pl logo bar
Summer 2020  Volume 16, Number 2        
 

digital clock

New Insurance Concepts That Could Save You Money

On-demand insurance is expected to become a fundamental part of the insurance industry.

Insurance companies around the world have been exploring a new insurance concept called on demand insurance that because of the advanced state of today's technology shows great potential for changing the structure of many insurance products. Pay-as-you-drive insurance is the most popular example of the concept.

On-demand insurance will play a fundamental role in the future of the industry, new research published by the International Underwriting Association (IUA) states. Pay-as-you go models of coverage will allow customers to automatically activate policies when and where they need them.

The predictions appear in the latest of a series of interviews conducted by the IUA Developing Technology Monitoring Group. In the report Tom Chamberlain, Underwriting Manager General Aviation and Aerospace, London, Allianz Global Corporate & Specialty, outlines how premiums will be adjusted according to data on a person's location and activity.

"In the future insurance will be based around whatever you are doing," he explained. "You will be in your house and your insurance will be active and when you leave your front door your premium will step up as it is now unoccupied. You will then get into a shared economy car and your phone will interact and automatically trigger your insurance for that journey.

"Your insurance will follow you as you go and as your activity changes. It will no longer be a manual process and could realistically work for everything you do requiring insurance."

The new report, titled On-demand and conquer: is the future of insurance a pay-as-you-go one?, looks specifically at Flock — Europe's first 'pay-as-you-fly' drone insurance product, launched last year. Users enter flight details and receive a quote that is influenced in real time by factors such as the time of day of the flight, its location and flight conditions.

No word yet on the availability of Flock in the U.S., but pay-as-you drive auto insurance is now offered by several insurers in this country, where the insurance costs depend not just on how much you drive but how, where, and when you drive.

On-demand or usage-based insurance (UBI), especially with respect to driving, offers several benefits to consumers and society:

  • Social and environmental benefits from more responsible and less unnecessary driving.
  • Commercial benefits to insurance companies from better alignment of insurance with actual risk, along with improved customer segmentation.
  • Potential cost-savings.
  • Same technology that powers UBI enables other vehicle-to-infrastructure solutions including drive-through payments, emergency road assistance, etc.
  • More choice for consumers on type of car insurance available to buy.
  • Social benefits from accessibility to affordable insurance for young drivers — rather than paying for irresponsible peers, with this type of insurance young drivers pay for how they drive rather than getting lumped in with demographic cohorts.
  • Higher-risk drivers pay most per use, thus have highest incentive to change driving patterns or get off the roads, leaving roads safer.
  • Continuous tracking of vehicle location improves both personal security and vehicle security. The GPS technology could be used to trace the vehicle whereabouts following an accident, breakdown or theft.
  • Gamification of the data encourages good driver behavior by comparison with other drivers.

[return to top]

 

 

 

 

In this issue:

This Just In...

COVID-19 Update: How Insurance Companies are Helping Consumers

Despite Its Low Cost, Most Consumers Don't Buy Cyber Risk Insurance

New Insurance Concepts That Could Save You Money

CDC Tips for Cleaning and Disinfecting against the Virus

 

 


The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2020 The Insurance 411. Tel. 877-762-7877. www.theinsurance411.com