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An Insuretch insider said to me “if there is one firm that is doing something truly radical in insurance its Laka”. Aha. So here we are – Laka on the LFP. Laka are re-slicing and dicing the paradigm that led to so much in lending/borrowing but has never really got out of the hanger in insurance – P2P. This despite the fact that the historic roots of insurance – and its current core model – rely on pooling risks.
Toby joins us today to revisit P2P insurance ab initio and to tell us how Laka are reinterpreting the paradigm to come up with some notable twists – not least of which if there are no claims in your pool in a given month you pay nothing. Oh and you don’t pay up-front either. Nor will you pay more than conventional insurance. And there are more differences as we hear in the show.
Sound interesting? I thought so.
Topics discussed include:
- Krav Maga and martial arts training
- the great value of running away no matter what level you are at
- Toby’s career journey from summer interning in insurance to moving on and corporate finance/studying around the world to Laka
- Laka is a Hawaiian Goddess of Prosperity and Hula Hoop dancing
- Chinese ways/culture around being a student – studying in Singapore
- the first Insuretech P2Ps were formed 2010/2011
- “We have moved on quite a bit since then, the regulator is more open, more engaged right now, the insurers are opening up, Insuretech has become A Thing which has led to money, talent resources flowing in.”
- the supportive surround/ecosystem in general – eg Anthemis fellowship, Startupbootcamp, FCA sandbox
- “if you look hard enough you can get what you need”
- P2P – cf )P2P-lending/borrowing versus P2P-insurance
- P2P insurance a group of people with something in common forming a pool, more often than not with an underlying insurer (to cover larger losses)
- which is remarkably similar to the conventional insurer-reinsurer market
- many variations on the model
- the importance of the social control element
- insurers have to pay out but would rather not pay out – Terms and Conditions being complex and there being an asymmetry of power when there is a claim “the law is strong on the weak and weak on the strong”
- mis-incentives and the PR cost of paying for over-playing the “unreasonable insurer” game
- conventional insurers do not like paying claims; conversely Laka only take a fee when there is a claim
- with Laka you only pay in months where the pool had a claim
- “cycling is a cyclical product” {groans}
- your stop loss, your worse price is around market rate – so any good experience of low claims will reduce this total cost of insurance
- credit risk by not taking insurance premia up-front and management thereof
- behavioural economics – on “emotional high-value assets” such as racing bikes folks will tend not to default compared to say on a washing machine
- the emphasis of community cohesion/accountability
- slicing and dicing the insurance deal in a different way
- regulatory challenges when you approach them with neither a square or a circle
- the choice between being a membership club away from regulation or being a regulated entity – pros and cons
- the importance of human beings being tribal animals
- sub-groups within a gross group – slicing up cyclists for example
- connecting people, rating by game-ification
- moving away from “postcode pricing”
- Laka are rolling out new products in the summer
- the thriving ecosystem around cycling and spreading faster of referrals in such tribes
And much much more 🙂
Share and enjoy!