Luko, the Paris-based home insurance startup, announced today that it has raised a €20 million Series A led by the VC firm Accel, with participation from Founders Fund and Speedinvest. The fresh capital will be used to start the international expansion soon.
Home insurance is a €100 billion industry in Europe, but its opaque terms and conditions, multi-stage and elongated processes and ‘guilty before proven innocent’ approach to claims have eroded consumers’ trust. On average, after the experience of making a home insurance claim, 40% of consumers choose to change provider. In addition, the industry has been slow to embrace technology and move online, failing to provide the experiences consumers have come to expect from other services.
Founded in 2017 in Paris by Raphael Vullierme and Benoit Bourdel, Luko has customer service at its heart, providing simple, transparent insurance and fast home repair. Its online platform set out to transform the insurance experience: it takes two minutes to obtain coverage, two hours to receive payment for a claim and two days for damage to be repaired. Gone are the times of waiting days or weeks for repairs while balancing life’s other commitments.
Currently offering flat and home insurance for individuals and landlords in France, Luko has attracted more than 10,000 customers in its first 10 months of operation. It is currently one of Europe’s fastest-growing insurance companies, having seen strong organic growth through word of mouth from happy customers, who are hungry for a new option in a staid industry.
While other neo-insurance companies are focused on offering traditional insurance cover through digital means like an app, Luko is focused on creating insurance 3.0, a new product category that goes way beyond coverage. Luko is developing proprietary home protection technology, so it can reinvent homecare and move insurance from a post-incident, claims-based model, to avoiding home accidents to begin with. The technology will monitor a home’s front door, water supply pipe and electric meter, and machine learning will analyse this data to help prevent floods, fires and burglary.
Luko Co-founder Raphael Vullierme stated: “We believe consumers need fairer insurance options that they can clearly understand and that will bring them peace of mind. While customer churn is traditionally an industry problem, Luko’s is nearly nil, and our Net Promoter Score is five times the industry average. This is the first step to our true endgame, avoiding home accidents altogether. We believe the future of homecare is in effectively protecting homes, and this investment will help us get there faster. We will use the new funding to accelerate our home protection technology development, expand from France across Europe and develop additional HomeCare Services.”
As part of Luko’s mission to transform the insurance industry for a better society, the company charges a flat fee, which is used for claims management, operational costs and to pay claims. At the end of a year, if there is money left over, Luko donates it to charities chosen by its customers through its Giveback programme. It received BCorp certification in June 2019.
Additionally, as part of the Series A round, all participating investors agreed to sign Luko’s social and environmental impact mission, to accept that Luko won’t trade its mission and impact for growth.
Luca Bocchio, who led the investment for Accel and will join the board, commented: “Insurance is still largely a very traditional industry. With only eight per cent online penetration, the whole industry is poised for change. Consumers have suffered long enough with poor home insurance options, and Luko is bringing a new option to market with fairness at its core. With an ambitious team, a sleek product, impressive technology under development and strong customer love, Luko will change the equation for millions of home insurance customers across Europe, as it pioneers an end-to-end homecare solution.”
Insurance Edge Comment:
Luko are ironing out some of the bugs when it comes to contents insurance. People like the idea of getting clauims settled quicker, and younger consumers have no problem trading data for savings on insurance premiums. The charity angle is a nice millennial touch as well, because who doesn’t want the extra halo aspect of being a good person and voting a bit more funding to your fave cause, via corporate profits?
But where is the USP in all this, are we really re-inventing the wheel here? No, all Luko is doing is improving the customer experience. Making insurance more virtuous, work better online, and in the end, a more moral service via charitable donation.
That’s long overdue, some might say, but the bottom line is that if one or two of the big players in home insurance offer exactly the same app-based product, with a charity fund bolted on top, they’ve just stolen your market share back.
Interesting times ahead.