Direct Line Group looks to tap into deposit insurance service for ‘Generation Rent’ as it takes 15% stake in Canopy
Direct Line Group has placed a 15% equity stake in rental market insurtech disruptor Canopy (formerly known as InsureStreet).
Canopy aims to offer an alternative to the large deposits normally required by landlords or agents for renters. It was founded by Tahir Farooqui in 2016 to “empower renters” after he witnessed his brother’s struggle to get a large rental deposit together.
By enabling renters to pay for deposit insurance via a web app or iPhone app, Canopy claims that large savings can be made compared to the cost of a traditional deposit.
It uses a ’RentPassport’ to hold information on the renter’s credit and rental history. Individual renters must undergo a credit check to enable the service.
A PwC report estimates that a quarter of all households will be privately renting by 2025 and this is a market that more insurers are tapping into.
For example, Lemonade is disrupting the US rental market, acting as both insurer and digital intermediary with the and the help of its claimsbot AI Jim and a raft of reinsurers including Munich Re, Lloyd’s and XL Catlin. It recently revealed a ‘Zero Everything’ offering for renters, but has not tapped into deposit insurance.
Direct Line announced an unlimited cover home insurance product in March, aimed at tackling the underinsurance problem. This is its first big foray into the possibilities of rental deposit insurance.
According to Direct Line Group director of household development Adam Whitely, the investment is the latest in a series and is “building on our ambition to be at the forefront of advancements in the insurance landscape.”
Whitely added: “The current rental model asks renters to pay deposits of several weeks’ rent, and we believe Canopy’s use of mobile technology provides an innovative solution towards this. By re-engineering the UK’s rental market Canopy are seeking to enable ‘Generation Rent’ to gain access to better financial services products while demonstrating how technology can be a positive disruptor.”
Canopy counder and chief executive Farooqui said: “We are excited by this financial investment as it supports the expansion of our business, which aims to improve every aspect of renting for all parties concerned – renters, landlords and estate agents. The days of the security deposit are now numbered, and we can now empower renters to become buyers far more quickly because their rent can now count towards their credit history.”