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Bicycle insurance specialist Laka secures £3.6 million in seed capital

Joseph Delves
7 Feb 2020

London-based firm aims to use the money to expand into Europe and beyond

Insurance firm Laka has raised £3.6 million in funding to bring its bicycle insurance products to a wider European market. The London-based company was launched in 2018 and offers what it describes as ‘crowd insurance’. This sees customers pay a capped monthly premium to insure their bikes, with any money left in the collective pot once all claims are settled refunded between members.

Rather than making an estimate on likely costs and banking the profits, Laka instead takes a 25% fee for every claim it settles, meaning its profits are dependant on it settling claims. In theory, this reverses the dynamic whereby insurers are incentivised to avoid paying out on their customer’s claims.

The latest injection of cash comes predominantly via venture capital firms LocalGlobe and Creandum. The firm has also attracted investment interest from Nick Evans, chairman of cycle clothing maker Rapha.

Loads of money

Following on from Laka’s pre-seed round in June 2018 - to date, the firm has raised £4.9 million.

In a statement, the firm explained it intends to use the money to fund its upcoming launch in the Netherlands, from where it hopes to expand across Europe and beyond. This move will also see the brand increase its focus on health-style insurance, including personal accident cover along with cycling-specific rehab and recovery services.

Launched by Tobi Taupitz, Jens Hartwig and Ben Allen, the backgrounds of Laka's founders span finance, insurance and software design. Last year the firm claims it grew 10-fold and is now used by over 5,000 cyclists across the UK.

Laka's model sees it move away from standard underwriting, where events relating to insured objects generate the majority of risk. Instead, as long as Laka’s customers can pay their premiums, the firm’s exposure shouldn’t extend much beyond its policyholders creditworthiness.

Further insuring against the effects of any unprecedented crimewave, Laka is ultimately backed by Swiss insurance group Zurich. Essentially reinsuring each Laka customer, a small premium included in each policy means customers will never have to pay above the pre-agreed cap, as Zurich would absorb the rest.

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