Big Interview: Freddy Macnamara, Cuvva

As a young hospitality entrepreneur, fresh out of the University of Edinburgh, Macnamara discovered an unlikely problem.

His rural business was quite far away from many of its suppliers, so often he would have to get in the car and drive to pick things up.

However with a busy schedule, he couldn’t always personally make these runs, so he found himself often on the phone to his insurer trying to get staff members added to his policy so they could do the trips instead.

“It was a difficult process, and I was constantly frustrated by it. I thought it would be much better if one could buy a short period of insurance on a mobile app,” he says.

So in 2014, just over three years after leaving university, Macnamara incorporated Cuvva.

Like many insurtech founders, Macnamara had to learn a brand new industry from the ground up, and this provided the benefit of looking at things with fresh eyes but the downside of being a relative outsider.

The search for a partner

The “easy part” of starting the business for him was establishing the need because he had previously been the customer looking for an hour of car insurance. The hard part was getting a carrier on board.

“Short-term motor insurance was a very niche business in 2014, no one had really heard of it,” Macnamara highlights.

He set off to find the most senior people in motor insurance and presented his idea to them, initially without much luck.

“We have always been playing in a space that most insurers shy away from,” Macnamara explains. “When you get an MGA agreement, [the carrier] is handing you keys to the kingdom, and that takes a huge amount of trust. If you don’t have that trust, you won’t have the envelope wide enough to compete.”

Through the year of 2014, he had several meetings with insurance companies, which allowed Cuvva to create a document with the concerns of insurance companies on one side and the offered mitigations on the other.

That awareness of both the challenges and the solutions led to them finding their first carrier.

Cuvva’s policies are currently underwritten by Wakam and ERS, and Macnamara says he is “really happy” with both carriers.

He shares that they are more focused on investing in “targeted partnerships” over a long period of time because that is best suited to a small business that is building a brand reputation and a balance sheet.

Macnamara argues: “Investing in one to three deep relationships where you can show a track record over many years gives you the leeway to do things that will push the edges of that envelope, but allow the business to grow in a safe way so that your carrier partners actually make money from that relationship because if carrier partners aren’t making money from the relationship, you have no business.”

A ‘real’ insurance brand

For Macnamara, a big part of that protected brand reputation comes from having a direct relationship with customers.

He says: “We’ve built a real insurance brand; we’re not just a few pixels on a price comparison website.”

40% of Cuvva’s customers come to the business through word of mouth, and Macnamara notes that this is “very different” to its competitors as it fosters a “deeper and long-term relationship” that improves the business’s stability.

“We’re not constantly relying on being the cheapest at the top of the price comparison website and having all of those customers who couldn’t give a crap who we are as a brand and what we stand for and will churn in and out every single year. I think that’s incredibly valuable,” he argues.

Macnamara gives price comparison websites credit for their initial impact of getting the industry focused on price but discusses that they made firms “strip products down to their bones”, resulting in customer distrust from inadequate service.

“We’re about to see a big flip away from price comparison,” he asserts.

He argues that price comparison websites do not provide enough information to underwrite in “today’s environment”.

It was a difficult process, and I was constantly frustrated by it. I thought it would be much better if one could buy a short period of insurance on a mobile app.

Some know-your customer information such as a current location, a selfie for identity verification, a picture of the driver’s license and customer usage behaviour is not available through price comparison websites, and Macnamara says this puts insurers at a disadvantage.

He also highlights the issue of margins being too low and insurers making losses on certain customers.

“It’s bad for the customer, really expensive and ultimately unsustainable,” he argues.

He notes that Cuvva maintains this position partly because there are no price comparison websites for short-term car insurance, as it includes risks that do not come with an annual policy.

Macnamara explains: “We have to be very careful and make sure that it’s the right people coming through so that we can price them accurately. It’s very difficult to do that via a price comparison website.”

Due to the uniqueness of the risks associated with short-term motor insurance, Cuvva applies certain measures to manage and mitigate.

Before a driver uses a car, they take a picture of the vehicle, which is scanned by artificial intelligence to make sure the car is not damaged.

Technology enabled

These types of measures are easier to implement for Cuvva because it does not have the legacy technology used by traditional insurers.

“We can have an idea and have it live a couple of weeks later, then see if it’s working or not,” Macnamara shares.

The insurtech is using AI in “every single aspect of the business”. As well as vehicle verification, AI is also used in the insurtech’s identity verification for app users.

AI bots are handling claims processing, including first notification of loss and triage. These bots are also providing frontline customer support.

These use cases have allowed Cuvva to improve its customer satisfaction score from 82 to 92, against the industry average of 77.5 according to the Institute of Customer Service.

Macnamara plans to triple the size of the business while maintaining a staff of less than 100 people through this automation and efficiency.

“You don’t need that many people to get very large scale going if all the things they are doing are automated,” he notes.

