The boom in the digital ecosystem enabled the creation of new type of business models for the hotel and stay industry. It was disrupted by AirBnB according to which anyone having a free room can become a shared stay operator. The typical home insurance industry will not cover such type of “shared economy risk”. “Safeshare” insurance is a new age insurance company which is disrupting the industry with their “shared economy”. It focusses on policy offering for house owners risk cover who are letting out their extra space on Airbnb.
Similarly, Uber share is disrupting the travel experience and the typical insurance provider does not cover accident damages on such shared travel. “Slice” is a new age insurance company which provides insurance cover for a shared car ride and that too on-demand basis.
API economy enables existing insurance operator to experiment on new frugal innovations – AXA, one of the leading insurance provider in the world, creates an “Insurance as a Service” that can be offered as any of their own offering. SATS Ltd, one of the travel and food companies, created an app to enable users plan their travel and, in turn, purchase the insurance directly on their app. The insurance purchase was enabled using AXA insurance as a service offering.
Similarly, let’s say you are in a diamond shop planning to purchase a very costly diamond and wanted to insure it. The diamond purchaser, as part of their POS terminal, can have the insurance service integrated which can help buy insurance directly from the diamond vendor. A win-win for all party involved – the insurance company, diamond vendor, and for the customer.
IoT and wearable are transforming the Life insurance in a new way - John Hancock a leading US operator’s insurance customer can opt for utilizing the wearable to keep track of the daily exercise activity. By sharing this daily exercise activity, they can get a discount on the policy premium - intern help John Hancock to reduce the risk of medical care cost if the insured is continuously exercising and maintaining his health.
Auto insurance industry is at forefront of new business innovation – New-age insurance provider named “Mydrive” provide telematics devices for the insured car to track the driver’s behavior and base their premium on the driving behavior.
“MetroMile” another auto insurance company utilizes a similar driver pattern and provides insurance based on the millage consumed by the driver. If you are a low millage user you might be paying a lot less premium while renewing it.
An interesting innovation is from an insurance company called CUVVA which provides on-demand auto insurance on hourly, weekly, and monthly basis.
Digital disruption enabled the peer-to-peer insurance – “Frindsurance” is a new generation insurance company which enables a group of people to create and share the insurance. The group of people pay the insurance premium and a part of the premium is kept to cover for the group need, if the group exhaust on the shared money then insurance company comes in for cover, the risk is mitigated at the group level first.
The above scenarios shown are just a few examples of how technology is enabling disruption and innovation in the insurance industry and how new business models are on the horizon for the better times ahead.