Some say that the current insurtech boom is similar to the dot.com bubble of 1998-2002. Whilst it’s true that not every company can succeed, some have made incredible progress in the last few years and are filling an actual gap in the insurance market, not merely adding bells and whistles to a traditional offer. Insurance Edge visited Zego in Shoreditch to find out what makes them tick.
Talking with CEO and co-founder, Sten Saar, (pictured centre of header photo) the first thing that strikes you is how laid back and yet determined, almost evangelical he is. In this regard Zego are similar to Yulife, Genasys Technologies or Sam White’s Pukka Insurance, all of whom are most definitely keen to shake the tree, revolutionise things and completely embrace the digital future.
Right now, UK insurance is at a very interesting point in its development and whilst there is still a place for an old fashioned broker, looking after loyal clients and building a relationship with face-to-face meetings, or lengthy phone calls, things have changed irrevocably in the last five years. Let’s start with one salient fact about Zego; their core customer base is a diverse population of delivery riders and couriers, often aged under 35, self-employed, working unsocial hours and braving Britain’s crowded city streets on a daily basis. They are, in fact, the type of customers that your old fashioned 1990s High Street brokerage would have politely turned down back in the day.
But Zego have different ideas, because times have changed and in the end, insurance is a people business, so the more you know about your customer, the better you can assess the true risk.
IE: The obvious question is why take the chance on high risk delivery courier riders, or drivers?
SS: Well why not? Nobody was really servicing this self-employed gig-economy market, and we could see back in 2016 that this kind of work was going to increase in all major cities around the world. When you look at delivery riders in a more holistic way, the risks aren’t that daunting; they don’t need pillion cover for example. Whether these individuals are in full-time self-employment, or just working three or four months during the summer, they are often pretty sharp and experienced and they need to ride to earn a living. That imperative means they are by nature risk-averse when you really think about it.
IE: For decades couriers had to buy Fully Comp and Goods in Transit as a package deal, lump sum upfront, but the gig economy has changed all that hasn’t it?
SS: Very much so, because that requirement to pay for a full year’s insurance upfront meant many drivers or riders were effectively locked out. Our way is more socially inclusive and some may say a bit fairer. The Zego idea is simple; pay-as-you-go cover, with the premiums being made in micro-payments via the app. As you work you provide data and that helps us because we then get to know our customer and what we can expect from our future customers, in a way that traditional insurers didn’t ever get to grips with.
IE: Do you see potential to expand the pay-as-you-drive/ride model to e-scooters maybe, or other types of transport?
SS: Definitely, and electric scooters are interesting to us because ultimately it is about road safety. In the future you may have single person electric vehicles which look like the Renault Twizy, or e-scooters, urban taxis and delivery trikes, all sharing the same road space. It isn’t so much a marketing opportunity for insurers but a response to a changing way of life, especially in cities. You may not see many vehicles over one tonne on city streets in the future, except at night, and that means that insurers must embrace all these changes in personal transport. We see insurance becoming compulsory for all kinds of riders – it’s inevitable.
E-scooters require a completely new and innovative approach to insurance and there are two options. Providers can offer insurance that covers third parties for injury and damage. Alternatively, they can allow riders to pay for cover through their platforms, and this must be a simple and fast process. Both approaches can only work with pay-as-you-go models to make them cost-effective.
IE: You’ve come a long way since that 2016 launch, with new investment arriving just a few months back – it’s a time of expansion now?
SS: Yes, that launch day back in 2016 was exciting, and we all watched as the first payment of £2.30 was made via the app! In the next year or two we are looking to expand beyond the six countries we operate in right now. There’s growth in Europe, USA, Latin America and Asia on the horizon for Zego. The great thing is that technology means it’s not so daunting to make your brand truly global now, for example we translated our entire product, including policy docs, into Spanish in just 28 minutes.
In a way, this is like Lego; we are building up an eco-system of insurance, using the same basic blocks around the world. Each block needs to be customised slightly because of local insurance or traffic law perhaps, but it’s the same principles that underpin the offer. Zego means freedom to work, to ride, no mid-term policy charges, and everything done with a few clicks online. Simple.
IE: Do you think the future of most vehicle insurance is online only, with claims handling by AI?
SS: Part of our DNA at Zego is to be future-facing, looking for innovations. Imagine using the best AI-powered software tools to build new Lego blocks, so you can deploy your product where it’s needed – almost instantly – as technology, transport and local city laws on delivery and mobility change.
In the end, insurance needs to be like room temperature; something that’s just there, in the background. You only really notice when a room is too hot or cold, and that’s how old fashioned insurance worked. People noticed it when it didn’t work that great. What we at Zego are looking to help build is insurance as a utility, it just works, without people having to search for the best deals online, or buy several different policies at different times of the year.
Wouldn’t it be so much better if on your way to the airport your app asked you if you wanted adventure travel, or normal business trip cover on this trip? You didn’t have to think about it weeks in advance and download all the necessary policy docs etc.
IE: Zego are aiming high, you really want to change things at a fundamental level?
SS: Of course we want to, but things are bound to change – radically – in the next few years. There’s some very smart people working in insurers, MGAs, brokers and so on, all striving to use the tools of insurtech to revamp and modernise the offers from traditional brands. But the whole sector is skating on thin ice, because if just one company comes along with an entire system that makes insurance a seamless, responsive, background utility, like the water supply to your home, then will you ever change, compare or switch again?
IE: So a big company like Apple or Amazon could create something that’s built into your phone, covers everything automatically and debits your account monthly, like your phone provider does?
SS: Maybe so. If someone builds a new product that genuinely rewards and encourages loyalty amongst insurance customers, rather than the current distrust, then they could own this entire market.
All of it.
IE: Something to think about. Thank you and looking forward to seeing where Zego goes next.