On-Demand is a very small but growing business model. There is still much to learn and prove. However, it’s resetting customer expectations and it’s giving those implementing it powerful new insights and capabilities. Insights and capabilities that will be used to reset the competitive bar across other insurance business models. The lessons learned here will change Customer Experience, open New Markets, and open the door to Continuous Underwriting, and Dynamic Policy Management.
The capabilities being developed and lessons learned by those implementing On-Demand Insurance are helping them understand what it will take to compete in the digital generation of insurance that is coming. Here are a few of the areas that will be impacted.
Resetting Customer Expectations
– Ease of understanding & use – On-Demand insurance requires instant understanding and must be very easy to use. It is essentially setting a bar that customers will use to evaluate other insurance offerings.
– Highly personalized & contextual insurance products and value-added services. These products are personalized to the individual and their needs in the moment. Other insurance products will need to step more fully into this paradigm. We are also seeing On-Demand products coupled with other value added services like incentive programs that provide rewards for behaviors that reduce risk. These value added incentives will become required offerings as more competitors begin to offer them.
– Instantly available when needed – These products use 3rd party data, machine learning, mobile devices, and interoperability with the digital ecosystems surrounding insureds to engage the customer at the point of need. They also use those to determine risk and pricing instantly. These capabilities will be used to increase awareness, relevancy, and engagement across the simpler forms of personal and commercial insurance solutions.
Expanding and Changing Distribution Models
– Connecting with customers at the point of need. As per above, these products connect with the customer at the point of need. That means they open the door to new distribution points that are connected directly to the customers activity at the time. This improves the customers understanding of the risk and their ability to reduce that risk instantly. This opens multiple new avenues by which we can reach, interact with and support customers.
– Providing real-time digital education. Rather than requiring a meeting and a lengthy explanation, these products provide instant simple education and communication at the point of need.
Continuous Underwriting
– Real real-time data from devices, IoT, & external sources. On-Demand insurance is rewriting the rules for underwriting. It’s using real-time data from multiple sources to assess need and risk. While some On-Demand solutions rely on the customer to turn the insurance on and off. Others rely on data from devices and transactions to manage the coverage. They are also using data in real-time to assess the risk profile.
– Granular segmentation and products. The data these products are gathering are being analyzed by machine learning models. As those datasets grow in size they are surfacing new market and customer segments. That knowledge opens the doors to new product and pricing models.
Real-time Policy Management
– Enable real-time policy changes. On-Demand by its very nature requires real time policy management. It requires coverage to be turned on or off based on the real time situation and needs of the insured..
– Optimize, cross-sell and up-sell coverage in real-time. These products and the machine learning models that support them are ingesting huge amounts of data. Data about the individual insured, their activity, location and the context they are operating in. That data enables the provider to offer other insurance products or value added solutions and coverage upgrades instantly at the point of need.
On-Demand – Get educated, Get Started.
Whether you are planning on developing an On-Demand product or not, you need to pay attention to what’s happening with On-Demand. It opens the doors to new markets and powerful new customer engagement models. It places new requirements on insurers and their core systems and processes. Addressing those, creates competitive capabilities that are game-changers and will migrate to other types of products. Those who are experimenting with On-Demand will gain a first mover advantage not just in On-Demand products but in customer engagement and cross sell / upsell opportunities.
Mike Connor
Co-Founder/CEO
SVIA
