PorchPals Launches Package Insurance Service in California

Brentwood and Nashville-based insurance startup PorchPals launched its package protection service in California at the end of last month, an e-commerce offering the company believes will help address rising package theft from front porches across the United States.

If a member’s package is stolen, they can sign into their PorchPals profile, submit a claim and, if all goes well, receive an electronic payment via the app of their choice. The startup’s platform also supports integration of a member’s home security system, insurance provider policies and e-commerce memberships into a single online dashboard.

The company’s market opportunity is rooted in package theft, citing a survey from SafeWise and Cove Home Security that found an estimated 210 million packages were stolen over the last 12 months in the United States. PorchPals Co-Founder James Moore said the startup landed on the idea after developing a scrapped concept that would have involved neighborhood ambassadors mediating the safe delivery or pickup of their neighbors’ packages.

Fintech observers say the company faces considerable obstacles even though it is tapping into the prevalent issue of package theft.

Alex Jimenez, a fintech consultant and the managing principal of financial services consulting at EPAM Systems in Newtown, Pennsylvania, is not involved with PorchPals but reviewed the company for the Business Journal. He said that an important part of PorchPals progression as a startup would be to evolve and add on to its services to counteract insurers copying their platform.

“When building a program like this, you have to make sure that the product is shipper agnostic, meaning that it doesn’t matter if you ship through FedEx, UPS, DHL or USPS,” Moore said. “You still cover the theft; it doesn’t matter whatever retailer (members) are with. So we truly do put the power back in the consumers’ hands to be able to provide resolutions for losses that they incur.”

PorchPals co-founders James Moore, third from left, and Adoree Jackson, fourth from left, stand with some of their business partners.
Insurance focus
PorchPals offers its service to consumers for $15 a month or $120 a year, insuring deliveries from merchants and allowing coverage for an unlimited number of packages. The startup’s policies are backed by Lloyd’s of London’s Newline Syndicate and cover up to three claims a year, or a $2,000 coverage limit, for members’ packages.

Moore said that after evaluating the first concept’s business model, he and his team realized what they needed was a product focused on the insurance industry.

“We felt that the consumer was used to (entertainment) subscriptions,” Moore said. “Some of them are $20 a month… a lot of subscription plans, you get entertainment and joy out of it, but they’re not returning a whole lot of value to you in a tangible way. So, I said we need to make sure that our price point is affordable for all households and covers the risk.”

The startup was founded a few months prior to the pandemic by Moore and Co-Founder Adoree Jackson, an NFL player and a managing partner at KME Ventures alongside Moore.
Moore and Jackson have been able to develop and bring PorchPals to market thanks to in-house financial resources through KME Ventures.


Acquisition target?
Bradley Leimer, head of fintech partnerships and open innovation at Sumitomo Mitsui Banking Corp., who also is not involved with PorchPals, said he wonders about the potential for PorchPals to be bundled with a retailer or e-commerce platform. He also said the service could take off by potentially being paired with a credit card provider as an additional service or a subsidized benefit from employers.

The challenges for PorchPals, according to Leimer, lay with its ability to grow and the cost of customer acquisition.
“The big risk is what’s going to happen if suddenly 100 million people have a PorchPal account and the thing goes under because they can’t sustain their business,” Leimer said.

He added that he envisions PorchPals as an acquisition target if it can garner success andincrease its scale, which is something Moore said the startup plans to do through offering a “myriad of services” to members’ porches.

Moore added that PorchPals has been cautious of the losses and claims that will be generated from the service and has prioritized keeping the company as a value-add to consumers.

“We’ve worked through insurance companies and reinsurance groups and those groups are very risk adverse,” Moore said. “They cover risk, but they also like to know what they’re covering and how much they’re going to be on the hook for.”

He noted that, moving forward, marketing will be a priority for the company, which is working with Maximum Effort to get word out. “Maximum Effort, Ryan Reynolds and his team have been in control and our overall of our marketing and there’ll be even more to announce about that here in the next couple of days,” Moore said.
According to Moore, the startup plans to be in every state by the first quarter of next year.

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