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Why On-Demand Insurance Will Become the Industry Standard
The on-demand economy has changed the way that consumers fulfill a number of different needs. It now plays a major role in the ways that people access entertainment, and with services like Uber it is even changing the world of transportation.
Beyond the more common applications for on-demand business models, we are starting to see a need for on-demand insurance as well. Various forms of usage-based insurance have existed for some time, but advances to communications technology have started to make these products more practical for insurers and more accessible for consumers.
At the current time, on-demand insurance only makes up about 1% of the global insurance market, but industry experts are expecting significant growth. In sectors ranging from auto to apartment insurance, this shift to on-demand is making its effects apparent. In a poll from September 2017, 44.9 percent of respondents said they believe that at least 50 percent of all insurers will have on-demand offerings by 2022.
The Response of Established Insurance Companies
For now, the on-demand insurance market is being driven by smaller startups instead of being guided by the industry leaders. The industry giants were not quick to identify the opportunities for on-demand insurance, so smaller companies stepped into the void.
While it may have taken smaller startups to identify the opportunity and get the on-demand market going, the larger companies have recognized the potential this market has. If you look at the numbers from 2010-2015, large corporate insurance companies have been investing heavily in insurance tech startups, and the amount they’re investing has been growing.
An Innovation to Meet the Needs of Customers
Technology may have made on-demand insurance possible, but it comes from the recognition of unmet consumer needs. Just like insurance customers of the past, today’s consumer still wants financial protection, but there is a large segment of the population that is not having its needs met by traditional insurance models.
With the on-demand model, insurance is more convenient. The customer can open an app or head to a website to get fast, convenient insurance in just a few clicks. Furthermore, this form of protection is more suitable for the lifestyle and usage of many modern consumers. Instead of paying for a blanket policy that covers a bunch of things the consumer does not need, on-demand insurance provides customizable coverage, and the consumer can use it when, how, and where they need it.
Examples of On-Demand Insurance
The market for on-demand insurance is small now, but it is growing. Several companies are already offering on-demand coverage, and there is going to be an increase in competition. As a result, there will be more options for the types of on-demand insurance that are available. The following are a few examples of different types of on-demand insurance currently offered.
Metromile offers on-demand auto insurance. Just like any other insurer, factors like age and driving history are factored into the cost. However, instead of paying for an annual policy you pay a monthly rate based on the number of miles you drive.
For people that drive less, this is a good alternative to the traditional auto insurance policy. You just set up an account using the Metromile app, install the mile-counting device to your car’s OBD-II port, and the system can count your miles and charge you as you go. You can even use the app to track mileage and account for your current insurance expenses.
Protecting your valuables is very simple with Trov. With the Trov app, you can insure a wide range of valuable items. It’s also very convenient because the entire experience can be handled from your phone.
Once you have the app, you just take pictures of the items you want to insure, and the app gives you a daily rate for the cost of insurance. With this service, you can specify which items to cover for loss, theft and damage, and you can easily turn the insurance on and off from the app.
The chances of an accident in the air are incredibly slim, but if you want a little extra peace of mind knowing that your family will be taken care of in the event of a crash, Airsurety has you covered. This company offers simple flight insurance that can cover you with policies that range from $500,000 to $3,000,000, and all you need to do is give them your name, email address and make a payment.
Insurance for the Sharing Economy
If you rent your home out using a service like AirBnB or Homeaway, you might worry about the damages that may occur when guests are using your home. With Slice, you can get the protection you need without having to pay for coverage that goes beyond the essentials.
The insurance from Slice allows you to turn the insurance on or off depending on whether you have guests. This allows you to pay for insurance when the property is actually making money for you instead of having to pay for insurance regardless of whether you have guests or not.
In addition to that, Slice is also experimenting with an auto insurance product for ride-sharing drivers. This could be helpful for rideshare drivers that work through services like Uber. The insurance provides enough coverage, but they only have to pay based on the amount of time they spend driving.
article by Rae Steinbach
Find Rae on Twitter: @araesininthesun
Rae is a graduate of Tufts University with a combined International Relations and Chinese degree. After spending time living and working abroad in China, she returned to NYC to pursue her career and continue curating quality content. Rae is passionate about travel, food, and writing, of course.