On-demand insurance: what it is and which startups are betting on

Last January, in an interview with InsuranceUp, the President and co-founder of Yolo, Simone Ranucci Brandimarte, told us that the 5 million investments just collected would partly be used to start the internationalization process. The partnership between Insurtech and Be, a consulting company listed on the STAR segment of the Italian Stock Exchange and specialized in Business Consulting and Information Technology, pursues this aim, with a specific strategy towards the On-Demand Insurance market. According to the company’s information, the agreement in fact provides for the increase of Yolo’s commercial offer in the eight European countries where Be is already present (in addition to Italy, even United Kingdom, Germany, Austria, Spain, Switzerland, Romania, Poland and Ukraine). 

According to Gianluca De Cobelli, Co-founder and CEO at Yolo Group  “Thanks to our broad-based partnership with Be, which follows the support of all the investors involved in our project, we are accelerating the digital innovation and transformation process underway in the insurance sector by increasing the potential for international expansion”. 

The agreement between the two companies provides for a partnership both in terms of technological development of Yolo platform (which is working in B2C, B2B, B2B2C), and in terms of local and international business development. 

The two companies’ common target is the ”disruption in a very dynamic segment of the market”, namely on-demand insurance. 

What exactly is on-demand insurance? 

It’s very easy: on demand insurance is a digital insurance model allowing companies to meet the insurance needs of a potential customer exactly when the need arises and only for the time required. The process is all digital, very fast, the service is subscription-based, with a clear pricing.  

There are many application cases: on the occasion of a trip, when driving another person’s car or using a bicycle, when occasionally playing a sport (e.g. a football match with friends), when using a mobility sharing service, when doing work at home, when trying to protect specific assets from cars to smartphones, from household appliances to an object we love. 

In short, the uses are potentially limitless and can appeal to the customer with the speed of subscription, customization, convenience, flexibility, transparency. 

International on-demand insurance startups 

A number of insurtech startups are making their mark on the international market for their on-demand model, such as Trov, Slice and Cuvva. 

Trov, a California-based company, has created (since 2012) an absolutely innovative insurance policy, aimed in particular at Millennials: on-demand policies, to protect their personal assets (computers, smartphones, TV, bicycles, musical instruments, sports equipment, cameras, etc.), even for a short period of time. Insurance policies which can be “switched on or off ” with just few clicks on the mobile phone when needed; claims can be handled likewise: even with a real time chat. The company is already global thanks to its strategy for partnership with large companies.

Cuvva is a European startup, Scottish actually, and has created a model of on-demand car policy that probably sprang to mind literally millions of times to many drivers, yet never made before: basically, it allows buying insurance through a monthly subscription between 10 and 30 pounds, according to the car and the city where the user lives, which covers the risk associated with a “stationary” car. When necessary, i.e. when the insured person wants to use the car, through the Cuvva application a sort of “topping up” of the subscription is made, starting from 1.20 pounds per hour, only for the time expected to be driven. The company states that owners who travel less than 4000 miles per year can save up to 70% on insurance costs. A possibility that reduces costs and meets new models of urban mobility.

Slice, born in New York, started with a first on-demand insurance product for people who rent their homes, or rooms, through online platforms such as Airbnb, HomeAway, OneFineStay and FlipKey. Now it also offers policies for ride-sharing and cyber secutiry, always with the on-demand formula and still being an insurance broker who works with major companies. Slice makes it very easy to “turn on” the policy as once the user is registered, the coverage is automatically added for the days indicated by the customer or through a text message, using the mobile app.

In Italy, Yolo is an all-digital insurance intermediary and is becoming a leading player in the on-demand insurance market: it targets the digital consumer through an offer of tailor-made policies to suit their needs. With the app users can subscribe to instant and pay-per-use products on a daily or monthly basis: from travel coverage to flight and smartphone protection and sports insurance. Yolo has adopted a business model that leverages not only a technology platform (also provided to Companies), but also strategic partnerships. 

Yolo is not the only one following this direction; even Neosurance is part of the game and has already started its internationalization process: it has developed a B2B technology based on artificial intelligence and machine learning that allows companies to offer instant micro-insurance policies where, when and for what the customer needs. 

Another insurtech startup that is entering the on-demand market is Poleecy: it has developed an app dedicated to temporary policies based on blockchain technologies. 

Technology is the key 

As can be easily guessed out, digital transformation is behind the creation of these insurance models, called on-demand insurance, instant insurance and micro policies. 

The complete digitalization of the purchasing process, via web and even more via mobile, is a key feature: a platform is therefore needed to process data, to process and automate a subscription as much as possible, and to be equipped with a simple, intuitive, attractive, transparent customer interface. 

What are the technologies behind the on-demand policy today or which will be leveraged in the near future? 

Cloud, artificial intelligence, systems capable of analyzing big data and automating the subscription process, sensors or telematic devices (in the case of cars), IoT, blockchain.