Why An Insurance Startup Is Targeting Foreign Drivers In The UK


A startup in the United Kingdom called Marshmallow has raised $1.2 million in seed funding as it tries to use digital technology to lower auto insurance costs for foreign-born drivers there. The new capital comes amid a wider push in Europe to bring more standardization to the vehicle insurance industry.

Marshmallow, its funding from Passion Capital and Investec, will launch later this year, according to a recent article (June 7) in TechCrunch.

The goal of the company is to build “a product for immigrants/expats who are poorly served by the car insurance market,” the report said. Those products aim to “use better data and technology to provide more fairly priced insurance cover to non-U.K. nationals. To that end, the startup is starting out with car insurance for foreign-born drivers.”

In the United Kingdom, vehicle insurance rates can run 51 percent higher than the market average for foreign-born drivers, according to Oliver Kent-Braham, one of the company’s co-founders, as quoted by TechCrunch. He said, “Unfortunately, a lot of insurers don’t attempt to understand foreign drivers living in the U.K., instead they just overcharge them.”

The company’s underwriting system employs a proprietary algorithm to come up with what Kent-Braham calls a “more accurate price for foreign drivers living in the U.K.” He said the company views its typical customers as those who have already lived in the United Kingdom before needing to buy insurance.

The article said, “The company’s research suggests that after one or two years of living in the U.K., people are ready to settle down, and that this often means buying a car and inevitably getting insurance.”

The funding for Marshmallow comes as regulators in the European Union (EU) seek to bring their own fixes to the vehicle insurance market. According to a recent report from the U.K.-based Shropshire Star, proposals before the European Commission would “standardize insurance across the EU, setting minimum levels of cover as well as creating a set format for insurance histories. This would see those with an insurance claims history in an EU country being treated equally by other member states.”

The proposals also could lead to setting minimum levels of a coverage that are “harmonized” across Europe, and requiring countries to “define which motor vehicles require insurance.” That last part stems from a controversy over whether such vehicles as riding lawnmowers and mobility scooters need insurance, according to the paper.

All this activity around vehicle insurance is hardly the only change taking place in the wider insurance industry. Take the sharing economy — specifically, home and ridesharing. Companies are getting into that space and offering lower-cost products designed to appeal to people like Airbnb hosts, and Uber and Lyft drivers. One such company is Slice Labs, the subject of a recent PYMNTS interview with Karen Webster.