Interview: Zego boss on pay-as-you-go insurance for gig economy millennials

Brokers and insurers must adapt to the changing face of employment if they are to survive.

This is the view of Harry Franks, the 32-year-old founder and chief executive of pay-as-you-go broker Zego, who has his sights firmly set on the 5m freelance and gig economy workers in the UK.

Before founding Zego two years ago, Franks worked for Deliveroo and had spent his whole career in the on-demand and technology sector.

From here, he identified the problem of workers on short-term contracts paying for policies that cover them for a much longer period than they require.

“You notice problems within the gig economy most acutely when considering traditional insurance,” said Franks.

“I was seeing lots of people wanting to work really flexibly, working just a couple of hours per day, or a couple of days per week around their lives because they were being able to give and receive jobs via mobile phone.

“But because of the cost of insurance they were either not taking jobs or they were buying insurance and cancelling it or they were trying to work more than they really wanted because they had this overhead, and they had to work however many hours a week to offset the cost of the insurance.

“The plan we set out was to make that variable in line with the way people needed it and wanted to consume insurance.”

Expansion

Boosted by an initial £1.2m in seed funding led by LocalGlobe in December 2016, the result was an app offering driving and delivery cover available on an annual, monthly, weekly, daily, hourly or even minutely basis.

Details are taken quickly through an AI conversation and in a matter of minutes you can be insured.

Customers top up their insurance payments through the app, which calculates the amount to be paid by a customer for working a certain amount of time in a particular job.

This enables the worker to switch between jobs easily and remain insured.

Two years on since Zego’s foundation customers are currently in the tens of thousands, with 16 different platforms signed up to cover for their workers (including Deliveroo).

But last weeks announcement the start-up would expand into public liability cover across 80 professions opens up the app to a whole new range of freelance and gig economy workers.

Babysitting app Bubble are already signed up to start partnering with Zego and Franks confirmed he is in discussions with similar platforms providing professional freelance services, handyman, home cleaning and home care services.

Franks said: “One of the challenges for the gig economy has been that it’s so unregulated that the sorts of protections that are required both by the people working in them, the people for whom they are doing the services and the wider public around them haven’t been as enforced as people who would traditionally be in PAYE structures.

“We think that insurance can really help the gig economy by making sure that whilst it maintains it’s flexibility each worker still has the infrastructure of best practice around them as they move.

“We don’t want people to feel that because they have bought one type of insurance policy that they are one type of worker.

“We want people to say I can do what I want because I know that these things follow me as I go.”

“Era of hyper-personalisation” 

But even tech-oriented millennial Franks concedes there should always be a place in the insurance buying process for human interaction.

Zego has a head on compliance who tests the app to ensure person is purchasing the right type of insurance, and each customer must communicate with a human at some point in the buying process.

Franks added: “We are really hot on vulnerable customers. Insurance is a complex purchase and you need to make sure people understand. We record everything that is going on and they will speak to a member of our team at some point in the process, even if it’s just to confirm everything.”

The gig economy, where people take short-term jobs on a more casual irregular basis often through their phones, is a sector that has boomed in recent years.

A government report in February found 4.4% of the population worked in the gig economy in the last year.

And with over half (56%) of these people in the 18-34 ‘millennial’ age bracket, the number of gig economy workers is only expected to grow.

Franks is clear that it is millennials who he is targeting and specifically those used to giving and receiving jobs through their phones. 30% of Zego’s current customers use the app to insure themselves for multiple jobs.

And he sent a warning to the traditional brokers that catering to this group will be fundamental if they are to compete in the future.

He added: “We want customers to be able to come to us and buy anything and for it to be managed in a really simple way.

“But the key for us is that the traditional products which would have been the anything of yesterday are not really now totally fit for the way people want to consume it because you are not 100% one thing.

“You’re doing multiple things. This era of hyper-personalisation of products and policies and even outside the insurance space people like to have a personal experience with whatever they do.

“That is coming at the insurance industry at a rate of knots at the moment, so what I believe we are creating is a facility to have true flexibility in one of the most important things that we have in our lives.

“Insurance is so important. It is around us the whole time and we’ve got to make sure that this sort of protection is adapted to the way we are now living.”

Zego raised £6m in Series A funding led by Balderton Capital in November 2017, and is currently not planning any additional funding rounds.

The start-up created its platform and has an actuary team in place to craft the products underwritten by Munich Re, Trans Re and Aviva.

The newly launched public liability line will be underwritten by MGAM Limited on behalf of Builders Direct SA and Franks revealed they will soon be launching with RSA for a specific line.