Zego partners with 10-minute delivery startup, Dija
Zego, which was founded in 2016, will insure Dija’s growing fleet of e-bikes, in the insurtech’s first commercial e-bike policy. Zego recently launched two new products in the flexible insurance category that are designed to cover e-bike and moped fleets in the UK.
Currently, Zego provides a range of policies from annual cover to pay-as-you-go, and has insured over 20,000 vehicles in five countries. The company reached unicorn status - and is the first insurtech in the UK to achieve the accolade, following a £150m investment round that boosted Zego’s valuation.
The fresh capital is being used to expand Zego’s services into other markets.
Zego’s flexible policies will provide Dija’s e-bike fleet with fixed-term annual cover. The company will charge on a monthly basis, so that the company does not have to pay a hefty upfront fee to cover its fleet. This allows Dija to have more control over its cash flow and enables the company to utilise its capital on strategic expansion both geographically and in terms of its employees.
Dija launched earlier this year and was established by Deliveroo founders Yusuf Saban and Alberto Menlolascina. The company has enjoyed swift success and fast growth, already receiving £14.5m in funding since its launch. The service has proven popular with customers, who are assured of a 10-minute wait time in receiving their groceries, without substitutes or missing items.
Dija will also be able to remove and add e-bikes from its policy simply and swiftly, from Zego’s fleet platform. Furthermore, the delivery company can monitor how many of their e-bikes are insured at any given time and which e-bikes in particular.
Zego’s policies save time for businesses in getting their vehicles on the road, because their new flexible e-bike and moped fleet products can go live in just one week. Businesses can also scale their fleets in size and expand them to include other vehicles too.
Insurtech industry growth
News of Zego’s partnership with Dija follows on from the news that Dott, and e-scooter startup was acquired by Cazoo.
Speaking about the new partnership, Ines Feraci, Director of B2B from Zego, explained, “We are excited to be teami ng up with Dija, a startup with huge potential, to launch our first ever commercial e-bike policy. Businesses in this sector are completely reliant on their vehicles and we want to give them flexible insurance products which help to maximise their fleets’ potential while minimising costs.”
Alberto Menolascina, Founder and CEO at Dija, commented, “Our partnership with Zego will enable us to assume greater control over our cash flow, which in turn will enable us to prioritise our funds on things like international expansion and hiring. For a fast growing startup like ourselves, this is exactly the kind of flexibility that we need.”
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.