Staying in its lane

When asked whether Cuvva would be achieving this scale by venturing to other lines of insurance, Macnamara explained that he is yet to find a match.

He says: “Ultimately, we have a very specific distribution model that relies on us being able to go and acquire customers directly, and if I can’t see that there is going to be some profitability for us and our carriers then we won’t continue with the product, and we haven’t yet found a product that we think is great for customers and carriers in the same way that our short term motor insurance is.”

Insurance Post recently analysed insurtechs that have diversified when there was still mileage to be run with core products and found that this has rarely worked out in their favour. Cuvva was commended for sticking to what it knows and achieving profitability sooner than its peers as a result.

Despite this, Macnamara noted that the MGA “has its eye” on annual motor insurance due to its “better way” of underwriting and direct customer acquisition model but aims to maintain its focus on growing its core offering.

“We need to make sure we focus and at the moment, we are growing at such a rate that we have 1.25 million customers. So we’re a growing high engagement brand and we don’t yet need to add products to get through,” he adds.

Profitability opens doors

In 2023, Cuvva was able to go from a £6m loss in 2022 to £3.8m adjusted profit, according to its annual report. Macnamara explains that this has allowed them to dedicate resources to expanding its existing products.

He says: “This has allowed us to really push that envelope and allow as many people to make their car multiplayer as we possibly can.”

One feature the business has been able to roll out recently due to this added leeway is the ability for non-British license holders to use Cuvva.

In December 2024, French and German license holders were permitted to obtain short-term motor insurance on the app for the first time.

Macnamara recalled countless experiences with friends who are from countries like France and Germany wanting to drive their friends’ cars in the UK but being unable to secure insurance and encouraged to go through car rental companies.

“This is going to be transformational to their ability to drive in the UK,” he says.

Another example is the expansion of Cuvva’s Car Clubs, which allows people to share their cars with people they know by inviting them to their club. Users can also set up an hourly and daily price if they would like to charge people to use their vehicles, which Cuvva receives a cut from.

Macnamara revealed that over 10,000 people had created Car Clubs on Cuvva’s platform and in December, it introduced a feature allowing Car Club members to discover and connect with people in their local area, marking the company’s first expansion into social networking capabilities.

“It’s not just people that you know; it’s people that live right next door,” Macnamara said. “If someone who lives within 250 metres of you has a car, they can make it public, and you’ll be able to send a request to join their car club and ultimately borrow their car.”

He notes that it’s not about running a car rental service through the app but rather lending cars to a small group of trusted people within the vicinity.

Macnamara shares: “Short-term motor insurance is becoming a very major category of insurance and that is completely driven by this wave of people who want to drive less and pay less for their cars and their car ownership.

“That’s not going to be solved by the car rental firms of this world. There has to be a completely distributed revolution and it’s going to keep happening for many years to come. The last couple of years profitability for us means that we’re in a really strong position to take advantage of this over the next few years.”

The primary issue Cuvva discovered for people trying to run car clubs in their local community was the high cost and the unwillingness of an insurance company to write a fleet policy. This is because the insurer doesn’t know who will drive the vehicles and ends up having high loss ratios.

Macnamara says: “Insurance is the key to unlocking proper community shared usage of vehicles, and it has to be done on an individual basis, rather than a fleet basis.”

Cuvva is able to price on an individual basis because it has worked on how much it costs to drive a car for an hour, so it can repeat that process for each member of a car club.

“My aim is for these car clubs to become a much cheaper way of using Cuvva so that you can use it much more often,” he adds.

“The app is the product”

Cuvva’s primary growth focus is delivering “a million improvements” on its app over the next few years.

“The app is the product,” Macnamara says. “Every week you will get a new version of the app, which will contain some level of improvement that will allow you to sign up more easily, better understand what’s going on, get around quicker, or in some cases bring the price down.”

The insurtech has focused on making the in-app experience “absolutely incredible” and Macnamara believes “all our hopes and joys are poured into making every single, tiny decision in there perfect”.

At the moment, when someone downloads the Cuvva app they scan their driver’s license and take a picture of their car, Macnamara claims they are then sitting behind the steering wheel in under five minutes.

“They feel like something magical has happened,” he adds. “Honestly they shouldn’t because it should be as easy as transferring money to a friend is today”

Macnamara argues that the supply chain through the price comparison websites has made the process so “convoluted” that customers settle down for a half day trying to buy an annual insurance policy when it is “more than possible” to do it in a few taps.

The juxtaposition of Cuvva’s app with standard motor insurance experiences is what Macnamara believes encourages customers to share the app with loved ones and brings that word-of-mouth traffic to the insurtech.

Cuvva’s app-based development and direct customer acquisition distinguish the firm from many in the motor insurance industry, but among insurtechs, its realistic ambitions and modest mindset are what have allowed it to hit profitability much faster than its peers.