Behind every new idea is a problem that needed solving. For Tahir Farooqui (pictured), founder and CEO of Canopy, a London-based insurtech providing of services the rental sector, his business concept was inspired by his experiences renting in a myriad of locations. Between living in the UK, Australia, New Zealand, Europe and the US, he said, he found that renting was tough and that the financial services sector has tended to underserve the renter - and thus Canopy was created to combat that trend.
“Canopy was founded to give visibility to the nearly 13 million renters in the UK,” he said. “We want to build a platform that uses data, and uses emerging technology like open banking, to find ways to save renters money. And also to find ways to build products, which offer renters the right protection at the right time so that insurance is embedded into the renter’s journey as opposed to an afterthought.”
Renters paid nearly £85 billion in rent last year, Farooqui noted, but despite rent being the biggest single expenditure of tenants, it is not reflected in their credit scores. This means that when tenants want to access other products such as insurance, a loan or a savings product, their rental history does not impact their credit score. Every time somebody moves, they have to go right back to the beginning of the screening process, so the entire system is fragmented. Canopy is using data to help renters build a portable rental profile and providing tenants with ‘Rent Passports’ to track their rental history and build their credit scores.
This rental profile makes moving significantly easier, he said, as all employment contracts, credit profile information and references are instantly at hand. It allows renters to carry the trust they built through their last contract on to the next property, similar to what an Airbnb profile does for the short-term rental market. Also, Canopy allows renters to utilise open banking to track their monthly payments, allowing them to improve their credit score which opens up opportunities to think about other products such as contents insurance, pet insurance or bike insurance.
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“These are partner products, we have partners like Laka and Urban Jungle, and Anorak for income protection, so we’re looking to offer a range of curated, best-in-class, affordable financial products for renters on the Canopy platform,” he said. “What we’re doing is looking at how we can embed insurance into the life of a renter, just like Uber and Airbnb have become part of everyday life so that, next time our clients are looking to move, they’re already thinking about protection.”
Farooqui firmly believes that ecosystems are the future of insurance, following on from examples set by the likes of Tesla, which now offers lifetime car insurance as part of the bundled offering. Looking at the life of the average renter, he said, it starts as a 21-year-old graduate and on average people in the UK rent for about 10 years and move every 20 months. Every time people move they can utilise these services and, in the future that the insurtech is looking to influence, it will be possible to deploy your rental profile internationally and access global protection products with ease.
Insurance companies have reacted well to the concept, he said - Direct Line Group is one of Canopy’s biggest investors as it is looking to get closer to a new generation of renters and to become embedded in the life of its clients. Canopy will also be looking to work with brokers as it is first and foremost a data and technology company and it wants to encourage maximum uptake of its services. As it stands, Canopy has about 25,000 renters on its platform which is projected to grow significantly.
“Over the next 12 months,” he said, “we’re looking to grow from 25,000 users to circa 150,000 by the end of the year and the second metric is that we are looking for about two million by December 2022. But in addition to growing the number of Canopy-rated renters on the platform and enabling renters to track their monthly rent, our other metric is cross-selling different insurance products on the Canopy platform.”
When it comes to the rental sector, Farooqui said, there are two traditional ways to improve rental affordability – either rents go down, or everyone starts earning £1 million a year. The latter isn’t likely and, if the last 20 years are anything to go by, rents are not likely to go down either. Insurance and technology companies, therefore, need to start finding more innovative solutions to support financial resilience, and a key part of this is the provision of insurance products that are affordable and accessible to the general public.