Why insuring the circular economy makes sense for investors
While on parental leave with his second child, Ola Lowden considered the rise of the circular economy and how the insurance market was failing to keep up. Seeing a gap, he and Emanuel Badehi Kullander founded Omocom and set about preparing comprehensive insurance solutions for multisided platforms.
From his time working on a sharing economy report for the Swedish Ministry of Finance, Ola knew that traditional insurance providers tended to underestimate the long-term impact of the sharing economy. But with consumer behavior patterns changing fast, Ola was convinced of the need for solid insurance products on Peer to Peer Partnerships and resale platforms.
In Sweden in particular the need seemed clear: the country is already practically cashless, environmental awareness is high as is interpersonal trust, while Swedes are also quick to adopt new technologies.
The circular economy is here to stay. Who’s going to insure it?
Instead of building systems and processes from scratch, Omocom partnered with the insurance companies and now acts as an intermediary between insurance and sharing economy platforms. Having hired leaders from companies like the Swedish FinTech unicorn Klarna, Omocom was quickly able to replicate the simplicity of FinTech products in the insurance industry.
The company achieved a significant breakthrough by partnering with TipTapp, an app that helps users transport items such as furniture when resold through second hand platforms such as Blocket. The cooperation allows users to insure the items while they are in transit. Omocom’s ‘insurance-on-demand’ product costs the user between €2 and €6 and covers damages up to €150-€1000 with no deductibles. As of Q3 2020 Omocom’s services are being provided on 13 platforms in three countries.
While the long-term trajectory remains promising, Omocom’s path to profitability has been rocky at times. As a young father, it was challenging to resign from stable employment at the National Board of Trade to embark on the uncertain journey of entrepreneurship. What’s more, insurance and reinsurance are strongly regulated and obtaining licenses from the regulatory authorities is a complex and capital-intensive process.
Despite the many challenges, including the unforeseen coronavirus pandemic, Omocom has now closed a seed round, although they had to seek the majority of the investors outside the Nordics. Ola remains convinced that the current crisis and the economic downturn will only accelerate the transition towards a circular economy as more customers look to reuse products rather than buying them new. For this reason, he remains optimistic about the company's future.
Recently both co-founders decided to add a new member to each of their families and will make use of parental leave again. As their first parental leave resulted in Omocom, perhaps the new ideas and strategies developed this time around may result in Omocom becoming Sweden’s first InsurTech unicorn.
Ola Lowden's story is featured in the new Stockholm FinTech Guide, which you can download here (PDF).
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