The story of PIKL (not named after a cat)
Why own a car when you can locate one nearby, via your phone, and rent it for the day? Need extra storage? Rent additional loft space. Fancy a short break? Visit Airbnb and enjoy the comfort of someone else’s home. This is the sharing economy. And it’s big business. By 2025 it’s estimated that the market will be worth 140 billion and short let could account for 50% of the entire UK lettings market.
But there’s a problem; traditional insurance products are developed for ownership rather than access models. This particularly affects homeowners, who are unwittingly letting their property via Airbnb without sufficient insurance cover.
It’s this gap in the market that compelled Louise Birritteri and her four co-founders to launch PIKL, a specialist insurance provider for the sharing economy.
100% of insurers don’t cover short lets
The inspiration for PIKL came to Louise while staying in an Airbnb. She was contracting for Co-op insurance at the time, leading their pricing team through some “challenging times”. She began to investigate how Airbnb properties were insured.
In a survey conducted with 90% of the UK insurance market, Louise discovered that 100% of insurers don’t cover short letting as standard. They also expect customers to disclose if they are short letting. Yet they never directly ask applicants this question.
The survey also revealed:
- Less than 30% of people hosting on Airbnb have told their insurer.
- In 39% of cases, if they had rung their insurer and told them they were letting their property on Airbnb, their insurer would have cancelled their home insurance policy with immediate effect.
What this means is that there’s likely no injury liability protection for a consumer staying in an Airbnb. And homeowners could be uninsured for instances such as escape of water, malicious damage, theft, or liability if they are hosting.
Louise soon realised that the gap was larger than just Airbnb. “The thing that Airbnb has done is allowed people to share their property on a short-term basis,” she explains. “The gap in the insurance market is that anything short-term of that nature, where you are lending peer-to-peer, so making money from your asset, isn’t covered by an insurance policy.”
Coming from a family of “hardworking business owners” starting a business seemed natural to Louise so in 2016 she co-founded PIKL. The name evolved from a discussion around what it feels like when someone needs to make a claim. Louise also has a cat named Pickle but insists the company was not named after her cat.
Achieving “capacity”
Gaining funding for an insurance start-up differs from other businesses, says Louise. Insurance companies have to get what is called “capacity”. “This is where, if every home that’s insured through the company were to experience something like a fire, the business has enough money to cover the claims.” According to Louise there are only a handful of companies in the world with sufficient capital to extend this capacity.
“As an insurance start-up you have to go through a capacity raise,” she continues. “You have to partner with an incumbent in the market to borrow their balance sheet in order to get insurance products to market.”
From three successful pitches they selected UK General, which gave PIKL access to capital from Munich Re, one of the largest reinsurers in the world. “This meant we had top quality insurance paper. We’ve got A-rated insurance products, which means you are very unlikely to not have your claim paid out.”
“Go big or go home”
In mid 2018 Louise and her team were ready to launch their first pilot. By now they were seeing competitors either launch, or getting ready to launch, and were at risk of losing their competitive advantage.
“We needed to go big or go home,” says Louise. With proof-of-concept PIKL needed to grow, to expand its partnerships and the number of products. It was at this point they concluded they needed to raise £2 million.
They began by approaching venture capitalists. “What we learnt was that venture capitalists like to have the comfort of having an Angel already invested,” says Louise. “They like to have someone with a name and who knows your industry.”
Having held senior roles at leading insurance companies including Aviva, RAC, Arthur J Gallagher, and Sainsbury’s, Louise had many industry contacts to call upon. This is how she met Kris Jones at TechVelocity, a start-up incubator in the East of England.
“Kris gave us a tremendous amount of help in terms of understanding the funding routes that were available to us at that stage,” recalls Louise. “He introduced us to some of the local Angels in Norfolk and that got us our first investment.”
Through her network, Louise was also introduced to Sir Peter Wood, Founder of Direct Line Group and one of the top entrepreneurs in the insurance market. “He loved it and he made me an offer.” With further investors on board, including Bain Capital one of the top 10 private equity firms in the world, PIKL succeeded in raising £2.5 million.
As PIKL approaches its third birthday they’ve scaled the team from 5 to 21, insured over 200,000 nights and have their first wholesale partner live. They’ve also won two of the top insurance industry awards: Insurance Times ‘Start-up of the Year’ and Insurance Age ‘Digital Broker of the Year’. “We’re just on that cusp of pushing out something big,” concludes Louise. “I’m really excited about what next year is going to bring for us.”