Insurtech Zego set to lead the UK’s micromobility movement, as COVID-19 pushes e-scooter trials

Insurtech Zego has become the first insurer to publicly announce a partnership with an e-scooter company as part of the UK’s first e-scooter trial. The deal highlights the greater potential for insurtech in this area of the market after COVID-19.

Findings from GlobalData’s Thematic Research: Sharing Economy in Insurance report highlight that riders using e-scooter rental platforms under the current business model are liable for any damage or harm caused by their use of the e-scooter. Should a rider have an accident that causes injury to a pedestrian or damage to a property, then challenges regarding insurance coverage arise. In the US, popular e-scooter platforms Bird and Lime offer limited liability insurance. But when accidents occur, they pose challenges of liability.

With this partnership, Zego is providing third-party liability insurance as legally required by the UK government. However, despite offering such coverage, legal interpretation remains vague for cases that could arise from e-scooter accidents. Lack of a clear legal mandate could lead to the insurtech taking on greater risk, as the ruling of e-scooter cases and claim costs it could incur are unclear.

It is expected that insurtechs will lead the way in the UK’s untapped e-scooter market and will be more inclined to take on risk with the new micromobility models. This is especially the case as conventional insurers are currently more budget-cautious due to the challenging claims landscape that the coronavirus pandemic has created for the industry. Beyond not wanting to take on greater risk, conventional insurers tend to be more complacent with their product offerings. Going forward, insurtechs are expected to play a greater role in untapped markets, as larger insurers will be squeezed with greater financial pressures.

Zego will also be offering personal accident cover for riders, which will automatically switch on and off as riders use the e-scooter. This is a big change compared to e-scooter insurance offered in other countries such as the US, where riders will need to have separate medical insurance to be fully covered should they get injured. In the UK, this is unnecessary as riders can fall back on the NHS. Zego’s e-scooter coverage demonstrates the insurtech’s ability to create new product offerings for the rapidly changing market environment in the era of COVID-19 and insurtech will lead the way.