The UK-based full-stack insurtech has raised $150 million, reaching a $1.1 billion valuation, per TechCrunch. Zego provides usage-based auto insurance for vehicle fleets and gig economy workers on platforms such as Uber and Deliveroo. It also has a B2B arm where it partners with companies directly, such as escooter rental startups, to offer insurance to end users. The insurtech will use the funding to continue expanding across Europe, grow its staff, and invest in its technology.
Zego’s application of telematics technology to the booming gig economy secured its path to unicorn status.
- The insurtech offers fairer pricing thanks to its usage-based model. Zego uses telematics to collect driver behavior data, including hours driven, to complement traditional information, such as driving history and vehicle details. This enables Zego to more accurately assess potential policyholders’ risk and price coverage accordingly. In addition, Zego acquired its long-term partner telematics company Drivit last December, moving the data collection solution in-house and allowing Zego to earn more on each policy sold. It also became the first UK insurtech to underwrite its own policies, per Business Insider.
- And its flexible coverage has hit a note among gig economy workers shunned by traditional insurers. Insurance can often be expensive and inflexible, making it difficult to adapt to gig workers’ irregular line of work. By contrast, Zego’s coverage can easily be switched on and off for very short bursts, with policies ranging from 1 hour to a year. Given that the gig economy was projected to grow to $455 billion by 2023 prior to the pandemic, up from $204 billion in 2018, and the crisis has likely only accelerated its growth trajectory further, Zego’s focus on the sector should yield strong customer growth.
Licensed in Europe, Zego can continue to expand across the continent despite Brexit barriers, broadening its addressable market. Zego received a broking license from Dutch regulator AFM last December, allowing it to continue partnering with European firms, including escooter startup Dott in France and ehailing app FREE NOW in Ireland, just as UK licenses became invalid post-Brexit on January 1, 2021. Zego can now expand uninhibited across the EU, where 11% of the workforce has done gig work and escooter startups are growing rapidly—creating further partnership opportunities.