Carrier readiness for on-demand insurance offerings

Customer experience Insurance

Traditional carriers should position themselves to respond 

On-demand insurance is increasingly on the agenda for many insurance technology, or insurtech, companies in 2022 because it taps into the needs of policyholders looking for insurance coverage they can use on an as-needed basis. As millennials and digitalization take over the U.S. insurance marketplace, the demand for this type of insurance—also referred to as episodic insurance—is on the rise and expected to grow nearly 30% by 2026, according to a 2019 report from Acumen Research and Consulting.

Historically, insurance customers have worked with independent agents to select insurance policy durations based on the carrier’s predesigned options. On-demand insurance gives policyholders the option of purchasing insurance protection for time frames that meet their actual usage needs, essentially providing protection to customers on their own terms.

Insurtech companies are leading the way in this marketplace opportunity, so traditional insurance carriers will need to innovate their offerings to better align with these shifting customer preferences and remain relevant, build loyalty and retain customers.

An evolving market

In 2019, Insurance Journal projected that roughly 60% of businesses would be owned by millennials or Gen Xers within a year, which would increase demand for technology that gives small-business owners the ability to purchase insurance at the click of a button. The reality is that younger business owners are more accustomed to using digital platforms that provide instant solutions rather than going the traditional route of purchasing less flexible insurance contracts.

On-demand insurance bridges the gap for customers who don’t fit the mold of requiring traditional policy terms, and instead just need protection for a specific event. Take, for example, Verifly, an insurtech company that allows freelance drone operators that take aerial shots of real estate to purchase coverage for specified periods of time, ranging from one to eight hours. 

As companies such as Uber and Airbnb have reshaped the world we live in, the need for tailored coverage has become more relevant; for instance, people need coverage that can flex between personal and commercial protection for variable time periods. On-demand insurance helps to fill gaps for coverage that was traditionally unavailable, insufficient, or excessive. For example, Slice—an insurtech provider that offers homeowners coverage in partnership with Canada-based carrier The Co-operators—allows homeowners to select start and end times for coverage when renting their home through sites such as Airbnb. This allows the homeowner to obtain business insurance coverage for their property and belongings while the space is rented, Digital Insurance reported in 2018.

Other companies, such as Trov, Cuvva, Sure and Digital Risks, are entering the market and taking advantage of the opportunity gaps created by an increasingly on-demand world, heating up the competitive landscape for traditional carriers.

How can traditional carriers position themselves to respond?

Improving the customer experience will be central to traditional carriers’ ability to build customer loyalty and long-term customer retention for these types of products. Here are some ways organizations might strengthen the customer experience at a high level:

  • Improve accessibility and flexibility with a range of insurance offerings to meet evolving customer needs.
  • Use fully digitized application, approval, and policy issuance processes for speed to market.
  • Leverage expedited policy servicing, claims investigation, and resolution processes.

In addition to having focused customer retention strategies, traditional insurance carriers interested in offering on-demand or episodic insurance must take a thoughtful approach to structuring their product model. That structure should enable innovation and flexibility with insurance offerings, as well as a reevaluation of strategy for pricing, underwriting, and servicing episodic products.

The use of data and technology to expedite product development, quote, and bind, and claims settlement capabilities will also require an intentional focus on process redesign and a nimble operating model to minimize the complexities of blending traditional operations with new insurance offerings.


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