How Hokodo is returning to the roots of insurance by deploying the latest tech
By Louis, Sami and Richard, Co-founders of Hokodo
Back to the basics… What’s the point of insurance?
Winston Churchill once said: “If I had my way, I would write the word ‘insure’ upon the door of every cottage and upon the blotting book of every public man, because I am convinced, for sacrifices so small, families and estates can be protected against catastrophes which would otherwise smash them up forever.”
And it was something like this (perhaps less eloquently put) that first inspired us — Hokodo’s founding team — to get into insurance. Because we too believed the industry has a vitally important role to play in the lives of everybody, both individuals and businesses.
But over the years, the idealistic shine wore off and we grew increasingly frustrated by the gap between the mission of insurance — risk pooling for the common good — and the reality, i.e. manual processes, crippled IT systems and, worst of all, opaque policies. In short, it doesn’t come close to what we — and Churchill 🎩 — had envisioned.
So, we decided to do something about it.
We believe that the design and distribution of financial products has been broken for a long time. And we’re on a journey to fix it!
Our starting point? The many SMEs left behind by today’s financial services industry — or more specifically, by their inability to buy credit insurance that could help reduce the 30% of insolvencies caused by the late or non-payment of invoices. More on that to come!
So, what makes us think that we can do a better job than large incumbent insurance players? We’re glad you asked. Hokodo’s secret sauce consists of three ingredients…
- A Copernican revolution in insurance: Most insurance today isn’t bought, it’s sold, which leads to crippling acquisition costs and low customer engagement. With Hokodo, we’re turning this model upside down, with APIs that enable insurance to be embedded into other customer journeys, in the same way that travel insurance is sold through airline websites. We want to become the Stripe of insurance, empowering all marketplaces, accounting and other B2B platforms to distribute cover that’s relevant to their customers.
- Products built around customers: Most insurance products are complex, expensive and difficult to cancel. In contrast, Hokodo will offer pay-per-use products that are so much more accessible to SMEs. Usage based cover is the future of insurance, with companies like Trov, Alan, Flock and MarketInvoice showing that building great products doesn’t have to mean trapping customers into year-long contracts.
- World-class tech and top talent: One of the main reasons why insurance lags behind other industries is that incumbent players have their hands tied with legacy systems, yet they can’t attract the digital talent they need to revamp things. By starting from scratch and bringing in a team of digital wizards alongside insurance stalwarts, Hokodo is reinventing insurance from the core, using the latest, cutting-edge tech. One example is how we’re using machine learning (ML) in our risk algorithms, substantially increasing their performance over traditional techniques. Who would have thought that one third of our team would be ML gurus and collectively have more PhDs than the founders?!.
Six months in — so where have we got to?
It’s been a very intense and exciting six months, during which we’ve effectively rebuilt a mini-insurance company to deliver our vision.
From three guys in an apartment (thanks for hosting, Sami and Richard!), we’ve moved to an awesome team of 12 and we’re aiming for 15 by the end of the year. It’s a great feeling to see the business take shape and to instil the non-hierarchical, no-bullshit culture that we missed so much at large financial institutions.
The tech and product are now ready to launch — news to come! — and with our data science team, we’ve rebuilt our own risk-rating engine leveraging several conventional sources of data along with some new ones. We deeply believe in the value of superior underwriting and don’t want to be another front-end with no technical capabilities.
We’re also super proud to pilot our first implementation with our fantastic partners at Centrifuge. Ever since their days at Taulia, we’ve always felt they had something special, and we’re honoured to have the opportunity to contribute to their ambition to re-platform B2B trade.
And already underway in Q4, we’re running a couple of implementations to road-test our product and validate the economics of our model. We also have loads of ideas for the product roadmap (including a financing bombshell) and we will be narrowing down the universe of possibilities by exploiting partner and user feedback — and that’s where you come in…
If you feel inspired by the vision or if you would like to challenge us, then we want to hear from you — email@example.com
Same goes if you’d like to bring insurance or financing solutions to your users but you don’t have time to waste with incumbent providers offering legacy technology — firstname.lastname@example.org
And finally, if you’re a data scientist, developer, designer or growth hacker and you want to challenge the insurance industry in a fast-paced environment, you can reach us on email@example.com