Insurers can’t just patch up their businesses, claims start-up founder
The insurance market needs a new and fresh approach – it can’t just keep patching issues up, according to Tobias Taupitz, founder of insurtech start-up Laka (previously Insure A Thing).
“Public perception won’t be fixed by slightly better customer service, although it would be a good starting point,” claimed Taupitz.
What the industry needs is something fundamentally different, said Taupitz, something fresh to start over and show the world that there can be a mutually beneficial outcome in the insurance business.
Laka is one of more than 20 start-ups attending the annual Intelligent InsurTECH conference on October 3 in London. Click here to find out more.
Taupitz believes that the conflict of interest between insurer and consumer can’t be overcome in the current business model.
“The insurer makes more money if they refuse to settle claims or settles them late. It’s a misalignment of incentives.”
Although Tauptiz believes that insurance is a great product, he warns that it’s gotten “off track”.
Laka, named after the Hawaiian goddess of prosperity and hula dancing, was founded to realign the incentives, to make money by acting in the customers’ best interest.
“The customer can’t come first if they have to pay premiums up front, and only get a promise in return,” he said.
And so, Laka puts the “customer on a pedestal”, paying out claims first and only requesting payment at end of the month, essentially in arrears.
Currently, Laka covers bicycles, but the company has an appetite to focus next on products that have similar characteristics (high value and partially emotional).
“Certain products like liability are not for us, but in theory, the model would work in the majority of non-life products,” explained Taupitz.
Laka makes money if it pays out, adding a success fee on top of claims. If no claims are settled, the start-up doesn’t make money.
Taupitz said that the start-up also offers full transparency and never overcharges, with customer’s being told the maximum price outright.
“It’s hard to change your proposition while still earning comfortable margins, so it’s rather unlikely that that will change unless insurers are forced to,” he claimed.
Taupitz explained that some insurers are willing to make changes to their business model, and added that Laka is beginning to work with an insurer with a “more open mindset”.
Laka is one of more than 20 insurtech startups attending Intelligent Insurer’s Intelligent InsurTECH conference on October 3 in London. Click here to find out more.
2017 cat losses could reach $190bn and mean downgrades
Neon hires Talbot and Brit underwriters for marine expansion
Recent cat losses may mean Mapfre misses ROE targets
Another US insurer launches VC fund to target insurtech
Willis Towers Watson taps ATC exec to lead CRB claims in Australia
Chubb reveals new CEO and chairman of Pakistan operation
