Lokky, the Italian data driven insurtech for professionals and SMEs

EconomyUp interviews Paolo Tanfoglio and Sauro Mostarda, Co-founder and CEO of Lokky

Awarded as ‘Best Insurtech 2022‘, Lokki it’s a company Data driven Italian insurtech, dedicated to small businesses, professionals and freelancersbased in Milan and active since 2019. Which moves and grows in the Italian insurance landscape with the added value provided by innovation.

Its strengths are advanced technological solutionswhich open up innovative market opportunities for products that can be targeted to individual needs, e the totally digital approachwhich accelerates and manages estimates on different products, the management of customers’ digital signatures, the archiving of documents in a rapid, effective and scalable way, and supports the correct application of the new rules that aim to increase the transparency and traceability of consents.

Lokky, the award as ‘Best Insurtech 2022’

The current market context and the needs of businesses require increasingly more flexibility in terms of risk management. In fact, the needs and insurance coverage are not all the same: a craftsman, a trader, a professional need increasingly personalized and differentiated products based on their characteristics and their specific entrepreneurial activity.

Lokky responds to this market need by offering a service that would be difficult to receive in the traditional market due to the time and profitability constraints typical of a product delivered in person.

With more than encouraging results so far: in 2022 the startup won the award in the ‘Best Insurtech 2022’ category at the sixth edition of the Italy Insurance Awards, and was included in the prestigious DIA TOP 250 Insurtech. The company also closed an Equity Crowdfunding campaign on Mamacrowd at the end of October, in which the Azimut Eltif – Venture Capital ALIcrowd II fund also took part; with this latest operation, Lokky reaches 5 million euros raised since its inception.

How Lokky was born and its business vision

«From the beginning», Sauro Mostarda and Paolo Tanfoglio, both co-founders and CEO of Lokky, explain to InsuranceUp, «we perceived that in the world of insurance products for small businesses not enough was being done to use the available data, and that above all there was a need to support the Italian entrepreneurial fabric made up of SMEs, innovating not only the insurance products aimed at this world, but also and above all the way of offering them».

These are the considerations, vision and strategies that led to the birth and development of the Insurtech startup: for larger companies and businesses, traditional agents and small brokers fully carry out their function, supporting the customer with the consultancy necessary to understand the needs and personalize the insurance solutions.

However, for smaller businesses – such as small entrepreneurs, professionals and freelancers – this often does not happen: in this case it is not always easy for agents to dedicate time and resources to customizing the policies, especially due to time and profitability limits; often the prizes involved are reduced, the potential remuneration of the intermediary is low and therefore it is uneconomical for the agent to allocate the time necessary for this consultancy.

The mission: cover the insurance needs of the market

In most cases, there is a tendency, therefore, «to fall back on standard solutions», notes Tanfoglio, «which sometimes include coverage that is not necessary or not correctly calibrated, with a consequent increase in costs for the recipient, thus generating strong discontent in customers who find themselves with products that are not consistent with their specific operational needs, of which they also often complain about the lack of transparency and comprehensibility».

Lokky therefore fits into this unsatisfied market need: it is precisely by providing a specific and personalized solution to this problem that customers are convinced to rely on the Insurtech and Data driven reality for their insurance needs.

Of course, explaining a complex insurance product online is not simple, even considering the specificity of the vocabulary used; «For this reason, from day one, we have worked on simplifying the language», explain the co-founders of the Insurtech company, «increasing transparency, combining the digital experience with the support of insurance experts on the telephone who are always available to our customers».

What Lokky offers

Lokky offers professionals and companies a personalized, simple, fast and totally digital experience: from understanding insurance needs, to product customization, through payment and up to the issuing and signing of the policy.

Using innovative technologies in the field of Smart analytics and Data enrichment, with the proprietary algorithm optimized in recent years, the startup offers the most suitable coverage for individual needs, through total customization of the available products.

«Our proprietary algorithm», explains Mostarda, «is a key and characterizing element underlying Lokky’s positioning on the insurance market. It is a constantly evolving area, which allows us to profile customers and offer a product that tries to adapt as much as possible to their needs».

Algorithms and continuous data updating

Defining the optimal level of insurance coverage for a customer is not an exact science and is subject, among other things, to the customer’s risk appetite; it is a process of continuous refinement and evolution, guided by the feedback collected from customers and by constant comparison with the work done by insurance experts.

Just like in a traditional relationship, it is a process of making suggestions to the customer, collecting feedback and progressively adapting the proposed insurance solution. «In addition to the feedback received from our customers», the insurance startuppers point out, «we had the opportunity to test the algorithm on other channels, which in some cases also involved the traditional agency network itself. It was the agents themselves who confirmed the quality of the results and gave us feedback to further improve its reliability».

Reaching and raising awareness of the insurance issue in a historically underinsured target market requires an innovative approach also in the way of reaching and speaking to potential customers. Alongside ordinary digital channels – such as search engines – and more consumer channels, such as social networks, «we add an ecosystem approach», underlines Tanfoglio, «where our offer is conveyed through partners who choose to enrich the experience for their business customers with a co-branded, highly personalized platform».

Lokky, the embedded insurance model

Lokky is, in fact, natively ready to be ‘integrated’ by external partners, both digital and physical (financial institutions, Fintech and Corporate), to be ‘customised’ to offer an innovative experience to its partners’ customers and, above all, to be ‘fed’ with the information assets in their possession, in order to make the proposed insurance offer increasingly streamlined and relevant.

“Ours is therefore an embedded insurance solution that leverages a platform natively open to the ecosystems orchestrated by our partners, and all in line with the regulatory constraints that increasingly regulate the distribution of insurance products,” the two co-founders point out.

They point out: «our objective was, right from the start, to be the preferred insurance partner for ecosystems with business customers», as demonstrated by the many already active partnerships which include both fully digital operators, such as Hype, ProntoPro and SumUp, and less digital operators such as Toshiba Climatizzazione, SunCity and TeamSystem.

Policies and solutions for micro-businesses, professionals and freelancers

In Italy there are around 6 million micro-businesses, professionals and freelancers, and there is only one characteristic that unites them: high heterogeneity. The company currently covers the insurance needs of more than 200 types of customers, with solutions ranging from damage to buildings to civil liability, employee liability, damage to contents, theft, professional liability, legal protection, other damage to property, and cyber risk.

“It seems like a lot, but we know that there is still a lot of work to do to give every entrepreneur and professional the range of insurance coverage suited to the risks they are exposed to,” they explain to the Insurtech startup. And they observe: «we have not even begun to reach all the professionals registered in a register, such as technicians, accountants, doctors, farmers and breeders, and the whole world of freelancers which has literally exploded with the increase in digital professions».

The obstacles to overcome for an Insurtech startup

«After our study experiences in Italy and abroad, we worked in national and international companies in the consultancy and financial sectors and over the years developed a network in the insurance sector. However, despite the contacts established, we felt to all intents and purposes like outsiders in the sector having never worked within this market segment», note the two co-founders of Lokky.

And they point out: «this aspect constitutes the real obstacle that we had to overcome because, despite the transversal skills acquired through work experience in various fields, the insurance sector is historically not open to contamination with other markets».

Furthermore, as regards investors, «we have found that it is difficult to find national funds specialized in the insurance sector with targeted knowledge: even if there are specific skills, investors are mostly individual business angels». On the company side, however, «there are still very few examples of openness to investments in startups, both directly and indirectly through funds, and this is certainly a lack of financial resources ready to support the innovation that the entire sector must face».