November 9, 2016
On-Demand Insurance: What’s at Stake
Now that we can itemize what we insure, a profound shift is occurring, to insurance and value in the cloud.
Now that we can itemize what we insure, a shift to value in the cloud is taking shape. We don’t have real numbers to crunch yet, but let’s take a stab at the issue.
If I have 10 major items in my home with an average cost to insure of $10 to $20 each, on-demand each year, does this represent a paradigm shift in the making from traditional underwriting?
If I sell two of those in the next six months, why am I still paying premium on them?
We just bought all new kitchen appliances, so are we to alert State Farm about our purchases; can we? We have a new bicycle and new flat screen less than a year old, and, like most, the list continues. If we’re paying $1,059 a year for both structure and personal property, what if we were to go on-demand?
What if over the past 10 years our property fluctuated in value by $30,000 or more, can on-demand keep pace?
Yes there are more questions than answers, but the fact is that the difference between real property and personal property is fading as we move personal lines to the cloud. Anyone care to examine that point further?
How are traditional insurers working toward evaluating, managing and tracking the things they insure in the cloud? If disruptors believe millennials feel strongly enough to insure major items in their home or apartment one by one, is there still time for traditional insurers to shift gears?
If in the next 10 years on-demand takes off and we have 10 major players, will they compete on price differences for the same items cataloged?
Example: Mike desires insurance for his new Trek bike valued at $2,300. So he goes to a site comparing prices for those 10 new players. Do you think, over time, there would be a few cents difference for a $2,300 bike to insure on-demand? One insurer may say $13 a year, another $12, and soon on-demand may be competing for less than a dollar difference, which raises the question: “Will individual items become a commodity in pricing over time?”
If you manage, track, update and possibly link on-demand goods in the cloud… will value-added services become more important than price? What will those services look like?
From a perspective of someone on the outside looking in for the past 20 years, I keep harping on this from a number of points, this one in particular: Customizable, on-demand insurance could take agents out of the equation.
Legacy insurers: You have something that Lemonade, Slice and TROV will never have up close and personal for your customers, but you’ve failed to make the necessary changes. Should there be change?
See also: On-Demand Economy Is Just Starting
On-demand could be the Achilles heel more so than any other disruption for the insurance industry! Traditional carriers: Combat disruption with disruption!