Insuring A Sharing Economy Start-Up

Back in January, before writing one line of Fat Lama code, we needed to figure out the extent to which the “problem” of insurance was solvable. How could you insure a market with endless variables across assets classes, values, customers and risk profiles? Especially whilst keeping the service at a reasonable price and simultaneously delivering a frictionless user experience. Let’s not even start on Public Liability or how to price the bloody thing.
So, sitting on the floor of a warehouse we were converting in Shoreditch, I got on the phone to some of the bigger insurance companies. Without mentioning any names, these included Lloyd’s, AXA and Aviva. And so the pitching began. Over and over again, I explained what we were trying to do and over and over again, I got ‘custard pied’:

“You’re trying to what?” – “Not one for us I’m afraid” – “Is this a joke?”

And rightfully so. The truth is, we didn’t really know what we needed. Why would these guys even consider a (single) policy that they had never done before? It was going to take them ages to build and the likelihood of it making them any money was 100:1. So we went back to the drawing board. I knew that it was going to take time, but somehow it had to be possible.

“How could you insure a market with endless variables across assets classes, values, customers and risk profiles?”

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We explored a number of options. Many other marketplaces are developing and writing their own “guarantee” that eventually gets underwritten. But for us, this was just way too risky and risked delivering an awful experience for the customer in the event of a claim – let alone all the operational risk that this brings. We needed a solution whereby the lister of any item holds their own policy directly with the insurance company. We needed a better proposal and people with contacts.
We soon realised that there were benefits to be found within up-and-coming community of Insurance Technology companies: “InsurTechs”. They had the connections with underwriters and they had nifty way of making our proposal more attractive. By bundling us up with 50 other startups across all different areas, suddenly the underwriter’s ears pricked. So before we knew it, we had exclusivity on a policy that had never been done before. Every single item on our site is fully insured and the policy is held by the lister, directly with the insurance company. No ifs. No buts. And for NO EXTRA cost.
Read more about our unique policy here.

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