lane
Veteran
Despite being mainly about car insurance near the end of the article is information about a new way of insuring bikes.
https://www.bbc.co.uk/news/business-45758926
https://www.bbc.co.uk/news/business-45758926
New Bike Insurance Model
- Thread starter lane
- Start date
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Slick
Guru
Mm, somebody somewhere has sat down and tried to once again take a reasonably simple business transaction and turn it into an overly complicated serious of steps to make you think your paying less but actually paying quite a bit more.
There will obviously be lots more people for the cops to sweep up late at night without insurance.
There will obviously be lots more people for the cops to sweep up late at night without insurance.
deptfordmarmoset
Full time tea drinker
- Location
- Armonmy Way
OP
OP
lane
Veteran
OK so had a look at the small print. Yet again only covered if the bike is locked with sold secured gold rated lock. That is exactly the reason I never use any bike specific insurer. I will continue with my home insurance cover even if it costs me more because I don't like carrying a massively heavy lock on any ride I want a quick café stop in a low risk area. Although I suppose if you are responsible for the claims on the policy you might be happier if everyone else was using a gold standard lock. Not for me though.,
OP
OP
lane
Veteran
Well yes possibly - but presumably not in relation to the new bike insurance model at the end of the article that the thread is about.
Slick
Guru
It's not exclusively for bikes and we surly can extrapolate the topic to include all facets of how it could affect us as consumers?
The devil is as they say, in the small print, which was my own only point.
Drago
Legendary Member
- Location
- Suburban Poshshire
In a sense none of us pay insurance for driving we are not doing - when we take out our policies the insurer asks us to tell them our estimated mileage, and adjust the premium to suit the risk which that level of mileage presents. Less miles = lower premiums, so you pay for the mileage you do, not that which you don't. They're trying to make complicated something that is already accounted for, and which is already rather simple.
PaulSB
Legendary Member
- Location
- Chorley, Lancashire
Complex and unnecessary. I have House Buildings and Contents including a maximum of £10,000 on bikes worldwide for £300 with a known quality insurer.
Why use a new, unknown entity with whom your risk is dependent on the actions of others? Better to control your own life for less money.
Cycle specific insurance is and will continue to be a rip-off.
Why use a new, unknown entity with whom your risk is dependent on the actions of others? Better to control your own life for less money.
Cycle specific insurance is and will continue to be a rip-off.
OP
OP
lane
Veteran
The bike insurance works as follows:
"Technology also now makes it possible for people to club together for insurance.
A firm called Laka puts cycling enthusiasts in groups of a thousand or so.
They pay nothing upfront. However, at the end of the month any claims are totalled up, and shared between the members.
In good months, when there are no claims, they will pay nothing. In bad months, when there are several claims, their liability is limited, meaning they might pay a maximum of £40 or so. "
The article quotes a cyclist who over the last six months he has paid just £22.50 in premiums, instead of £200 under a conventional policy.
Thinking about this it might be possible that you pay £40+ every month depending upon the level of claims. Therefore you are taking some of the risk which insurance is supposed to eliminate.
"Technology also now makes it possible for people to club together for insurance.
A firm called Laka puts cycling enthusiasts in groups of a thousand or so.
They pay nothing upfront. However, at the end of the month any claims are totalled up, and shared between the members.
In good months, when there are no claims, they will pay nothing. In bad months, when there are several claims, their liability is limited, meaning they might pay a maximum of £40 or so. "
The article quotes a cyclist who over the last six months he has paid just £22.50 in premiums, instead of £200 under a conventional policy.
Thinking about this it might be possible that you pay £40+ every month depending upon the level of claims. Therefore you are taking some of the risk which insurance is supposed to eliminate.
Pale Rider
Legendary Member
Crowd bike insurance could work for simple theft claims.
In other words, the largest possible payout is the cost of the most expensive bike in the scheme.
Even then, a cluster of claims could put enormous pressure on the group.
Such a scheme would not work for public liability/injury claims where the claim could run into tens of thousands or more.
In other words, the largest possible payout is the cost of the most expensive bike in the scheme.
Even then, a cluster of claims could put enormous pressure on the group.
Such a scheme would not work for public liability/injury claims where the claim could run into tens of thousands or more.
Drago
Legendary Member
- Location
- Suburban Poshshire
Clearly the people who came up with the idea have never heard of the collapse of the Lloyds Names model. Exactly the same, writ large.
PaulSB
Legendary Member
- Location
- Chorley, Lancashire
I'd like to introduce myself as a cyclist who has never paid a premium to specifically cover my bikes. That would cover the last 24 years - before then I had no bikes worth insuring.
I've just checked my Buildings and Contents insurance including bikes to a value of £10,000. Cost for 12 months was £204.74 - £17/month.
Why bother with Laka or anything else? It's a con.
Hi all,
Tobi here from Laka. I'm one of the founders and am happy to address all of the questions raised.
@Drago you are spot on that we have introduced a modern version of the Lloyds Names model where a group of people come together and agree to contribute to the actual claims cost that happen in a period. However, there is a twist to it: we have bought in a "stop loss" or guarantee from an insurance partner (Zurich UK). The promise is that you will never pay more than the guaranteed personal cap but if everyone takes a bit better care, the savings are yours to keep. On average, customers have only paid half of the personal cap (max. we charged in a month was 77% of the cap - in July, when people are most active).
