Bitesize InsurTech: Canopy
December 11, 2020 Chris Sandilands
Canopy is building an ecosystem for landlords and home renters.
The business started off providing renters insurance but has broadened out its proposition over the last 24 months. The idea is now to be a two-sided marketplace where renters can obtain financial wellbeing products during their rental and landlords can access ancillary services for their properties.
The acquisition model is focused on estate agents and property management companies, who can use the app to screen potential renters. Canopy does this through open banking integration and credit scores from Experian. This increases transparency for landlords and speeds up turn-around times, whilst also eliminating the need to pass around sensitive documents like bank statements.
The company has gone from three partners in December 2019 to nearly 70 now including agents such as Hamptons International and Chancellors. Last week its open banking integration scanned 800,000 transactions and the business has 15,000 active users.
Renters can access a variety of financial products including contents insurance (via Urban Jungle), car insurance (Cuvva), bike insurance (Laka), pet insurance (Bought By Many) and deposit insurance (Wakam)
The vision is to make Canopy a global standard for renters information through the Canopy Passport, for example by making each renter’s score meaningful and transferable. The company is currently in discussions with mortgage providers, for example, to see how rent payment history could be used in the mortgage underwriting process, improving both the quality of underwriting and speed of approval.
The company is planning a Series A fundraising in 2021.
The Oxbow Partners view
Canopy is operating in a changing market. Our Market Intelligence team recently published a note to subscribers called What ‘Generation rent’ means for the UK insurance market. We noted that the UK’s private rental sector has more than doubled since the early 2000s and that renters are becoming older and renting for longer. We concluded that insurers should consider these structural trends when considering their future home insurance strategy. To access a copy of the note please contact the team.
Canopy is an interesting play in this changing market, and we believe that its pivot from insurance provider to ecosystem provider is smart – even if it will some time for the business model to mature given that ecosystems generally focus first on scale before moving to material monetisation. We also like its B2B2C customer acquisition model, not least because customer acquisition is monetised via the fee paid by agents. A partnership or investment by a company with a significant footprint in the landlords market would surely help turbo-charge growth.
Finally, it is interesting to note that almost all of Canopy’s insurance partners are InsurTechs rather than the underlying carriers. According to Tahir Farooqui, the founder, this is simply because these companies have the technical and proposition capabilities to deliver a seamless integration.
We extrapolate two observations for (re)insurers. First, a partnership strategy is essential in order to engage with these dynamic digital trends and propositions. Second, insurers need to think about their long-term technology strategy to ensure they have the technology and other capabilities to engage with ecosystems when they emerge. Munich Re’s recent partnership with John Lewis is a good example – the ability to cluster around opportunities, and work with partners to deliver better client solutions will be an essential capability of the future.
