Bitesize InsurTech: Laka

May 23, 2020

Laka is a ‘digital mutual’ that charges customers retrospectively according to the previous months’ claims experience. The company is riding high having just raised a £3.6m seed round led by LocalGlobe (investors in CityMapper and Floodflash) and Creandum (investors in Spotify and Klarna) and with participation from several angel investors. The InsurTech has now raised a total of £4.9m.

Laka currently focuses on the cycling market and insures all kinds of bikes, including e-bikes. It has also created the Laka Community, connecting avid cyclists from across the UK.

We recently caught up with CEO, Tobias Taupitz, to find out what Laka has in store for the future and heard about some interesting developments in the Laka camp.

First up is Laka’s expansion into Europe, with The Netherlands as the point of entry. The country was chosen because of its bike penetration (it has the highest bike spend per capita in Europe), the high number of inbound requests from Dutch customers, and the favourable regulatory environment. While Covid-19 has slightly delayed the timeline, Laka expects to launch in Q3 this year.

Laka is also expanding its product range to serve cyclists with accident recovery. The product, designed in collaboration with sports and injury recovery experts, will allow cyclists get back in the saddle after an accident by providing them with access to recovery mechanisms that aid treatment.

Finally, to amplify its geographical and product expansion, Laka will start firmly focusing on urban mobility and is also planning to change its look and feel.

The Oxbow Partners view

Cycling has been one of the big winners of the pandemic so far. London is one of many cities to have unveiled car-free initiatives, while further west, Bristol has begun work on improving cycle routes across the city. Laka stands to benefit not only from the surge in potential customers, but also from the predicted increase in average prices of bikes sold as commuters migrate to e-bikes, which typically cost between £1,500 and £2,000.

Greater focus on e-bikes also positions Laka for its migration into urban mobility – an area where its investor Creandum has experience through Voi (a European e-scooter sharing company). The UK’s Department of Transport has recently fast-tracked a pilot scheme for e-scooter rentals and if successful, e-scooters could present the next big opportunity for Laka.

We also referenced Laka in a recent blog post about the future of insurance propositions in light of Covid. Insurers – with the encouragement of President Trump’s Twitter feed and more sober notes from the FCA – are thinking about how to ensure ongoing fairness of their products. Premium rebates, the remedy of choice so far, is a blunt instrument. Propositions like Laka respond much more naturally to fluctuations in the market context – in Laka’s case by calculating the monthly premium on actual loss experience rather than trying to estimate it annually in advance.

On a side note, Laka has kindly offered a discount code for our blog readers – type Oxbow25 at checkout for £25 in free Laka credit