3 Big Advantages of Offering On-Demand Insurance

By Insurance CIO Outlook | Thursday, July 02, 2020

As technological dynamics, economy, and customer expectations shift, on-demand insurance offerings are becoming promising for insurance carriers.

FREMONT, CA: Innovative insurance models are emerging today. Be it peer-to-peer insurance or on-demand coverage, insurance carriers are exploring new opportunities. The conventional insurance policies with coverage spanning longer periods are still relevant, but a large segment of customers are now looking forward to the flexibility and short-term plans. The advantage that customers have from on-demand insurance translates into market opportunities for insurance carriers. As the era of on-demand services broadens, the insurance industry should look to develop on-demand models due to the reasons enlisted below.  

Relevance to Millennial Populations

Top 10 Policy Administration Solution Companies - 2020The traditional customer base for most of the insurance companies is gradually declining. Millennials are now replacing them. The demographic shift is poised to have a lot of repercussions in the insurance industry. On-demand insurance products are appealing to the fast-paced lifestyle that millennials live. By developing on-demand insurance, insurers have the opportunity to acquire new customers effortlessly and increase profitability rapidly.

Aligned with Economic Trends

The economic trends have evolved significantly over the last few years. Today, the sharing economy and gig economy are some of the buzzwords across the globe. On-demand insurance policies are extremely relevant in such economic ecosystems. With on-demand offerings, insurers can deliver coverage for shared assets. Besides, microinsurance policies allow insurers to deliver coverage for shorter periods. By allowing individual devices, travel packages, and events to be insured, insurance companies can expand across untapped markets.

Lower Threshold of Risks

Since the values of premiums are low and policies are generally short term, the risks associated with on-demand insurance are lower. In addition to that, on-demand insurance allows for usage-based policies, which customize the terms and conditions depending on user behavior. This helps with better risk management. Therefore, insurance carriers offering on-demand services have the advantage of less operational risks and reduced chances of fraud.

With innovative on-demand business models, which are poised to define the future of the insurance industry, both large and small insurance carriers can discover new opportunities that can fuel rapid growth. 

See also: Top Insurtech Companies

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