This is how Germany's first truly sustainable insurance company is to be created

Start-up Verde is going to extreme lengths to be as sustainable as possible. That doesn't exactly make growth easy.

Most startups these days don't need much except sweat, love, and many lines of programming code. Sometimes even as few as six lines are enough, as with fintech Stripe, which used it to get to a multi-billion valuation, to make the really big leap in a short amount of time.

The makers of Verde from Munich have it much harder.The big goal of the start-up, founded in 2017 and now consisting of six permanent employees, is to become the first sustainable insurance company in Germany. "Sustainable banking and sustainable investing is becoming more and more normal, it's just that insurance companies don't have it yet," says Elena Sulzbeck, who is both the assistant to the boss and press officer on the team.

But it takes more than just program lines. Regulator Bafin requires Verde to keep 3.5 million euros on hand for a license, which is a large sum in itself. Verde, however, insists on not bringing a big investor on board, and instead wants to set up the insurance company as a cooperative and grow sustainably. They have already collected 1.1 million euros, 2.4 million euros are still missing - and that's just to be allowed to start at all. The fact that the initial phase of such a start-up can take four years or more is quickly explained.

In 2017, Marie-Luise Meinhold started Verde as a founder, although one must distinguish between the two. Because there is both a Verde eG, i.e. a cooperative, and a Verde AG, i.e. a stock corporation. The strange construct can be explained by the fact that Verde would like to have as many shareholders as possible, which works well via a cooperative. However, cooperatives are not allowed to operate insurance in Germany, which led to the creation of Verde AG, whose main owner is now Verde eG again. "It's all a bit complicated, but there's no other way if we want cooperative insurance," Sulzbeck says.

Elena Sulzbeck works at Verde. (Photo: Verde)

After the founding phase, a time of discovery began for Verde. Role models were missing, as there was still no really sustainable insurance in Germany and so they felt their way forward bit by bit. In the meantime they offer theft insurance for bicycles, partly to pay off the costs until the necessary licenses are issued.

Just how serious they are about sustainability is evident in the small stuff. The cooperative's bank account is at the green GLS Bank, the office gets by without paper for the most part, and the team travels to events either by bicycle or train. According to Hilfswerft, Verde eG is one of the 222 most sustainable companies in Germany

. The cooperative also has its balance sheet drawn up for the common good, which allows companies to test how public-spirited they are. Verde does well in this regard.

In order to finally offer liability and household insurance, Verde needs 3.5 million euros in cash. Verde does not want to bring classic investors on board for this, as they could otherwise exert too much influence on the development of the still young company - and possibly steer it in a not so sustainable direction. Instead, on the one hand, they want to inspire more cooperative members, who can buy in for as little as 300 euros. On the other hand, for some time now they have been focusing on profit participation rights, which interested parties are supposed to purchase. 2.5 percent in interest they want to pay per year, depending on the profit - and then of course the question remains, whether they get the financing together at all, to ever be allowed to offer as Bafin-licensed insurance.

"If insurance works and is sustainable at the same time, we believe that's a market advantage"

Elena Sulzbeck, Verde

The start-up from Munich now has 130 cooperative members, plus 1070 tons of CO2 saved and 1.1 million euros already invested in sustainable projects. These include, for example, schools or tram lines and sustainable bonds from companies or countries.

Once the license is there, they want to focus on liability and home insurance at Verde and roll up the billion-dollar market at least a little bit. 50 million households in Germany have household insurance and Verde sees huge market potential in this. "If an insurance policy works and is sustainable at the same time, we believe that's a market advantage," Sulzbeck says confidently.

The team wants to invest the money that customers are then asked to deposit with Verde for their insurance policies in sustainable investments that have a positive social and environmental impact, Sulzbeck explains. To do this, they want to exclude individual industries from the outset, such as armaments and weapons, nuclear and coal energy, biocides, pesticides, factory farming, genetic engineering or even addictive substances.

Also in countries, in which torture is practiced or the death penalty is imposed, Verde invests according to own data in principle not. In addition, they look at the remaining investments and evaluate how sustainable they are. Among other things, external reports or public reports are consulted for this purpose. They are not rigidly committed to green energy, for example. If there is a lack of housing in cities, for example, that is also a possible investment object because it has a social benefit.


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