InsurTech profile: Zego - insurance made simple
The innovative insurtech was borne out of a vision of a world where insurance no longer limits our choices.
Insurance, says the company, “hasn’t changed in more than a century”. But, how we live our lives and the technology we use to do so, has.
This means that traditional insurance policies and models are no longer in line with our ambition, particularly when it comes to small businesses, flexible working or things like vehicle-sharing.
Disrupting the insurance model
This realisation spurred Zego co-founders, Sten Saar and Harry Franks to take action.
As former directors at Deliveroo, Saar and Franks found it difficult to onboard new delivery riders, who had to provide proof of an expensive annual insurance policy.
To them, the solution was clear: pay-as-you-go cover with low upfront fees. And thus, Zego was formed.
Since 2016, the company has actively worked to remove the barriers that prevent people living and working how they wish.
To do this, Zego offers simple, flexible policies through its dedicated app, or over the phone or internet, that cover any size of enterprise. Or, as it explains, “top of the range, custom products to explore the full potential of their entrepreneurial spirit”.
How Zego works
The company uses a paperless approach to its policies. All information and details can be viewed in the Zego app; customer service can be accessed the same way.
The process is simple, too. After deciding on a specific policy, for example, quotes are offered online or via the app within minutes - the app is available in Google Play and the Apple App Store.
Insurance products available include:
- Private hire insurance
- Scooter insurance
- Car insurance
- Fleet insurance
- Van insurance
Insurtechs are winning the race with legacy system companies
Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.
That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.
The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector.
What exactly is insurtech?
Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.
Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.
The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.
Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.
More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.
Insurtechs and risk
But there are some obstacles in the way of insurtech’s continued evolution.
Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.
Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?
There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.
While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.
Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal.