Butter targets gen Z with smooth insurance  

Insurtech Butter has raised $1.3 million as it prepares to launch subscription cover for nominated possessions like smart phones, ear pods, watches, laptops and “whatever you’re into”. 

The insurtech has secured an offshore underwriter and is to be integrated by eftpos into a new eQR digital marketplace next year, and hopes to expand to New Zealand and Asia after launching in Australia over coming weeks.  

Promoting “commitment-free cover for the stuff you care about,” Butter will offer monthly or yearly insurance products on products within 60 days of purchase.  

“Designer bag suddenly out of style? Got gifted a new iPhone? No problem. You can cancel your insurance whenever you want,” Butter says.  

It likens itself to AppleCare but is partnering with a wide range of retailers to offer cover “basically on anything,” Sydney-based co-founder Cassie Bell, who quit a job as a lawyer to run the startup and is confident the niche is profitable, tells insuranceNEWS.com.au. 

“We have had pushback, people have said, ‘Oh, it’s been done and it’s failed’ but there are a couple of reasons why Butter is different from the predecessors,” she said.  

Only insuring new items will help limit fraudulent claims, she says, and Butter’s retail partnerships will achieve enough volume to make a low premium portfolio stack up.  

“It’s definitely a volume business – we think we can get that volume with our distribution strategy so the policies outweigh the claims and we end up with a pretty good loss ratio. That’s the strategy behind it.  

“That kind of more flexible embedded insurance is becoming more popular. Those micro premiums or really flexible premiums I think are doing quite well.” 

Ms Bell came up with the idea for Butter – the names refers to something smooth you can put on anything – while at a party with co-founder Steph Skevington who also longed to “add your snowboard or whatever it is that you want to insure to an app and manage it like any other subscription”. 

“I’d broken a pair of earrings I was given as a gift and she’d spilt water all over her laptop. 

“We were kind of complaining about how expensive it was to replace those things and how it’d be so cool if there was some kind of insurance you could just take out on those things that you really loved and cared about, and not have insurance for your whole house,” Ms Bell said.