Risk-intelligence for small-business insurance
The market went on sale. Small businesses did not get the coupon.
Every business is a cross-section · Clarity is the product.
Friend exists because small-business insurance is priced poorly. Most small companies get sorted into broad buckets of risk and charged the average premium of the bucket, so the careful operators quietly overpay while the risky ones get a deal. We build the risk intelligence to tell those two businesses apart. A simple score, and what it means. That is the whole company, and it is why the tagline is just the plain truth: clarity is the product.
You are getting this because you are close to Friend, an investor, a client, or a partner. Once a week we pick a few things happening in insurance and tell you, in plain language, what they mean and how they shape what we are building. We show our work and our opinions, not only the headlines, and if you think we have read something wrong or didn't explain something clearly, please reply and tell us. We would rather be corrected than sound polished, and early and often feedback helps us the most. The more brutal the better.
What we are doing: building the risk-intelligence layer for small-business insurance, the Green, Yellow, and Red score that tells a careful operator apart from a careless one. In the coming weeks we will share more on exactly what we are building, where we are in the process, and what is next.
The market went on sale. Small businesses did not get the coupon.
Commercial insurance keeps getting cheaper for almost everyone except small business. In the same seven days, the biggest deal in the industry paid $575 million for the one thing that is actually scarce: knowing which small business is the good risk.
This week the insurance market kept saying the same thing three different ways. Prices are falling across commercial insurance, but small businesses barely see it, and where the bill does drop the coverage behind it is quietly thinning. Firms are paying less for less. Underneath all of it, the one thing everyone actually wants is a trustworthy read on which business is the good risk and what coverage is the right amount. That read is what we build.
The Council of Insurance Agents & Brokers reported that commercial property and casualty premiums fell 2.0% on average in the second quarter, a second straight quarter of broad declines. The relief was lopsided: large "accounts" (i.e. big firms with big insurance bills) fell 3.7%, with many big property accounts seeing renewal cuts above 10%, while small accounts dropped just 0.5%. Commercial property (i.e. coverage for when buildings get damaged) led the declines at 6.3%, even as umbrella liability (i.e. coverage for when landlords cause damage) rose 5.3% for a 35th straight quarter.
When the insurance market goes on sale, the discounts go to whoever can push for them, and small businesses never can. Big companies with fat wallets have brokers, options, and the leverage to walk away. A corner restaurant has none of that, so it gets sorted into a one-sized-small bucket and charged the bucket's price, sale or no sale. This is the exact gap Friend is built to close: price a business on what it actually does, not on how little clout it has.
Munich Re agreed to acquire cyber insurtech At-Bay for an enterprise value of $575m, with closing expected in the first quarter of 2027. At-Bay serves small and mid-sized US businesses and generated about $278m in gross written premiums by the end of 2025, and pairs cyber risk insurance coverage with a security and managed-detection platform. Munich Re's Hartford Steam Boiler unit, its capacity partner since 2017, will run it.
The day's lead, seen straight on. At-Bay did the choosing, deciding which small businesses were safe to insure against hacks, while Munich Re quietly supplied the balance sheet behind it since the beginning. Now the reinsurer is buying the chooser outright, because it always had the license and the capital, but not the underwriting judgment or the cyber offering for small-business customers. Both are slow, expensive things a legacy big insurance company nor rival can easily spin-up. That is Friend in one line: own the pick & shovel (Friend Analytico) and the mine (Friend Insurco), because the pick is what gets bought and the mine is where they dig. For anyone backing Friend, that is the shape of a possible exit in plain sight: build the sharpest pick, own the most fertile mine, and the balance sheets come shopping…from the beginning.
Insurance-technology startups raised about $2.44 billion in the second quarter, and 99.1% of it went to companies built around artificial intelligence, spread across 95 deals. A handful of large rounds took most of the money, including a $520 million raise for satellite-data firm ICEYE, while early-stage funding cooled by more than half from the prior quarter. Increasingly, big insurers are choosing to build their own AI rather than buy it from a vendor.
A couple of years ago, saying you used AI to underwrite was a pitch. Now it is the price of admission, and almost nobody is getting funded without it. That is good news and a warning for Friend at the same time: the tools are everywhere, so the edge cannot be "we use AI." It has to be where the AI is pointed. We point our AIs responsibly, with a human holding its hand on either side, at the one question the market still gets wrong, which specific small business is actually the good risk.
As premiums fall, insurers are quietly tightening policy wording and adding exclusions, so a lower bill can mean less protection rather than a better deal. Commercial property prices dropped about 4% in the first half of the year while umbrella and excess liability rose 11%, and lawsuit costs keep climbing: US court awards above $10 million reached 149 in 2025, up from 44 in 2020. Smaller businesses that once bought cheap $100 million umbrella limits through purchasing groups have largely lost that option.
A smaller premium feels like a win until a claim shows you what got quietly removed from your coverage to earn the discount. This is the whole difference between being covered and being covered correctly, and almost nobody reads the policy closely enough to tell the two apart. Court awards (which small businesses are often forced by their landlords and banks to buy insurance for) have more than tripled in five years, so that coverage gap is getting expensive fast. Friend's job is to make that hole visible before a claim does. In a word, Clarity.
The market put itself on sale and small businesses did not get the discount, while the smartest money in insurance spent $575 million to buy the ability to tell one small business from the next, albeit something they already owned. Capital is not the scarce thing. Differentiating small business risk is, and it is exactly what we are building.
Friend is building the risk-intelligence layer for small-business insurance. If you want the full plan, or you just want to learn more, we would love to talk. Reach us at newcombe@friendanalytico.com, or simply reply to this note. Whether you are thinking about investing or only want to learn more, either is welcome.