.

Another advantage is that many small car rental companies purchase their insurance from associations or cooperatives; these insurance options are not regulated by SUSEP in Brazil, but Pay-Per-Use is. Finally, an important trend in the sector is that fewer people own cars and choose to use services such as Uber, taxi, bicycles etc. This may boost the car leasing industry.

AUTHOR: MARCELO FRANCO, VERVE CAPITAL FOUNDER