Manchester-based insurance technology firm Fruga has raised £1m in seed funding to expand its open banking platform and help consumers reduce the cost of annual insurance renewals.
The round was backed by NPIF II – PXN Equity Finance and venture capital firm Haatch. The company plans to use the funding to grow its workforce and accelerate customer acquisition across the UK insurance market.
Fruga allows customers to link their payment cards to insurance policies, earning credits through everyday spending with partner brands. The credits can then be used to reduce the cost of future insurance renewals, offering customers a way to offset rising premiums through their regular purchases.
Founded in 2024, the Manchester-based firm operates in the growing InsurTech market, where technology companies are seeking to change how insurers engage with customers and retain business. Fruga’s model uses open banking infrastructure to connect consumer spending with insurance rewards, creating an additional incentive for policyholders to remain with their provider.
Chief executive and founder Ross McCarthy said the insurance industry had trained customers to view their policies primarily in terms of price, leaving providers struggling to maintain long-term relationships.
“Every renewal sends them back to the comparison sites, and the insurer that wins them this year loses them the next,” McCarthy said. He added that Fruga aimed to move customers away from that cycle by putting greater value at the centre of the relationship.
The company intends to use the new capital to make additional hires, with key appointments anticipated early next year. Funding will also support the expansion of its customer acquisition pipeline as it seeks to establish a wider presence in the UK insurance market.
Joe Ball, senior investment associate at PXN Ventures, said the relationship between insurers and their customers had remained largely unchanged for years, with many consumers hearing from providers only when their policies were due for renewal.
Price often determines whether customers stay with their existing insurer or switch to a competitor, creating pressure on providers to compete for business at each renewal. Fruga is seeking to address that challenge by giving customers an ongoing financial incentive to remain engaged with their insurer between renewal dates.
The funding comes as insurers continue to face pressure to improve customer retention in a market where comparison websites make switching providers relatively straightforward. By linking everyday spending to future policy discounts, Fruga hopes to offer insurers another way to differentiate their products while giving consumers a route to lower renewal costs.
The latest investment will support the company’s next stage of growth as it develops its open banking technology and expands its reach among UK insurance providers.