The Lloyds Model fell apart with the asbestos crisis and Underwriters had to default on their exposure. This can't happen in our case as we would need to see a lot of bikes nicked before Zurich runs out of money.
@Pale Rider you are right in saying that our model works best for theft, damage and loss, which is what we are currently covering. The maximum "hit" is limited thanks to Zurich. To fill a gap though, we are buying in conventional 3rd party liability cover which we are going to launch before the end of this month.
@PaulSB we are an unknown entity indeed and will need to earn trust the hard way: delivering on customer service. We are regulated by the FCA and backed by a large insurance partner, which hopefully takes off a bit of pressure. There are clearly some very good home insurance products out there which might fully address your needs.
Just a few pointers to consider why standalone cover could be of interest:
a) excess - we often see an excess of £500 or higher, meaning that in case of a claim this will be deducted - Laka does not have an excess
b) coverage - we have seen policies that only cover theft at home - 9 out of 10 claims with us are actually for damage
c) claims - often a hassle and you will see the price of your home insurance going up the next year if you claim for your bike
d) community - home insurers put your bike in a pool with ipads, laptops and other "stuff". With us you are pooled with people like yourself, avid cyclists.
@lane we do indeed ask for a Gold lock. Unfortunately this a requirement put on us. However, we only ask you to use it if you leave your bike unattended, which rarely any of our customers do anyways. The more likely scenario is that you take your bike out for a spin on a Sunday and put it back in the secure garage. We are currently revising our policy wording picking this up. Customers should only need to own / use a Gold lock if they want to / aim to leave their bike unattended.
Apologies all of for the massive write-up but I thought I'd address it all in one go. Please fire away any further questions. We are a young firm and believe that customers are much better off paying at the end of the month, based on the actual claims cost the Laka Community incurs, plus a fee for us to keep the lights on. This should be the closest to fair pricing in insurance out there.
If anyone is intrigued, please use this link to sign-up with us to secure £15 of free credit as a welcome gift. We do have monthly renewals and therefore don't lock you in for a year.
Have a great start to the week,
Tobi
P.s.: Laka has won 3 awards at the recent Insurance Choice Awards, a consumer-driven awards show. We pocketed Cycle Insurer of the Year, Best Newcomer and Innovation of the Year, all in our first year of trading (link).
Tobi here from Laka. I'm one of the founders and am happy to address all of the questions raised.
@Drago you are spot on that we have introduced a modern version of the Lloyds Names model where a group of people come together and agree to contribute to the actual claims cost that happen in a period. However, there is a twist to it: we have bought in a "stop loss" or guarantee from an insurance partner (Zurich UK). The promise is that you will never pay more than the guaranteed personal cap but if everyone takes a bit better care, the savings are yours to keep. On average, customers have only paid half of the personal cap (max. we charged in a month was 77% of the cap - in July, when people are most active).
The Lloyds Model fell apart with the asbestos crisis and Underwriters had to default on their exposure. This can't happen in our case as we would need to see a lot of bikes nicked before Zurich runs out of money.
@Pale Rider you are right in saying that our model works best for theft, damage and loss, which is what we are currently covering. The maximum "hit" is limited thanks to Zurich. To fill a gap though, we are buying in conventional 3rd party liability cover which we are going to launch before the end of this month.
@PaulSB we are an unknown entity indeed and will need to earn trust the hard way: delivering on customer service. We are regulated by the FCA and backed by a large insurance partner, which hopefully takes off a bit of pressure. There are clearly some very good home insurance products out there which might fully address your needs.
Just a few pointers to consider why standalone cover could be of interest:
a) excess - we often see an excess of £500 or higher, meaning that in case of a claim this will be deducted - Laka does not have an excess
b) coverage - we have seen policies that only cover theft at home - 9 out of 10 claims with us are actually for damage
c) claims - often a hassle and you will see the price of your home insurance going up the next year if you claim for your bike
d) community - home insurers put your bike in a pool with ipads, laptops and other "stuff". With us you are pooled with people like yourself, avid cyclists.
@lane we do indeed ask for a Gold lock. Unfortunately this a requirement put on us. However, we only ask you to use it if you leave your bike unattended, which rarely any of our customers do anyways. The more likely scenario is that you take your bike out for a spin on a Sunday and put it back in the secure garage. We are currently revising our policy wording picking this up. Customers should only need to own / use a Gold lock if they want to / aim to leave their bike unattended.
Apologies all of for the massive write-up but I thought I'd address it all in one go. Please fire away any further questions. We are a young firm and believe that customers are much better off paying at the end of the month, based on the actual claims cost the Laka Community incurs, plus a fee for us to keep the lights on. This should be the closest to fair pricing in insurance out there.
If anyone is intrigued, please use this link to sign-up with us to secure £15 of free credit as a welcome gift. We do have monthly renewals and therefore don't lock you in for a year.
Have a great start to the week,
Tobi
P.s.: Laka has won 3 awards at the recent Insurance Choice Awards, a consumer-driven awards show. We pocketed Cycle Insurer of the Year, Best Newcomer and Innovation of the Year, all in our first year of trading (link).
srw
It's a bit more complicated than that...
Insurance socialises, not eliminates, risk. The model proposed is as old as the hills - it's exactly wherw Lloyd's of London came from. But unless you know the other members of your pool you will feel stiffed when the cost is bigger than expected.
