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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.

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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!