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Ten years ago, Locket CEO Krystian Zajac was jet-setting around the globe; rubbing shoulders with some of the wealthiest, most discerning clients on the planet and installing custom smart technology in their mansions and penthouses. Smart home wouldn’t hit the high street for at least another five years. An average project ran into hundreds of thousands, if not millions of pounds, and the technology came in huge, industrial equipment racks that occupied entire rooms in your home. It was a world apart from the plug-and-play systems and drinks-can sized smart assistants that are so well-loved today.
But despite the success of his multi-award-winning international installation company, Krystian couldn’t escape the feeling that the people who would benefit the most from the time, money and energy-saving benefits of the technology were the ones who could least afford it. So he pivoted entirely – and set out on a decade-long quest to democratise smart technology for everyone.
We sat down with Krystian to learn more about his latest venture, Locket, and how it’s putting smart technology to work to help protect people and their homes.
So tell us about how you got from billionaires to… buildings and contents insurance?
Smart technology has been around for decades, but for the longest time it was a plaything of the rich and famous. We looked at technologies like smart occupancy detection – “if I leave the iron on, turn it off for me so I don’t burn the house down” – and we thought, that’s just not a problem billionaires need to solve. It’s a problem for someone who’s rushing out of the door, trying to make the school run on time so they can get to their desk by 9 o’clock and not get fired. So we set out to find ways to make the benefits of smart technology accessible to everyone. Locket is a new kind of home insurance that focuses on protection, not just pay-outs – we help you to protect your home with smart technology, and then we reflect your increased safety with ever-more-competitive insurance pricing. You can offset the cost of equipping your home with smart technology, and get more of what you actually wanted from home insurance in the first place: safety, security, peace of mind.
Why home insurance? What about the industry makes it a good vehicle for this idea?
Not a lot of people realise just how broken the insurance industry is today. At $7 trillion it’s the single-biggest industry on the planet by quite a margin; there are more insurance policies than people. But customers are almost universally dissatisfied. Only one person in ten trusts their insurer, and that’s according to the industry’s own representative body (the ABI). Two in three people think their insurer will try anything to cheat them out of a pay-out.
But at the same time, claim payouts are by far the biggest cost-centre for insurers. So you’re stuck in this weird Mexican standoff where people buy insurance for extra peace of mind, but then don’t trust that it’s actually going to work… and insurers can’t ever really win hearts and minds, because every pay-out comes directly off their bottom line. They’re financially incentivised not to pay out. It’s a conflict of interests, baked right into the model.
Locket flips the script. We help you to get safer all the time, and protect the things you love. If we do a good job, you don’t need to claim, so we save money – and we share the benefit with you. It’s a completely different incentive structure, and it’s synergistic; nothing like the zero-sum model of incumbent home insurers. We’re playing on the same team as customers for the first time.
You’ve obviously got pedigree in smart home, but this isn’t your first insurtech venture either, is it?
No. Our last insurtech venture, Neos, ended up getting acquired by the UK’s largest home insurer, so that was a good result. Several of the key players from that venture decided to reform around Locket a few years later. We’ve actually got a number of people who’ve followed us all the way from the original custom technology company, so there’s some amazing expertise handed down there. Smart home is still a very young field, and so is insurtech – we count ourselves fortunate to have decades of experience in the leadership team alone. It’s part of our secret sauce as a company.
Aside from the smart home angle, is it otherwise standard home insurance under the hood?
No, we think there’s a lot of room for improvement in how conventional insurance works as well. So to give a couple of examples – traditional insurance pricing works by asking you an average of about 60 different underwriting questions, and then creating an aggregate risk score which you can use as the basis of a price. It takes maybe 30 minutes to get through that questionnaire. But a lot of the information is already available on the internet – so we automated the process by writing an algorithm that queries premium data sources, which provide us with reliable information. That means you only need to answer five or six questions – taking maybe two minutes of your time, max. It’s the kind of thing that’s difficult for an incumbent insurer, hampered by legacy tech stacks built in the 80’s… but it’s very native for us as, first and foremost, a technology company.
Likewise – there’s something called an MTA, a mid-term adjustment. It means making a change to the terms of your policy when it’s already active. To do that with an average old-school insurer – you have to call them, wait on hold, give them the info, pay a £30 fee to cover the guy who sits in a chair and takes your calls all day… they re-generate your paper policy wording, post you out a new one… As a tech-first insurer, we just let customers make the change in the app. It happens instantly, we recalculate your price on the spot, dynamically update your policy wording to reflect that. In the future, we could even adjust your policy automatically in response to some external trigger – say you’re an AirBnB host. You need extra cover whenever you have guests. But why pay for it when you don’t? We could integrate with your AirBnb calendar and turn the extra cover on and off based on your needs. Building the whole tech stack in-house lets us run rings around incumbents and create a different kind of service.
That sounds excellent. Just for fun, what’s the craziest thing you created for a client in your old life?
I can’t talk about a lot of it, but we did things like a swimming pool that converted into a ballroom at the touch of a button… hidden underground panic rooms with biometric access and their own uninterruptible power, water and internet. One client built what I can only describe as a castle – seven floors on top of a Swiss mountain; 10-meter tall windows with sweeping views out over the Alps. Huge TVs that retracted into the furniture at the touch of a button. A hidden library, an underground lake, its own ski-in-ski-out access. Real James Bond, Tony Stark stuff. We learnt a lot from jobs like that which we now apply in the far less glamorous world of home insurance!
Krystian, thanks so much – great talking to you and all the best for the future.
Thank you too, my pleasure!
Locket have exceeded their £750,000 campaign on Seedrs to help bring smart home insurance to the masses, but you still have a chance to get in on the action. Visit the campaign to invest in a $7 trillion market that’s ripe for disruption and help change home insurance for good.