On-demand insurance allows customers to trigger coverage at any time they choose, such as between rides with a ride-hailing company. Customers often turn to this form of service due to its instantaneous access and usage-based pricing (EIOPA 2020). This insurance solution also enables individuals to purchase coverage without extensive paperwork, medical exams or long-term commitments.
1. Convenience
On-demand insurers typically have a faster application process than traditional insurers, making coverage more easily accessible. Some policies even use technology to track usage and allow customers to pay only for what they require – for instance ride-hailing drivers can get short-term liability coverage during periods when their app is active but they are not transporting passengers, mitigating potential gaps in coverage.
On-demand insurance may also be more cost-effective than traditional policies, since customers only purchase coverage when needed. Unfortunately, limited product offerings may limit market expansion while fraudulent claims could undermine its credibility and cause irreparable harm to its reputation.
2. Flexibility
On-demand insurance provides coverage on an as-needed basis based on duration, event or usage. With features like easy applications and pricing flexibility that allows for pausing and reactivating policies when necessary, this new model is revolutionizing the insurance industry.
Flexible benefits plans allow employees to utilize pre-tax dollars in a predetermined contribution limit to customize a selection of options within a defined contribution limit, such as health reimbursement accounts, transportation benefits, family expansion support services, caretaking support programs or work-life balance initiatives. Such benefits can greatly increase employee satisfaction and engagement. Many on-demand insurance products provide tailored plans based on usage and need, with features like pay per mile car insurance rated via telematics or short-term project coverage, giving more control over costs and coverages.
3. Scalability
As with the services provided by Netflix or Spotify, customers demand on-demand insurance that fits seamlessly with their lifestyle changes. Insurers have responded by revising their business models, offering instant policies and collecting data through digital ecosystems.
On-demand insurance can be activated both manually or automatically by customers using embedded mobile technology, making the service ideal for gig economy workers or those with new work arrangements (see Figure 1). Furthermore, micro-duration coverage options may also be provided that cover short periods (see Figure 1).
On-demand insurance depends on customer consent for data exchange and on being able to accurately forecast claims and liabilities on an annual basis, usually through contract duration estimations. Unfortunately, shorter contracts make building cohorts essential to premium calculations more challenging.
4. Accessibility
As people become accustomed to instant access (streamed music and videos, same-day shipping), people expect the same experience when purchasing insurance. That’s why on-demand insurers provide policies that can be activated or deactivated immediately through mobile apps – making it simple and effortless for customers to obtain coverage when needed without lengthy application or renewal processes.
On-demand insurance provides solutions that don’t fall within traditional policies’ coverage – like home and auto coverage for Airbnb or Uber drivers – helping drive market expansion as consumers seek flexible solutions.
5. Convenience
Contrary to traditional policies, on-demand coverage typically is available via mobile apps or digital platforms – making this type of coverage appealing for individuals looking for fast coverage without lengthy paperwork requirements or underwriting processes.
On-demand insurance providers typically offer more transparent policies with clear terms and conditions, making it easier for individuals to make educated decisions regarding their coverage and ensure they receive adequate protection.
But some customers may find their increased access to data and usage-based insurance offerings too intrusive; for example, not being comfortable having a tracking device in their car that monitors how far they travel each month may not be the greatest comfort.
6. Flexibility
On-demand insurance has rapidly expanded over the past several years, offering coverage for an event or duration and enabling customers to activate or deactivate protection instantly via digital platforms. Thanks to advanced data analytics and AI that simplify underwriting processes, on-demand policies provide personalized insurance that aligns with modern lifestyles.
Flexibility in employee benefits plans has become more and more desired by employees, who desire a variety of customizable perks to fit their unique needs and circumstances. Employees can take advantage of flexible spending accounts or healthcare reimbursement arrangements to use their flex benefits allowance for what matters to them most, increasing employee wellbeing and work-life balance for increased job satisfaction.
7. Convenience
Traditional insurance can be an intimidatingly complicated maze of paperwork and commitments to understand. Due to extensive medical exams and long-term commitments required of many policies, it may be prohibitively costly for individuals or small businesses with diverse coverage needs.
On-demand insurance provides customers with a convenient and straightforward method for purchasing, activating, and deactivating coverage as their needs arise. Some policies allow individuals to pause auto coverage when not driving while others use telematics technology to rate based on your driving behavior – giving those with concentrated exposure the chance to purchase coverage at discounted rates than traditional annual policies.
8. Scalability
Traditional insurance policies are long-term commitments that may not provide coverage for specific needs. On-demand insurance provides customers with a quick and simple way to purchase coverage for specific periods, events, or activities quickly and conveniently.
On-demand insurance products are now easily accessible via mobile apps and digital platforms, enabling consumers to obtain coverage quickly without needing to contact underwriters, agents, or brokers for approval. This enables insurance to be quickly obtained without incurring premium costs associated with traditional policies. Some on-demand insurance policies based on data analytics offer tailored coverage; this may raise issues regarding data security and privacy.
9. Accessibility
On-demand insurance provides users with instantaneous protection compared to traditional policies which require long-term commitments that may be hard to modify or cancel, making it ideal for people on tight schedules who require flexible coverage or those looking for ways to reduce expensive annual premiums.
On-demand insurance applications are typically managed online, making the experience smooth and seamless for consumers who prefer instantaneous access (streamed music/video, same day delivery etc). It gives them more power and control over their coverage.
