Zego’s partnership with Starling Bank will see it offer public liability insurance for small enterprises through the mobile-only bank’s marketplace, with a view to making other lines available in the future.
Balderton Capital-backed Zego has so far raised roughly £7.2m in its drive to offer pay as you go insurance products. It hopes to address the issue of underserved businesses purchasing the wrong type of insurance through its latest venture, according to Zego CEO Sten Saar.
Saar said: “For far too long, businesses have had to deal with long, complex sign up procedures to get their insurance and were all too often sold the wrong product, even after filling out pages and pages of unclear forms.
“Zego uses publicly available data to save businesses time and improve accuracy. SMEs make up a vital part of our economy and we’re pleased to be supporting businesses through the Marketplace platform.”
Challenger bank Starling was founded in 2014. Since then it has raised £90m of funding across three rounds. Its chief platform officer, Megan Caywood added: “Small businesses have always been the backbone of the UK economy, but the big banks continue to underserve and overcharge them. We want to change this, and today we’ve taken another big step in transforming the way small businesses can manage their finances.”
Insurance sold through the partnership will be available to any type of small business, Post understands. Zego is using publicly available big data to cut down on questions and form-filling for purchasers of the product.
Zego will seek to release further lines alongside public liability, it is understood. Policies sold through the marketplace will be available by the month or year.
While Zego argues that SMEs are being overcharged, brokers and insurers have identified a different problem for SMEs in some sectors.
Construction is one area that brokers have argued suffers from underinsurance and lack of the correct cover. In July, Construction Insure director Mark Herbert had his concerns over the use of price comparison sites to provide such insurance rebuffed by the treasury.
Around half of all UK construction firms, including builders, did not at the time have adequate insurance in place, according to research cited by Herbert.
HM Treasury’s response was: “The Government does not prescribe the terms, conditions or price that insurance companies may set when offering insurance.”
Other insurance companies have sought to tackle the SME insurance gap problem. Last year, Allianz launched a data initiative built to reduce the number of SMEs that are affected by underinsurance. Its database identifies whether sums insured are in line with that of other similar businesses in the area.
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