London-based insurtech start-up Zego raises $42m to fund European expansion 

Zego offers insurance to Deliveroo riders
Zego offers insurance to Deliveroo riders Credit: Alamy

A start-up which allows Uber and Deliveroo couriers and drivers to pay for commercial vehicle insurance by the minute has raised $42m (£33.3m) in investment.

Zego, which was founded by two former Deliveroo employees in 2016, allows workers in the so-called “gig economy” to pay for commercial insurance only when they use their cars and scooters for work.

Food delivery couriers and ridehailing drivers do not work standard working weeks, instead opting in to work when they have the time to do so.

Zego chief executive Sten Saar, the former operations director of Deliveroo, said his business can dramatically reduce insurance costs for couriers when compared to traditional commercial insurance.

Personal scooter insurance policies cost around £350 a year, Mr Saar said, but this can rise to £1,300 a year for a standard commercial policy.

“Previously it was such a niche market that there weren't that many people in this industry and therefore there were only a few insurers who were offering these products,” Mr Saar said.

The investment in Zego comes from Berlin-headquartered investors Target Global, as well as TransferWise co-founder Taavet Hinrikus and existing investors Balderton Capital and Tom Stafford of DST Global.

Mr Saar said his business plans to expand its insurance policies to cover electric scooter rental start-ups. Many companies offering the scooters to rent through smartphone apps have launched across Europe in the past year, although the vehicles are illegal to drive on public roads in the UK.

The business also plans to expand its coverage to include more European businesses, Mr Saar said.

Last month, Direct Line founder Sir Peter Wood led a £2.5m funding round in insurance business Pikl, which allows people who let out their homes through Airbnb to insure their property.

Mr Hinrikus said: “I’ve been following Zego for some time and have been hugely impressed by the team and their ability to rapidly roll out innovative new insurance products and quickly gain market share.”