Can the on-demand buying model reinvent the insurance industry? Some big names are betting it can.
As it has with transportation and food delivery, the on-demand app service model continues to disrupt industries. The latest industry to feel this change is insurance. Insurtech startups now offer innovative ways for consumers to buy coverage whenever they want with just a tap, and investors, as well as established insurers, have taken notice and appear willing to back these ventures.
Evidence of this trend splashed across the tech and insurance world recently when Trov, a San Francisco Bay-based on-demand insurance app, grabbed $45 million in Series D funding led by Munich Re/HSB Ventures. That’s on top of the $39 million the company pocketed last year in Series C financing from investors including Suncorp Group, tech firm Guidewire, and fintech venture capital firm Anthemis Group, among others.
The Uberfication of Insurance
Launched in 2013, Trov initially debuted as a cloud-based app where consumers inventoried valuables likes cars and jewelry. The service also allowed users to pinpoint the value of an item and monitor its worth. In the four years since its launch, Trov’s digital lockboxes have been filled with 940,000 assets valued at more than $8.5 billion, the company reports. Users have the option of sharing this confidential information about the items with their insurance broker, tax preparer, or appraiser. According to Trov, some insurers provide premium discounts for high net-worth policyholders if they set up Trov accounts.
Trov’s latest iteration spawned from wanting to do more with its app, Founder and CEO Scott Walchek told Insurance Journal. Once users knew how much their items were worth, the next logical step was to provide them with a convenient way to insure those assets, he said.
So, Trov morphed into digital platform where users log on and instantly buy insurance for computers, smartphones, cameras, or sports equipment. Customers also set the coverage period.
Trov’s on-demand insurance app clearly aims to capture the millennial demographic, a generation comfortable with the technology and needing of coverage for their omnipresent devices if stolen, damaged, or lost.
“Even if someone is protecting something to the extent of $5 to $10 per month, we think that kind of growth of premium actually can return terrific returns around the world, particularly because it’s this new generation who really doesn’t want to protect any other way,” Walchek said.
Investors, meanwhile, hope to profit from the skyrocketing popularity of the on-demand model and the cutting-edge technology supporting it. Increasing purchasing options for consumers and making policies easier to buy ultimately enlarges the industry’s market share. In an Insurance Journal article, Andy Rear, CEO of Digital Partners at Munich Re, called Trov’s on-demand coverage a “genuine innovation in insurance for an unserved or under-insured market.”
Trov currently sells coverage in the United Kingdom with backing from AXA Insurance and in Australia in partnership with Suncorp. By the end of this year, Trov expects to offer its on-demand policies in the U.S. as a managing general agency with Munich Re serving as the underwriter.
Established Insurers Bond with Insurtech Startups
Trov’s partnership with established insurers and investors points to insurtech’s growing acceptance within the rapidly modernizing insurance industry. Instead of fighting these startups for market share, legacy insurance companies want to blend their risk assessment expertise and proprietary data with the innovative, on-demand digital technology that consumers, especially millennials, now crave.
Late last year, Allstate announced its acquisition of SquareTrade Holding Co. for $1.4 billion. SquareTrade offers extended warranty plans for laptops, tablets, mobile devices, and other consumer electronic appliances. What makes its online sales model unique is the ability for consumers to view the failure rates of those items — information that’s not typically made public. Like other insurers, Allstate aspires to increase their online footprint, utilize new technology, and make an insurance purchase easier for consumers — a move it believes it accomplished with the SquareTrade deal.
These deals signal the growing inroads technology has made in the insurance industry. Simply put, consumers, particularly younger consumers, desire cool, easy apps that streamline insurance shopping and purchasing.
Nevertheless, to be successful, insurance companies and agents must provide good service, combining tech tools and the human touch. A recent survey from J.D. Power found property owners’ satisfaction with their insurance companies rose in 2016 due to carriers efficiently and fairly settling their claims in a particularly tough year for losses. Another J.D. Power survey reported higher satisfaction among auto policyholders who contacted their agents when filing a claim.
Technology makes some aspects of the insurance purchasing and filing process easier, but your clients still want to reach out to you, their agent. When they do, be sure to provide the great customer service that no app can replace.