Zego has raised £1.225 million in seed funding from investors led by LocalGlobe. The fundraising comes as Zego launches its first product for car drivers, which is fully underwritten by Aviva.
Zego, which previously was known as Tego, was launched last year to provide specialist pay-as-you-ride insurance to drivers working for sharing economy companies – including Deliveroo, UberEATS, Jinn and Amazon. All car, bike and scooter drivers are required by law to be insured for the periods that they are delivering, but the expense and difficulty of buying a policy can be a sticking point in signing up new drivers, as until now there have only been annual policies available.
Zego believes that insurance must adapt to the new ways of working where many people only want to work for a few hours or days a week, around their other commitments or interests. The company wants to empower people to work the way they choose, by providing an affordable flexible product at a cost that is proportionate to the hours worked.
Since August 2016, Zego has been selling a flexible pay-as-you-go product to scooter drivers and is about to launch a motor policy for food and courier delivery drivers who use their cars. The policy is payable by the hour and is offered nationwide. It is suitable for food delivery and for courier drivers working from their homes on a flexible basis.
Fees for the scooter policy start from 65p an hour up to £25 a week, while insuring a car can cost as little as £1 an hour. Given that underwriting premiums are based on track record and past claims, there is the potential for premiums to become even cheaper for drivers with a safe driving record. Zego is building telematics functionality into the app, to give an accurate picture of how its customers drive.
Zego’s cover is bought through an app and drivers top up their account like an Oyster card or pay-as-you-go mobile. Accounts are debited after a shift is worked. To date, Zego has written 400,000 hours of cover for drivers.
This funding round will help the rapidly growing company with its tech development and enable it to increase its technical team. The product for small engine scooters is already available across the UK, although the biggest demand is in London and other big cities.
“We want to empower people across Europe to work in the way that suits their life and commitments. We’re targeting part-time drivers with a product that is particularly tailored to help them get the most out of work. Buying insurance should be quick and easy, mobile, flexible and transparent. You should only have to pay when you earn and that way our insurance helps you to work and take control of your expenses,” Harry Franks, co-founder and CEO of Zego said.
Robin Klein, partner at LocalGlobe, said: “The world of work is changing fast and services like insurance have a long way to go to catch up. Zego is a simple idea but it has the potential to free millions of people around the world to work in a way that suits them. As Zego collects more data about delivery drivers it will also help the insurance industry price premiums more effectively, which ensures that sharing economy jobs really do pay for those who rely on them.”
Zego was founded by three tech entrepreneurs with first hand experience of crowd-sourced companies. Before starting Zego, Harry Franks worked at a senior level at Deliveroo and before that luxury rental business onefinestay, which was sold to AccorHotels last year. Sten Saar, co-founder and chief operating officer, started his first company at the age of 17 growing it to a net revenue of $1 million. He later worked for onefinestay and latterly developed operations at Deliveroo, while it was growing rapidly. Stuart Kelly, co-founder and chief technology officer was lead developer at Mainframe and then head of engineering at successful start-up Hubble, where he was responsible for developing the technology to create a scalable global platform.