The confinement has changed our behavior as insureds . Indeed, the number of trips and the kilometers traveled have been reduced; we have never spent so much time in our accommodation, both for leisure and for work. These changes have had direct impacts on certain risks reducing the number of car accidents, theft and fires, but on the contrary increasing the risk of domestic accidents.
This period had an effect of awareness of policyholders on their insurance premiums. Just like the appeal of the UFC-Que Choisir consumer association which requests a reduction in Auto / Motorcycle insurance premiums. Beyond the absolute need for insurers to be more educator on the operation of insurance and the pooling of risks, it is interesting to note that policyholders have shown a strong expectation of a more understandable, fairer and better premium. more flexible . Will on-demand insurance offers benefit from the end of the crisis?
Insurance on demand, is it really the answer?
On paper, on-demand insurance is effectively the promise to benefit from ad hoc insurance to protect a property at a specific time and be able to put an end to it in a few clicks. With this type of ephemeral insurance, policyholders can better manage the cost of their protection by bringing it into play in the most useful circumstances.
Its first steps date back to 2012 in the United States with the birth of the startup Trov. These offers then developed in France with players such as Valoo, Tulip for everyday items (smartphones, cameras, bicycles, kite surfing), Wilov or even Leocare for car and home insurance. The big insurers and brokers are also trying it, like the wholesale broker April who launched the Objhey platform dedicated to the insurance of “passion” objects.
However, insurtechs who have tried to democratize insurance on demand or in use on the French market are still struggling to find a viable economic model . Unlike traditional insurances which charge monthly or annual installments, the actors of the “on demand” insurance recover a few euros for one or two days and have no recurrence of income. Several insurtech have also stopped the insurance of small everyday items to focus on the auto market or business fleets to capture higher premiums.
What if tomorrow, on-demand insurance becomes a supplement to a basic insurance guarantee?
Today, the main obstacle to the development of ephemeral insurance over the long term remains the very low insurable mass, which does not allow insurers to achieve the right balance between mutualisation and personalization. The slow increase in smartphone use in everyday purchases in Europe, an efficient way of distributing this type of guarantee, is a second major obstacle. Finally, this type of insurance is more prone to the risk of adverse selection even if the use of data and mobile solutions today makes it possible to better anticipate this risk.
What if the answer is found between the two worlds? Indeed, confinement did not remove the risk of the insured but made it evolve. Today, it is easy in other countries to activate or not its options within a housing contract according to its presence or not for example. The insured can thus activate a theft cover in his housing contract when he is traveling and deactivate it on his return. An option can also be added when carrying out renovation work …
Today, on-demand insurance is only part of the solution that can effectively meet a need for flexibility in traditional insurance. However, to be successful over the long term, the product must be profitable for the insurer and provide value to the insured. Ephemeral insurance can find its place in addition to the basic guarantee if it meets a specific need of an insured and provide this need for customization which is lacking today in conventional products.
Senior Consultant PMP