Chris Slater – Oka, The Carbon Insurance Company

Our latest Spøtlight is on Chris Slater, Founder and Chief Executive Officer of Oka, The Carbon Insurance Company. Oka is de-risking the voluntary carbon market for buyers and sellers of carbon credits through its carbon credit insurance solution, which provides buyers with financial compensation in the event of unforeseeable and unavoidable .

Hi Chris, could you tell us a little about yourself, and your career leading up to your current role?

Before founding Oka, I spent 15 years as the Co-Founder and COO of Simply Business, a US- and UK-based insurtech B-Corp that pioneered online quote and buy for small business insurance. After it was acquired by Travelers Group in 2017, I entered the world of venture capital, investing in mission-driven startups and scale ups.

One of the companies in our portfolio was an embedded auto insurance company called Salty. In 2022, a chance conversation with Salty’s executive chair, James Hall, catalyzed a journey of discovery in the carbon markets. I found it fascinating how frequently conversations came back to these twin challenges of quality and risk. The voluntary carbon market (VCM) is unregulated, meaning corporate buyers take on all the balance sheet risk in the transaction, as well as any potential reputational fallout. There’s no elegant risk transfer mechanism.

I hadn’t expected to return to insurtech, but this was such an obvious and exciting opportunity — commercially and in terms of climate impact. It just made sense that insurance was the missing part of the capital stack. And so Oka, The Carbon Insurance Company™ (Oka) was born.

Can you introduce us to Oka and tell us in your own words what your company does?

Our mission is simple. We want to ensure that every carbon credit is insured.

By overcoming buyer concerns and obstacles to carbon credit project investment, we’re aiming to unlock liquidity and scale in a market that John Kerry recently projected would be “the largest the world will have ever known.”

Our first-of-its-kind insurance solution, Carbon Protect™, provides buyers with financial compensation in the event of unforeseeable and unavoidable post-issuance risks. The risks we cover fall into two main categories, reversal and invalidation. Reversal happens when the carbon associated with a credit returns to the atmosphere, due to a natural catastrophe or human-induced activity (such as illegal logging on a reforestation project). A credit may also be nullified through invalidation, if the registry determines that a credit doesn’t represent 1 ton of CO2  due to issues such as over-crediting, non-additionality, or double-claiming. In these circumstances, our policy pays out.

Issued credits that are wrapped in insurance send a strong signal of quality and safety to the market. They eliminate any question of one credit equating to one ton of carbon sequestered or avoided in the atmosphere.

Oka raised an impressive early-stage funding round last year – how was the fundraising experience, and how has that funding been used to contribute to your company’s growth/roadmap so far?

I’ve been in the insurance industry for almost my entire career. Had you told me 15 years ago that you could launch a new insurer with a lean team in 12 months, I wouldn’t have believed it. Yet we’ve been able to do just that. From conception and fund-raise at the end of 2022, we’ve established a full-stack insurance carrier and Lloyd’s syndicate.

Our goal — to catalyze market scale with best-in-class risk solutions — made us laser-focused on product development in 2023. Mobilizing support across the insurance industry, from reinsurers to Lloyd’s, we were fortunate to work with the best minds in pricing, underwriting and legal counsel to bring the world’s first embedded carbon insurance product to market.

We built out sophisticated pricing and underwriting models for a range of project types, including both nature-based to engineered solutions, across the world. We’ve also developed frameworks for policy administration, ratings, customer service, and operations, giving us a glidepath to automation and efficiency as we scale. We’re now working with customers — the first of which we announced last month — to embed our first-of-its-kind coverage into their point of sale.

I’m humbled to say the ambition of the team hasn’t gone unnoticed. Last year, Oka was recognized as one of the 100 world-leading companies in both the InsurTech and ESG FinTech industries.

Carbon credits have been of growing focus to the industry recently – from your point of view, what types of carbon credits are more/less in demand today, and will that continue to be the case in the future, or do you think that will change?

The VCM was besieged by controversy in 2023. Thanks to new disclosure regulations on both sides of the pond, however, the long-term, structural case for the VCM has never been stronger. Many of the world’s largest organizations will need to offset their emissions to come within range of their decarbonization targets. As a result, we’re seeing unprecedented demand for high-integrity, high-quality credits.

