Thinking

ON-DEMAND (ING) MORE FROM INSURANCE

From tech-enabled home insurance to wearables generated health policies, startups are colonising the trillion-dollar insurance industry – with investors not far behind.

Insurtech startups around the world are eagerly pushing and shoving in the queue to become the next Unicorn (I know, I know, we’re tired of the phrase too). Amongst the tussle, clear opportunities for disruption are appearing.

With mobile-first solutions now common place – with roadside assistance, food delivery, banking and the connected house all controllable at the press of a button – it’s now time for insurance to play catch up.

 

THE POSSIBILITIES ARE ENDLESS

On-demand insurance delivered on mobile and underwritten in seconds is gaining momentum. And it’s beginning to attract some serious attention.

The unbundling of insurance policies into specific risk protection, at a level of convenience not seen before, is drawing attention from venture capitalists globally.

Trov, the on-demand insurance platform for lifestyle products founded in 2012, received $14m investment in their 2015 Series B round, led by investment firm Anthemis Group. The app allows users can add personal affects to a list, receive valuations on them based on a number of metrics, then switch insurance for the individual items on and off at the swipe of a finger.

But is all this money fueling the customer experience we’ve all been waiting for or is the trend for on-demand innovation just further complicating our lives?

Well, a bit of both. First, let’s talk positives.

 

QUICK & EASY. CONVENIENT INSURANCE

Specific risk protection has many advantages for the insured.

Want peace of mind that your family’s wellbeing is protected during your flight, without the complexities of a full life insurance policy? Sure, the on demand flight insurance app provides cover from take off to landing. Just submit your details whilst waiting to board and you’re all set.

Cuvva, another app, provides fully comprehensive car insurance at an hourly rate, underwritten within 10 minutes. Perfect for covering your neighbour’s split window VW van when you want to borrow it for an evening on the coast. Something notoriously expensive to insure short-term.

You still have to ask for your neighbour’s permission and probably the keys. It’s not that clever yet.

 

UNBUNDLING ALWAYS BEST?

Both are a great showcase for the convenience of on-demand insurance but just how useful is it to break our insurance packages down like this?

Personal injury insurance is now available unbundled for sportsmen and women to be covered whilst involved in their sport. But what happens when you step off the field and trip over your laces? At what point does specific risk insurance become an inconvenience rather than a convenience?

 

LET’S NOT COMPLICATE MATTERS

We recently spoke to James York founder of Worry + Peace, the 21st Century broker looking to rebrand the insurance experience. He felt that there was a potential for on-demand insurance to unnecessarily complicate matters.

“There’s a feeling that there’s a need for people to leverage the bad reputation of the insurance industry by developing the next best option, which grabs the headlines and draws investment quickly. But if we are really focusing on consumers, let’s challenge that assumption? What was wrong with that bundled life insurance policy?

There’s nothing wrong with the content of it, but perhaps we need to focus on the execution, distribution and relationships from the insurer. Let’s face it I don’t want to be insuring myself for every activity I do. I’d rather be safe in the knowledge I am protected with bundle insurance because that seems more convenient to me – convenience is what we all seek isn’t it?”

Maybe he’s got a point.

Should we focus on insurance for cyclists every time they jump on a Boris Bike? Or concentrate on core issues within the industry, like the broken relationship between consumer and insurer?

Well like most things, it’s a bit of both. And the good news for the consumer is it’s all coming at the same time.

 

GAINING TRUST ALONGSIDE TECH INNOVATION

We’re under no illusion that there’s a huge customer base for on-demand insurance products.

However, before getting too deeply entrenched in the idea that the next big tech development will save a relationship already on its last legs, there needs to be a reparation of that customer/insurer disconnect.

And, as it so often does, it boils down to improving the customer experience.

The industry can no longer survive with two customer touch-points. The first when it sells a complex and over-engineered product; the second when it makes claiming against that product all the more difficult.

An interesting one to watch is Insurify who are addressing this disconnect. With a $2m investment from Rationalwave Capital Partners, they’ve recently launched a virtual agent technology ‘Evia’ built on machine learning and natural language processing.

Whilst that bit might still sound complicated, the customer experience part is ‘take a photo of a numberplate and you’ll get an SMS with a few quotes’.

Once the customer/insurer relationship has been resurrected by startups like these, consumers will be far comfortable adopting the exciting new on-demand tech solutions coming our way.

Want to know more about on-demand insurance disruption? Make sure you have a read of our Disruption Report 2016 | Insurance.

 

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