ProductStories #3 — Why we waited 1 year to insure your homes

Last week, we launched our home insurance. Just one year after the release of our apartment insurance.

In the meantime, Luko has grown efficiently… We multiplied our team by 5, flew on our own and left Station F ( and we are already looking for our new nest to welcome all of Luko’s future talents), we released an NVEI insurance ( new individual electric vehicle, such as electric scooters) in less time than it took to say the words ( and before all the big insurers), we built a new mobile application from scratch, and have made great progress on our door and electricity protection devices.

In brief, between the apartment and the house, there was a world.

But why did we wait so long to release a home insurance policy?

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A complex product

68% of the French live in a house, and we aim to protect homes. Insuring homes was therefore a huge opportunity, which we had not yet seized.

Yes, but… insuring a house is not as simple as insuring an apartment.

Insuring an apartment…

An apartment is simply a sub-entity of a larger entity: a building. You have to insure what is inside this apartment, but as soon as the damage spreads to the walls, or to the rest of the building, the insurance of the resident no longer applies. It is the insurance of the co-ownership or the building that takes over.

…vs insuring a house

The risks in the home are much more frequent. Some risks do not exist or only slightly for apartments: lightning, for example, almost never directly affects an apartment, any more than the fall of a tree. Unless you live on the ground floor, you are also protected against floods in apartments.

And then the apartments rarely have verandas, gardens, a large garden, an old fence, let alone swimming pools… ( we would have liked to have done so during this heatwave period 🏊🏼)

As you will have understood, home insurance is complicated. And at Luko, we like it simple. And we didn’t want to offer sub-optimal insurance. So we took the time to think about it in order to offer an insurance that really insures, while keeping what is Luko’s strength: a simple, effective underwriting process. All this with a little extra touch….

… 📡

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Simplify and propose a more innovative and fairer approach

Making a complicated process simple: that’s what we’ve always tried to do at Luko. The endless procedures, the complicated insurance terms, the hidden exclusions (a small asterisk here, another one there)… We get rid of them!.. However, it is not always easy to do this without oversimplifying, without leveling the risks, without reducing to such an extent that the insured is not sufficiently covered.

So to make sure that we didn’t make any mistakes, we started from 2 simple observations:

1. Every house is different

How to determine that these 2 houses are different? Simply by using their geographical coordinates and elevation levels.

From there came our first idea: to create a ++ subscription that uses satellite imaging technologies. When the user gives us his address, we get the latitudes and longitudes thanks to Google Maps, and we place a point near his house. But we do not stop there: we then load all the cadastres available in the area and ask the user to confirm which one (or several) of the parcels belong to him.

So we can go further than Google Maps and understand exactly what its land looks like. Once identified, it allows us to intelligently determine the surface of the ground, the surface of the roof, and what is on the ground **: today swimming pools, tomorrow trees likely to fall on the house in the event of a climatic event, the day after tomorrow… everything is possible!

2. Informing is protecting

Today, data is everywhere, tons of information are available in all directions. The real challenge is to be able to process these data and present them in a clear and understandable way.

Geo-risks, for example, is an extremely rich government database, with hundreds of risks documented. Yet few people we know have been there to learn more about the radon risk of their property, for example (if, like me, you had never heard of radon before today: https://fr.wikipedia.org/wiki/Radon), or about the historical climatic events that took place near their home.

Geo-risks data is part of this data that we have strived to simplify and make accessible to our users.

We offer each person who goes through the Luko underwriting process (without even having to insure themselves) a detailed risk report, divided into 4 main risk families:

• the field risk
• the risk of flooding
• industrial risk
• and the risk of theft

These 4 major risks are undercut in our risk report. For field risks, for example, we include:

• ground stability (e.g. risks of proven ground movements, known and at-risk underground cavities)
• localized natural hazards (e.g. avalanche risks if you live in mountainous areas)
• the quality of the soil (e.g. porous soil)
• and the risks related to the land that do not fall into any of these 3 categories are classified as “other”.

Without being a geological expert, our user has a better understanding of the risks (and non-risks) associated with his geographical area. This way, he can better protect himself against it.

For this risk analysis, we kept in mind Luko’s mission: to protect homes. This is our ambition with sensors, and we are renewing it with this innovative subscription product.

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What we’re planning for tomorrow

Based on these 2 simple observations, we have reinvented our underwriting process to offer our new policyholders a new experience for their home, one that reassures and insures them.

We are far from having fully utilized the capabilities of satellite imagery: we are still in the early stages, but hundreds of applications are possible.

Reimburse better and faster

Our risk carrying partner, Munich Re, the world’s largest reinsurer ( i.e. an insurance company, which insures insurers) has started using drones to map land in Canada before and after disasters.

This technology could allow us to pay back faster in the future because we could see the damage instantly. It would also eliminate the need for an expert to go on site to see the damage for himself, a godsend for the least accessible territories. And to facilitate the coordination of our assistance services and expert repairers.

Prevention: “information is power”

In addition to improving our AI algorithms, we aim to manage the data collected in the most accurate way possible. The idea is not to discriminate against policyholders, but on the contrary to offer them a fair price, adapted to their risks, while helping them to protect themselves better on a daily basis through a better understanding of their environment.

Our ambition is not to be “big brother”, it is not to know everything in order not to compensate our policyholders if they make a mistake, but rather to help them not to make these mistakes.

Since its inception, Luko has made it a point of honour to place prevention at the heart of insurance by developing technologies to prevent disasters. And it is with this in mind that the use of satellite imagery coupled with artificial intelligence is part of this approach. We expect to be able to provide our policyholders with personalised advice, depending on their location and even their land: alert in the event of a forest fire or flood nearby, recall to pruning trees too close to their roof, etc.

The applications are endless to continue to make insurance more transparent, truly useful and fair.

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Originally published at https://www.luko.eu on July 1, 2019.