I don’t see that trend abating; if anything, the flight to quality will only grow. Market-wide standards for quality carbon credits, published last year by integrity bodies the ICVCM and VCMI, are designed to help steer buyers towards quality. If, however — as recent research suggests — fewer than 20% of projects meet those standards, the bigger question is: Can the market match demand with volume in the near term?

That’s where insurance can play an important role, in bridging the gap between quality and supply.

While some project categories are perceived as lower integrity overall, for instance, there’s no shortage of projects within those categories that are high quality and insurable. Coverage sends a strong signal to the market, while providing buyers with protection in the event those projects fail to retain their integrity.

Alternatively, some individual projects are deemed lower quality because of their inherent permanence risks. We can eliminate that risk through our coverage, elevating their value in the market.

Finally, there are emerging project types that are currently viewed as high quality (e.g. DAC, biochar), but due to their nascency and lack of historical performance data they still carry uncertainty risk that can be mitigated by investors and buyers through insurance.

Which sectors do you see participating in the carbon markets in a more prominent way in the future?

Given the size of the opportunity, we expect the insurance sector to enter the market in larger droves — particularly as insurers grow more familiar with the risks and as historical data becomes more readily available for pricing and underwriting — which will improve risk capacity.

Elsewhere, large players in the banking sector are scaling up their involvement as builders of infrastructure and platforms. We’re also seeing the rise of digital infrastructure and tech companies, particularly those with innovative solutions for monitoring, reporting and verification (which is critical for ensuring high integrity credits). In sector terms, international aviation will be reliant on carbon markets as CORSIA begins to roll out.

Oka has recently seen Syndicate 1922 go live – can you tell us more about the Syndicate, and what you hope to achieve with it?

Oka Syndicate 1922 — through which we provide dedicated coverage against post-issuance carbon credit risks — commenced underwriting in January 2024. The syndicate-in-a-box (SIAB) framework was designed to help entrepreneurial businesses establish a Lloyd’s underwriting platform. Oka is one of just eight selected SIABs, making this a really massive achievement for the team and a testament to the market opportunity ahead.

The Lloyd’s model brings a few unique advantages: association with the Lloyd’s brand and its A-rated paper; access to the world’s leading insurance marketplace and syndicated capital; and the global license. Also, the license opens the door to our international expansion as we continue to confront this global challenge.

Oka and Cloverly have just launched a new brand of insured carbon credits for the VCM – congrats! Can you please tell us why you decided to launch this new product, and the benefits it will provide customers?

As we get closer to corporate decarbonization deadlines of 2030, carbon offsetting is going to become an increasingly important lever for thousands of companies, particularly those in sectors with hard-to-abate emissions. On the other hand, the market is still in flux and the landscape evolving, making due diligence time consuming and expensive for corporate buyers.

The result is high uncertainty risks for companies buying or looking to buy credits. We want to give those companies the confidence to procure credits, knowing that the uncertainty risks are transferable. Oka-protected credits, such as those distributed by Cloverly, come pre-wrapped in insurance, meaning that customers are under no burden to take on extra due diligence themselves. Our goal is to create as smooth a pathway to the VCM as possible.

And finally, what are your plans for 2024? Any key targets or milestones you can share with us?

Growth — of both Oka and the carbon markets! We continue to see public enthusiasm for carbon solutions — from large bets on emerging carbon capture technologies to enormous investment in nature-based solutions — which is commensurate with what we’re hearing in conversations behind the scenes. The primary hurdle to broader corporate uptake is risk, which makes insurance a catalytic opportunity to unlock confidence in and capital for the VCM — to bring it to maturity.

To that end, our plans, in one word? Expansion. If 2023 was about consolidating our product and position, in 2024, we want to bake insurance into as many transactions as possible. Once rigorous risk infrastructure is a core pillar of the VCM architecture — as it is for all other sophisticated markets — then we’ll really start seeing the benefits of what could be a century-defining market.

If you’d like to find out more about Oka, please visit its Sønr profile, or you can check out its website.