Update 11 October 2017
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Insure A Thing is an insurance startup that is trying a genuinely disruptive business model.
As Founder Tobias Taupitz puts it: “A large chunk of your insurance premium is used to pay for people to calculate your likely future claims. Another portion is then used as a safety margin, and if that’s not used, it’s paid out as a corporate profit. That model doesn’t feel like it works in the consumer’s favour.”
Insure A Thing are solving this by creating an after-the-event model. Customers pay a share of the actual cost of claims at the end of the month, up to a predetermined cap. For example, the cap to insure a £2,500 bike might be around £17 a month, but could be significantly less if claims costs are lower.
Any surplus claims are picked up by a reinsurance contract. Insurance also covers the credit risk of policyholders not paying their monthly contribution.
The company is starting with high-value bike insurance but is clear that this is a proof of concept. There are other products in the pipeline.
The company is part of the FCA’s Regulatory Sandbox (an arrangement set up by the UK regulator to help startups come to market quicker) and is hoping to launch later in September. There have been a few challenges along the way nonetheless, mostly resulting from the slightly philosophical question as to whether the company is offering an insurance product at all (as opposed to a credit product, for example).
The Oxbow Partners view
Insure A Thing is one of very few InsurTechs doing something genuinely disruptive. Most InsurTechs – and there’s nothing wrong with this – are simply trying to do the existing model better. It’s a clever idea from the former Barclay’s M&A banker.
We like the business for two reasons. First of all, it should lower total premiums as its ex post business model reduces the importance of crystal ball gazers like actuaries and risk managers. On the other hand, the model is simple for consumers to understand (unlike peer-to-peer insurance). All you need to know is that your premium is capped and the rest is upside.
Two challenges stand out. First, Insure A Thing needs to believe that consumers care enough about their cover that they’ll try something new. Second, the company needs to build sufficiently large groups quickly to make the model work. We think the focus on affinity niches, starting with bike clubs, is the right way to go about both of these challenges.
We also like the fact that the model appears to be Sharia-compliant, which could be a game-changer for non-UK territories.
Disclaimer: Chris Sandilands is an angel investor in Insure A Thing.