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EXCLUSIVE: Modern Mobility – Zego and the Future of Auto

EXCLUSIVE: Modern Mobility - Zego and the Future of Auto | Fintech Finance

Since 2016, Zego has been on a mission to disrupt the motor insurance industry. Being the first UK insurtech to reach Unicorn status, the company has remained strong after the drastic shake-up of the pandemic and has only proven that usage-based insurance is the way of the future. 

FF News spoke to Sonia Flynn, the Chief Operating Officer at Zego, about what makes the insurer unique, and why input is just as important as output when it comes to delivering a product.

“Zego got started way back when it was really about customers only paying for the insurance that they needed,” said Flynn. Zego specialises in UBI, from pay-as-you-go to annual plans, private drivers and fleet businesses have access to a wide range of insurance types. Zego uses both shift data to price insurance based on how much drivers use it, but also how they drive, considering driving behaviour events and context (e.g. harsh brakes, aggressive cornering) – these are measured using a telematics device (for fleets) or standalone telematics app, Sense (for individual drivers), that connects directly to the insurer.

The cost of living crisis has permeated every facet of UK life. With car insurance costs fluctuating at a rapid rate – ABI’s Motor Insurance Premium Tracker found that the average cost for insurance has dropped by 5%, the lowest in 7 years – insurers are now serving a customer who needs to know where their money is going. Considering this huge economic cloudburst, Flynn assures that the use of telematics informs customers on how their premiums are being priced and what they can do to control it. “When people share their data with Zego – you’re an individual driver and you share your data with us – we are able to give you feedback on your driving behaviour and how you may influence the shape of your premium, and the cost of your premium at renewal. This is important for drivers to understand so that they can have further impact on the cost of their premiums.”

This type of flexibility in cover has been a recurring KPI for Zego. In an economy focused on consumer demands, customers will always be shopping for the best deal, and what services are on offer for the least amount of money. This is why usage-based insurance products have shown their value in the last 3 years. The market for UBI was valued at $28.7 billion in 2019, and it is expected to grow to $149.2 billion by 2027, according to Allied Market Research.

Growing exponentially worldwide, from APAC to EMEA, usage-based insurance has been growing in adoption not just because of its practicality, but because it contains additional communicative features which bring the insurer closer to the customer. In select Private Hire and Courier plans, Zego makes available its standalone telematics app (Zego Sense app) to its policyholders. The app collects driving data on acceleration, braking, and cornering which the insurer uses to price a customer’s renewal. With these direct telematic tools, the customer too is in conversation with the insurer and can see in real-time how their insurance works. 

“From our perspective, the idea of paying the cost upfront, and having to front it in one lump, versus being able to spread the cost, or influence the cost of your premium, there’s that idea of being able to manage it better and more efficiently, saving you both the time by giving you one quote which you understand, and then breaking up the cost and spreading it based on your income and your means, whether you’re an individual or manager of drivers.” 

Communication in UBI is a necessity, to personalise premiums to drivers and businesses, insurers like Zego need to be with customers every step (or mile) of the way.

A recent report by By Bits found that between February and September of 2020 (the height of the pandemic) there was a 31% increase in insurance customers who considered pay-by-mile policies. They found that the average retention rate for UBI policies was 5 years. The report also found that during the pandemic, the majority of motor insurers (97%) reported that customers wanted fairer usage-based pricing during the lockdowns, with three quarters (75%) of motor insurers claiming that customer satisfaction is a priority. 

For their fleet offering, the company also offers Micromobility cover for businesses that manage e-scooters and e-bikes. Zego is big on Micromobility, providing both fixed insurance plans and flex plans, business owners have a choice of paying by the vehicle or by the minute. In his futurist envisioning of the year 2040, CEO of Zego, Stan Saar, laid out how mobility will change and affect the world we will live in. From single-person vehicles to solar-powered e-bikes, the options to get from point A to point B will explode, and movement will become more efficient and focused around the individual, accounting for both sustainability and personal mobility.

“What the 2040 vision brings out for us is how these things will play out in the medium to longer term. And to be thinking about that when we consider the choices that we make now as a business. We’re always thinking about what the best thing to do is now, and also how we can set ourselves up as a business and be relevant in what we offer to our customers.”

The insurer’s focus on long-term thinking extends beyond product offers, this January they expanded their business into the Netherlands. Keeping in theme with long-term thinking and goals, Zego is determined to adapt their products to a vast range of customers across Europe, whose needs may differ from what they’re used to in the UK. 

“When we then opened up in the Netherlands, we were really keen to find people to join our team, who understood and had a lot of relationships that we might need, as a way to get us started on the best foot. To get us up and running on the best possible standing so that we would know what the market would need, what our gaps were, and what we could amplify.” 

This technique of referral has proved successful for Zego’s home base, where it makes up a big part of their hiring process. This, coupled with their Flex First policy, where employees have the option to work remotely or in a shared environment, the options again are varied depending on peoples’ situations and preferences. 

“We have not struggled for talent, but we never take it for granted,” said Flynn.

In a Deloitte report on motor and home insurance, where 8,000 respondents were surveyed, the features which made a number one policy included simplicity, data privacy, and swift comparability. Customers want a straightforward plan that they understand and do not have to fuss around with. Looking at the work of Zego, UBI and telematics technology opens the floodgates for communication where policyholders are put right in the centre of how their insurance is working, on a daily basis. 

Driving behaviours are changing, with 62% of drivers thinking they’ll drive less in the next five years – according to the previous By Bits report – being attentive to how and when you use your car is paramount. Pricing premiums on a usage basis with telematics tools narrows the underwriting process down and builds plans wholly around the needs and behaviours of the driver/business. 

“Investment in underwriting is a really important construct because you need to understand both sides. Why? Because it’s not just about how we onboard you, we want to build a long-lasting relationship with our customers […] so that if something happens, we live up to our promise.”

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