Zego doubling down on growth with 40 brokers

The motor insurtech first revealed its trials to sell usage-based policies with brokers in mid-2020.

“Two years for us is like six years in a normal company. We did a lot in that period,” Saar observed.

Adding: “We work with 40 brokers properly. We are doubling down on a small number of brokers who truly get the product and are willing to explain and offer it well.”

Zego’s leader explained that over the course of the trial it had started with usage-based products, evolved into also having fixed term policies and now calls them “behaviour-based”. It makes use of telematics data to provide a full picture of a fleet’s risk profile as well as sharing actions a fleet can take to improve their risk.

“It is not specifically based on mileage, it is based on how drivers are driving,” he detailed highlighting that customers get rebates of up to 15% based on overall scores across factors including loss ratios, and ultimately better renewal pricing.

“We are analysing around 10 million miles per week,” he stated.

Portal

The firm’s fleet portal allows managers to manage vehicles with insights that he claimed saves “tens of thousands in cash”.

Citing an example of one fleet reducing claims by 30% in four months he noted that the savings go beyond this – fewer accidents means less vehicle depreciation and ultimately better leasing terms as well as better driving meaning paying less for fuel.

“Getting that insight will enable driving down the overall cost itself,” Saar summed up.

“It is hugely powerful considering the cost of living crisis that we are living through.”

Select

However given the product and its value needs to be well explained to the end user not every broker partnership has been kept on, he acknowledged.

“We proactively select brokers out if they don’t get the product and don’t care about it,” Saar confirmed.

This year the insurtech has teamed up with Aviva and QBE on fleet policies.

The Aviva deal targeted trades and haulage fleets in the UK containing between five and 500 vehicles.

“With Aviva we developed products that we didn’t have before,” Saar set out. “The product range has gone from two to four in motor fleet. It has had great interest.”

QBE is backing behaviour-led fleet products, including delivery and courier. According to Saar, the provider “sees how in a couple of years’ time 80% of the market could be using the products that we do”.

Tables turned

Accepting the pair of high-profile names has helped boost Zego’s “credibility”, Saar said the market was seeing that it “must be doing something right” and paying more attention.

“Now, as we are into our sixth year, the tables have turned in a sense that the insurers are showing real interest and want to talk to us,” he commented.

“They want to be able to give us capacity for the products because they see how much it is better for the customer. They also hear customers going to them and asking about some of those products.”

This though will not lead to a plethora of more capacity additions, he suggested.

“We ideally work with as few partners as possible but the partner has to be comfortable taking on the risk.

“For us it is important that it is the widest footprint because the product itself will do its work.

“It is more who can we truly build the best partnership with and who truly sees the vision and what we are building out.”

Targeted

Launched in 2016, Zego originally targeted the gig economy, branching out to ride hailing, ride sharing, car rentals, scooters and more.

In essence it operates in areas where vehicles are being used to earn money, be it from a gig worker to fleet to rental companies. Still in all of these what comes next?

“The product we have today is maybe only 5% of what we are planning on building. We are really at the beginning of transforming how fleets buy insurance,” Saar replied.

He calculated that fleet in the UK is a £6bn market and £35bn in Europe.

“We can build a $10bn [£9.28bn] company purely by focusing in those areas,” Saar said.

Continuing: “Our intention today is to double down further where we are rather than extend the range. At some point next year we will be exploring what is next on the horizon.”

International

The firm expanded into the Netherlands in January adding to its portfolio of UK, Ireland, France and Spain along with four further markets where it sells but does not have offices.

There are no further country pushes on the near-term horizon.

“We are doubling down hard on where we operate today,” Saar reported. “We have great footing, great customer satisfaction. It is doing more of the same and faster.”

Previously, the Zego boss and co-founder has revealed a goal of being a global giant, as big as Allianz or Axa, with multiple business lines within 10 years.

“The ambition hasn’t changed,” he highlighted.

“Overall we are here to build a generational business… [one that] truly solves the insurance problems.

“Zego is here for decades to come to build great insurance products for the customers.”

Redundancies

In July though it reduced its headcount making 17% of staff unemployed taking the number of employees to around 500.

“We did the redundancy, it was unfortunate but we had to do it to make sure the business is on a strong footing especially considering the macro has changed a lot,” Saar said.

“The recession is looming. There are going to be tough years.

“It is important to course correct and that is what we had to do sadly.”

In his opinion the business has restructured to go on to a better place and was quite early in its move: “You can now see tech companies and large companies pausing hiring and planning on reducing.”

Saar also set out that he did not anticipate a further wave of redundancies.

“We set it up ourselves so that we have got a strong runway for years to come,” he said.

Macro

While that current macro environment has come with a very visible downside for Zego and the people affected, there are also opportunities, Saar pinpointed.

“There is a clear cost of living crunch and ecommerce has slowed down a bit.

“Those macro trends have an impact on the overall market. We are a tiny player and what we have seen is more interest for our products.”

IPO

In March 2021 Zego raised $150m in a Series C round taking its funding to over $200m since launch.

There is “no intention to go and raise [again] in the near term” Saar made plain.

The 2021 funding gave London-based Zego a $1.1bn valuation and Saar told sister-title Post at the time that an Initial Public Offering was “inevitable” for the “reluctant unicorn”.

“The ambition and the vision haven’t changed,” Saar updated.

Concluding: “I don’t see us exploring an IPO anytime soon. We are in a good place from our cash point of view. No change to anything over the next 12 months.”

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