“We now see insurance as a necessary evil,” says Laka CEO and founder Toby Taupitz. “Almost nobody is excited about it. It might not be the best or the most exciting product in the world. But needless to say, if you are in need, it's a fantastic product, because if your house burns down, you won't really be able to cover the loss.”
Taupitz grew up in Germany with an insurance broker father ("insurance was the typical topic at the dinner table, basically,”) before moving to London to work as an investment banker. It was in London that the idea for Laka came to him. He started to consider a fairer way to do insurance by asking “can we put all the ingredients into one box, shake it good, and reassemble all of that for a much fairer and better outcome?“
Laka turn the existing insurance model on its head: instead of projecting what costs it may need to cover and charging inflated prices, it only charges customers based on the cost of actual claims that have been taken out that month, and the fee is capped.
“There is no more guesswork in there, we know how much we need to recover at the end of the month, we can do so fully transparently and share a billing email with our customers every single month,” says Taupitz. “We make a small fee from every claim that we settle, almost like a success fee. For every successfully settled claim, we get paid. And ironically with that, the more claims we settle, the more money we earn, compared to the current insurance world that makes more money by not paying out.” Laka CEO and founder Toby Taupitz
As well as being a fairer model, the way that Laka operate creates a sense of community amongst their customer base, dubbed the ‘Laka Collective’. “We are trying to break this mantra of: it's me against the insurer,” Taupitz explains. “Rather, we see ourselves as a facilitator on the sidelines saying that if you take better care together and fewer claims happen, you save money. So you are in this together...there's a strong sense of community. If I file a fraudulent claim, then people like myself will have to cover that.”
As well as covering the cost of damaged or stolen bikes, Laka also provide a health and recovery product to mitigate the mental and physical impact after a claim, “So if you had an accident, for example, you could get a WattBike bike delivered to your house; you could get a nutrition plan from Team GB chef; you could get a training plan from Rowe and King,” explains head of marketing, Jonathan Ramm. “For our customers, losing their bikes is not just losing an object, it's losing a massive part of their life. They're engaging with their friends, and we want to enable people as quickly as possible to get back on their bike. So we look after your bike, we look after you.”
Such is the gratitude from the collective over the simplicity of the process that members have sent beers to the Laka office because “they're genuinely completely gobsmacked by the level that we want to go to,” says Ramm.
Indeed, one such beneficiary of the Laka insurance model is Olympic gold medallist Elinor Barker. Barker is now an ambassador for the brand, but before that she was a customer who, after having her bikes stolen just weeks before the Olympics, was amazed by the simplicity of the claims process. In a blog for the Laka website Barker wrote: “The whole process was incredibly quick and reads like (a very boring version of) a Craig David song; I had my bike stolen on Monday. I put in my claim on Tuesday, and had the money in my account on Wednesday.”Elinor Barker is an ambassador for Laka
Laka, explains Ramm, want to go beyond insurance and into grassroots cycling initiatives and promoting the sport. Working with Barker is part of that, “for us, it's all about working with the right people that are helping promote the sport in the right way,” he says. “And we can be, not just an insurance company that's there for you when you make the claim, but be part of your whole journey and really support and develop your life on a bike.”
The company is still relatively small, with 32 employees, although it has offices in London, Bristol, and Amsterdam and is working towards expanding across the continent. Most of the people who work at Laka are cyclists themselves meaning that they understand the needs of the customer base. “I think it's fair to say that everyone on the team has a strong affinity towards cycling in different degrees,” says Taupitz, “We have amateur racers in the team, our claims handlers actually have been working in bike shops, have been mechanics, have been working with different bike brands.”
In the world of insurance, Laka is a true outlier and Taupitz believes his company is the only example of this model that exists at the moment. The innovation that goes into Laka might be a very modern concept, but he has this analogue comparison for his business: “It is almost like the farmers in a village coming together after the farm burns down -- all chipping in,” he says. “So I would describe it as a digital form of mutual insurance. There are definitely histories and examples around that, but I think we just took all that might have worked in the old days and gave it a very modern touch.”
As the saying goes ‘it takes a village’, and the same applies to reimagining the world of insurance.