Can you please tell us more about Laka and what inspired you to create “Bicycle insurance powered by you”?
Laka’s first and foremost ambition is to restore trust in the insurance sector. We are doing so by going back to the roots of mutual insurance: we no longer take premiums upfront. Instead, Laka pays out first and only later asks the Community to pay the cost of claims back – up to a personal cap guaranteed by an insurance partner. Thanks to the lack of interest income, Laka’s model is strongly aligned with Takaful insurance principles. Bikes are the first “proof of concept” and we are working towards the launch of our next product in Q3’ 19.

How is Laka disrupting bicycle insurance?

At Laka we have created a new business model where the customer truly comes first, reversing the negative perception that customers have, and rewarding them for taking good care of their possessions. When a customer signs up, they pay no premiums upfront. At the end of the month, Laka adds up all the claims that have occurred for that given month, adds a service charge, and this payment is then split pro rata amongst all Laka members, based on their insured value. This in turn, allows for customers to take even better care of their possessions because acting against the risk pool means acting against their own best interest. This also creates a community within the Laka members. When members pay their bill, they know they are helping other members get back up and running. Finally, when there is no claim within the month, our customers don’t pay a penny. Instead of taking their money, we reward them for being cautious. At last, a model that allows for the customer and the insurer to be on the same side. In months with many claims, customers are protected from high payments through a stop loss arrangement (personal cap) we have in place with insurer Zurich. The personal cap is set at around market rate and thus the worst possible outcome for customers with Laka is that they have to pay the same price they would have paid elsewhere. Customers cannot lose with Laka.

What were the challenges that you faced in starting your company and how were you able to overcome these challenges?

We have launched an unprecedented business model which naturally comes without a blueprint to turn to. We had to secure regulatory approval, find an insurance partner who was willing to work with us far outside of their comfort zone and finally convince customers that “we are for real” and not just another “me too” proposition. We were fortunate to get support from a vast ecosystem in the UK, including regulatory Fintech Sandbox, accelerator Startup bootcamp InsurTech where we met our partner Zurich Insurance Group, and lots of early customers who were willing to look beyond a bumpy journey early on. As so often in life, perseverance is key.

How are you planning to scale Laka and do you think this is possible in the Middle East?

We tested our proposition in 2018 and are ready to scale across products and geographies. We like high frequency, low severity products and larger premiums pools including personal accident, dental, travel but also renters insurance. Given the Takaful insurance application, we believe the Middle East is an exciting market for Laka with the right local partners and I am attending InsurByte to build out our network and to meet as many people as possible.

What advice can you give to entrepreneurs especially in the insurance sector?

Hang in there and ignore the nay-sayers!

For more information:
LakaHQ
www.laka.co.uk