This week we shine the Spotlight on Tim McCosh, Founder and CEO of Yokahu. Yokahu is a parametric insurtech focused on closing the tropical cyclone protection gap, and it’s currently raising funding before its launch in January 2021.
Hi Tim, could you tell us a little about yourself?
I grew up in Scotland and moved to London after university. I found my way into the london insurance market where I was a broker of international property (re)insurance. After a year or so I started to look after clients from the caribbean region and in roles across two different companies built up a great network in the region whilst diversifying my product knowledge beyond just property insurance to several classes.
In 2017 I saw the impact of Hurricanes Irma and Maria in the caribbean and USA. I felt as an industry we needed to do better. In June 2019 I decided it was time to be part of the next generation of insurance services and left my job to figure out where I could create value and that has led me to Yokahu.
Can you introduce us to Yokahu and the problems its solving?
Yokahu is focussed on closing the tropical cyclone protection gap – the amount of economic damage caused by a tropical cyclone that isn’t currently insured. More specifically we are starting with the caribbean, where the protection gap in 2017 was ~USD 50bn. The region is set to be one of the most impacted by climate change and increased hurricane strength, whilst it also has a population where a large proportion are unable to afford or unable to access existing products.
We aim to be the M-Pesa of catastrophe insurance. Our initial product is a direct to consumer product that enables people to at least partially insure themselves from hurricanes, rather than potentially lose everything. Customers chose an affordable monthly payment and in return are paid pre agreed lump sums when they are affected by a hurricane. The stronger the hurricane, or the worse they are affected by it, the more they receive. The whole product is managed from a mobile phone and the customers have the money within 24 hours of the storm.
Tell us a bit more about the technology that enables Yokahu’s parametric 24-hour claim payout.
Our platform will be fully automated and constantly receive data from weather sources such as the National Hurricane Center. It will overlay this in real time with our policy holder information and when a policy is triggered the payment is made automatically. The whole platform is designed to run in such a way that we can handle the millions of customers we want to service in the future.
What’s your view on your market? What are the opportunities and threats?
The tropical cyclone protection gap is a huge problem and directly affects 1.6billion people globally. With climate change the problem is only getting bigger. I was at a conference earlier this year where it was discussed that the insurance market needed no more capital to close the protection gap globally; only more products. So the opportunity is enormous.
There will be competition of course, but the biggest threat I see is regulatory. A lot of countries where parametric insurance could be applied to help protect their economies have regulations that treat parametric insurance as gambling. I believe this stems from products that have had a poor handle on basis risk historically. With new technology and new products with better management of basis risk, I am confident of this environment changing.
You’re currently raising funds – are there any details you’re able to share?
Yes we are. We have self funded to date, and have successfully validated our commercials, built an underwriting model and agreed a letter of intent with an insurance carrier to underwrite the risk. We also have an agreement to be regulated in the UK as an appointed representative.
We are looking to raise our first outside investment to enable us to build our technology platform and onboard our first 2000 customers. My main focus at the moment is assembling the right set of advisors/board members and sourcing capital. So we would be happy to discuss this in more detail with any of your readers who would be interested in being involved in our journey.
What are Yokahu’s plans for the next 12-months?
I’m really excited about our plans. With a successful raise we will be building out our technology stack and launching our product in Q1 2021 to customers in 14 different nations in the Caribbean. We plan to run a pilot next year with up to 2000 customers, and already have the first hundred or so signed up awaiting news of our launch. We will also be working in the background to establish partnerships to access customers in more jurisdictions in the future.
Our first hurricane season will be a huge opportunity to learn from our customers what they like about the product and what can be improved. It is also a critical time where we have to deliver the service our customers are expecting. We want to exceed our customers’ expectations as their recommendations are a key part of our future growth plans. So if a hurricane affects a customer of ours it is vital that we have already put the right processes in place with our partner insurers to ensure triggered policies are paid in the timeframes we expect.
There is a huge amount of work to do, but I cannot wait to deliver an insurance product people want to buy and that will positively impact so many.
I’m really excited about our plans. With a successful raise we will be building out our technology stack and launching our product in Q1 2021 to customers in 14 different nations in the Caribbean.Tim McCosh, Yokahu Founder
If you had to give one piece of advice for aspiring startups looking to disrupt the insurance industry, what would it be?
Don’t try and do it completely from the outside. For all its faults, the insurance industry has a wealth of knowledge and because of its old fashioned ways people have incredible networks. So my advice would be to talk to people within the industry. Everyone I have spoken to about Yokahu has been willing to help and suggest more people I should speak to. All of these conversations have been helpful in some way. Insurance isn’t quite as simple as some people think and so having these conversations will likely help with all sorts of different challenges and likely lead to a more complete business proposition.
Is there a startup within the insurance or wider financial services space you really admire?
There are a number! I have met a lot of insurtech founders in the last few years, and also been an early adopter to a few. I have to say I love my ByMiles car insurance policy – and that was before Covid 19 meant I didn’t drive anywhere so I didn’t have to pay!
More broadly, I think you have to admire Monzo. I know it’s an obvious one, but to get the customer numbers they have in the retail banking sector in such a short period of time is, I think, a testament to the product they have built. I went to one of their events a while back about how they had structured processes internally and left really impressed with how they scaled their own internal structures so that at the time they could onboard team members in minutes and the whole internal IT support for 2000+ employees was run by 6 people. This sort of approach was so interesting to see and I am sure will continue to reward them with success.