With a goal of making insurance simpler to use, West Des Moines entrepreneur Darren Wood has launched Recoop Disaster Insurance, a product that will pay out lump-sum insurance settlements to homeowners or renters whose residence sustains damage from many types of natural disasters. 

The supplemental insurance product is designed to reduce the out-of-pocket financial burden in recovering from disaster losses for those who already have property-casualty coverage.  Recoop’s policies pledge to pay a cash benefit of up to $25,000 within an estimated 24 to 48 hours, once an area has been included in a federally or state-declared disaster area. 

Wood, an insurance consultant who has specialized in voluntary insurance programs for employers, has been developing the product over the past two years with several strategic partner companies under the umbrella of his company, Strategic Product Partners LLC. The seeds of the business were sown for Wood through his professional experience dealing with the widespread devastation caused by Hurricane Sandy on the East Coast in 2012.  

The number of disasters per year has more than doubled from the 1990s to the 2010s and in 2020 alone there were 22 natural disasters with losses exceeding $1 billion each, Wood noted. These realities, on top of the fact that most American homeowners are underinsured by 20% of their homes value, paved the way for Recoop to step in as a safety net, he said. The supplemental coverage includes hurricanes and seawater storm surge, wildfires, tornadoes, earthquakes, gas explosions, and winter storms or dust storms. 

“At a time when families are financially vulnerable, Recoop lessens the financial burden with affordable policies and expedited payments,” Wood said. “We created Recoop to be different and ensure that no individual or family experiences financial ruin due to a naturally occurring event beyond their control.”

The covered property must have sustained more than $1,000 in actual damages from a declared natural disaster. The policies don’t put any restrictions on how policyholders spend their payouts, so it could be used on any unexpected expenses, including covering the deductible on a traditional homeowner’s policy.  

Among Recoop’s strategic partners is Professional Solutions Insurance Co., a subsidiary of NCMIC Group. The strategic partnership is the third for PSIC in the past several years, said James West, Professional Solutions’ vice president of corporate business development. While malpractice coverage will always remain the company’s core product, expanding into new niche product partnerships has been a focus.  

“With Mike [McCoy] coming on board a few years ago [as CEO] he challenged all of us to think a little bigger,” West said. “So one of the challenges we’ve taken on is [asking]: Are there other areas that grow and diversify our risk?

“In regards to Recoop, we’re excited,” he said, noting that it’s the only multi-peril supplemental disaster coverage he knows of in the market. “We’re basically bringing together a team of experts, which really puts us in the best position in the market. … It just felt like a very natural synergy with them.” 

Recoop is currently available in 38 states, including Iowa, and Wood anticipates receiving regulatory approval in all 50 states within the next year. 

Here’s a Q&A with Wood with more information about the company.  

What were some of the hurdles that you had to overcome in developing this product? 
Most homeowners’ insurance policies leave gaps in coverage, which is why Recoop was created — to pick up where insurance stops, so consumers can bounce back faster after a disaster. Recoop is the first and only multi-peril disaster insurance product that pays a lump-sum cash benefit, up to $25,000, after a natural disaster. Creating an entirely new product in a highly regulated industry like insurance was the biggest pain point we had to overcome. It took time and patience to bring together the right resources and backing to create a product that would achieve all that we wanted to provide to consumers.

Briefly tell me about your partner companies in this venture and the role that each plays.
We are lucky to be led by a team of insurance industry experts and backed by world-class business partners. We have a network of incredible strategic partners that have helped take Recoop from a seedling of an idea to an accessible consumer benefit. We are backed by the biggest reinsurance leaders in the industry between Swiss Re and Munich Re, as well as our carrier, Professional Solutions Insurance Co., so our customers know their money will be there when they need it. Sedgwick is our claims administrator, and we partner with Businessolver for benefits administration, which gives us access to powerful tools and solutions to administer our policies and process claims effectively and efficiently.

How are you and your partners funding this venture? Have you obtained angel or venture capital?
Recoop’s initial seed funding has come from a combination of its founders and angel investors. Most recently, we are closing a Series A with current investors just under $2 million, and with our expected growth rate, our Series B is expected to be in the $5 million to $10 million range. 

What’s the estimated market size of this insurance niche for gap disaster coverage?
We see the market as nearly everywhere and for everyone. Natural disasters are inevitable and with FEMA reporting that 80% of U.S. counties have experienced a weather-related disaster in the last five years, we know the risk is real. Living in denial about those risks is costly, which is why Recoop was created to cover the gaps and pick up where insurance stops.

When was your initial launch, and have there been any covered disasters yet in which you’ve paid out claims?
We started with a soft launch earlier this year and are currently activating our go-to-market strategy as we speak. For context, in 2021 alone, 21 federally declared disasters would have been covered by Recoop so long as the individual met all claims requirements. And this doesn’t consider state-declared disasters, which are also covered by Recoop, which just highlights the magnitude of the risk everyday consumers face with natural disasters.

What market do you see for employers offering this as a benefit? Are you making it available to employers in the states you’re in now?
With our current distribution plan, we’re focused on actively rolling out this product offering to employee benefit brokers, and we’ll continue to grow over time through other market categories. Recoop is currently available in 37 states. We’re actively working on adding new states and policies in the future and will be in all 50 states very soon.

Any plans to bring this to the commercial market for small business coverage?
Our focus right now is on helping as many people as possible by ensuring that Recoop is accessible to them, building awareness around our product, and creating understanding of how it can help protect their financial future. We know that the average household savings in the U.S. is just $3,800, and 60% of Americans have no emergency fund. Too many people face financial ruin in the wake of a natural disaster. And that’s just not OK. We know this risk and concern extends to other categories and markets, so it’s something we’re mindful of as we continue to roll out Recoop across the country or explore international opportunities.

Company has partially remote, ‘super-lean’ staff

 Based in a West Glen office space in West Des Moines, Recoop Disaster Insurance is the doing-business-as name of Strategic Product Partners LLC, an Iowa limited liability company. 

Led by Des Moines native Darren Wood, who splits his time between residences in Franklin, Tenn., and Greater Des Moines, the company currently has a “super-lean” staff of five, two of whom are based locally. Most recently, the company brought on a chief operations officer who works from the Twin Cities, said Alex Sabbag, Recoop’s chief marketing officer, who lives near San Diego. Staffing could easily double within the next year, with the ability to hire in Greater Des Moines or anywhere in the country, Sabbag said. “I wish I had a crystal ball,” she said. “The faster we roll out distribution, the faster we’ll grow. A lot [of staffing support] is coming to the table through third parties.” After recently moving to an oceanfront property, Sabbag said she now personally owns a Recoop policy. After living in California for the past year and a half, “I’ve watched many people lose their homes due to disasters.” 

Website: www.recoopinsurance.com
Address: 5465 Mills Civic Parkway, Suite 400B, West Des Moines  

Frequently Asked Questions page: https://www.recoopinsurance.com/faq/