A car insurance startup backed by the chairman of Lloyd’s of London and a former GoCompare executive has raised £15m ($19m).
Cuvva announced on Tuesday that it has raised a round of so-called “Series A” funding — its first big chunk of investment from institutions. The £15m raised came from venture capital firms RTP Global, Breega, and Digital Horizon, as well as existing early-stage investors LocalGlobe, Techstars Ventures, Tekton, and Seedcamp.
Cuvva was founded in 2014 as a digital-first car insurance business. The company lets drivers buy temporary coverage by the hour and has sold 40m hours-worth of coverage to a quarter of a million customers, mostly in major cities.
“A very large proportion of our customers use Cuvva when they buy a new car to drive it home,” Cuvva founder and CEO Freddy Macnamara told Yahoo Finance UK. “The remainder use it as an ad-hoc replacement for being added as a named driver to other people’s policies.
“We have big spikes in usage around public holidays. Everyone goes home and needs to borrow their parents’ car or wants to share the driving.”
Bruce Carnegie-Brown, chairman of giant insurance marketplace Lloyd’s of London, joined Cuvva as chair in the summer and early backers include GoCompare’s former chief strategy and investments officer and the CEO of multinational insurer Jardine Lloyd Thompson.
Macnamara said Cuvva would use the new funding injection to launch longer-term coverage, including monthly car insurance that Macnamara claims will be cheaper than current alternatives. At the moment, people wanting to pay monthly for car insurance must take out lump sum loans that are paid back monthly.
“There are two middlemen that we are trying to cut out,” Macnamara said. “The first is the premium finance company who charge 10-40%, and the second is the price comparison website. We can do their job effectively for free by connecting directly into the insurance carriers.
“When you add up those two players, that’s a big chunk of your average £800, £900 insurance premium. We have a dramatically lower cost base than our competitors because we’ve built everything from the ground up.”
Cuvva is also moving into the travel insurance space and Macnamara said the startup ultimately wants to become a one-stop-shop for insurance.
“There’s a huge, huge amount of software that needs to be built for us to achieve our vision of being the place where you buy all of your insurance in one place,” he said.