The millennial consumers are remarkably different from their predecessors. This is true in the sense that whilst earlier generations preferred to own as many resources as possible, the current generation prefers to rent. This is the reason why apps supporting the on-demand economy have ended up disrupting multi-billion-dollar industries. Take the case of Uber, which has market capitalization worth billions of dollars and yet the worlds largest transport service does not own any cars or hire any drivers! Similarly, the world largest hotel service, i.e. Airbnb does not own any properties. This major shift brought about by the on-demand services has also created a lot of implications for the insurance industry.
In this article, we will have a closer look at the effect that the on-demand economy is having on the insurance industry.
We will also understand the relatively nascent concept of on-demand insurance for the on-demand economy.
Insurance Challenges for the On-Demand Economy
Consider the case of the insurance needs of a person who works the gig economy. The user normally uses their vehicle for personal as well as commercial needs. The problem is that for both these situations, the insurance policies provided are very different. Hence, if the user purchases two separate insurance policies, the costs can become prohibitive. The same is the case with people who rent their properties on Airbnb. The insurance policy does not cover any damage that occurs during the course of commercial use of the property. If a separate policy is bought for this purpose, once again, the coverage turns out to be too expensive.
In both these cases, the problem is that the insurance is being sold on an annual basis. Hence, even if a person rents out their house for 10 days in a year, they have to pay the premium for the entire year. This is where the on-demand insurance marketplace is coming in handy. These services allow users to purchase insurance for the products they need for a short period of time.
Lets understand how this works with the help of some examples.
Examples: On-Demand Insurance
Problems with On Demand Insurance Services
Authorship/Referencing - About the Author(s)
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