A third of all consumers say they would buy insurance online. Will insurers respond with more on-demand platforms?
On-demand services like Uber and Seamless allow consumers to summon a ride or a meal by simply tapping a screen. These apps have fundamentally changed how consumers reach businesses, and insurance companies are no exception. A recent Celent survey revealed that 28% of consumers prefer to engage with insurers online, signaling a growing acceptance of tech-enabled insurance transactions.
That wasn’t a surprising result for Celent Insurance Practice analyst Luis Chipana. “Insurance consumers are influenced by what they see and experience in other channels like Amazon, Netflix, and Uber,” he told AdvisorNews.com. “The way these companies operate has made consumers expect the same experience from other industries.”
To attract the next generation of insurance customers, however, insurers need to quickly develop on-demand platforms for quick policy purchases and claims settlement. Although 71% of consumers still favored talking with an agent in-person or on the phone after reviewing insurance options online, young people overwhelmingly expressed a preference for digital channels, the Celent survey found. More than 90% of people age 25 or younger said they would purchase policies through a website.
On-Demand Insurtech Startups Make Their Move
Several insurtech startups have already made an impact with their on-demand insurance platforms. They’ve already received significant venture capital investment, prompting traditional insurers to explore such platforms, as well.
San Francisco-based Trov, for example, enables its users to instantly insure small electronics such as computer, smartphones, cameras, and sports equipment for a specified period of time through its mobile app. Its success helped Trov secure a $45-million Series D funding package led by Munich Re/HSB Venture, as well as $39 million in Series C financing from investors such as Suncorp Group, tech firm Guidewire, and fintech venture capital firm Anthemis Group.
The massive popularity of rideshare services has created opportunities for other insurtech startups. Since personal auto insurance usually doesn’t cover cars used for commercial purposes, New York’s Slice Labs developed an app that enable rideshare drivers to sign up for coverage whenever they’re working, eliminating the need for a costly long-term policy. Like Trov, the company formed a coverage partnership with Munich Re last year. It also attracted $3.9 million in seed funding from XL Catlin’s XL Innovate and Horizon Ventures.
Not to be outdone by startups, established insurers have ventured into on-demand services, frequently through partnerships. Nationwide, for instance, collaborated with Sure on its mobile app for renter’s insurance. Consumers can browse through quotes, buy a policy, and pay premiums through the app. Nationwide came up with the concept after it surveyed 1,000 millennials and found more than half didn’t have renter’s insurance.
More Complex Coverage Needs
Many on-demand insurance platforms cater to customers with less complicated insurance needs, such as a policy covering a finite period of time, small items, or straightforward coverage types like renter’s insurance. Yet some insurtech firms are tackling insurance risks requiring more detailed underwriting, such as life insurance.
Lapetus Solutions, Inc., for example, has developed a software program that analyzes a person’s selfie for evidence of predispositions toward various illnesses. The company’s executives assert that its digital technology could help consumers buy appropriate life insurance in as little as 10 minutes.
Customize and Provide Discounts
Chipana advises insurers looking to enter the on-demand market to provide clients with the option to customize their policy rather than offering a comprehensive insurance contract. He further recommends that insurers “lower the limit available and type of coverage, starting from a basic plan.”
Given concerns over data security, Chipana further suggests insurers grant discounts for online shoppers, especially Millennials. More than 30% of consumers told Celent’s researchers they’d be willing to share their personal information online in exchange for lower premiums or a discount.
Insurance agents can take advantage of the shift toward on-demand services. Since a majority of young people explore insurance options online, a digital lead generation service puts your agency in front of them on their mobile devices. With a quick on-demand service, you’ll be there whenever consumers are ready to buy.