Insurtech companies are forcing a paradigm shift in the insurance industry towards more personalized, on-demand policy coverage.

Insurtech companies are leveraging technology in order to challenge the paper-intensive processes that have long been a hallmark of the insurance industry.

Today’s consumers have become accustomed to a digital world of real-time services transacted through mobile apps and they are beginning to expect similar convenience and speed of delivery from their insurance providers.

Insurtech (insurance technology) platforms are applying the same innovations to the insurance industry that helped the fintech revolution disrupt the financial sector. By using technology such as artificial intelligence (AI), the internet of things and advanced data analytics, insurtech companies are bringing more competitive pricing to conventional insurance markets such as auto, home, life, rental and travel insurance. At the same time, the insurtech industry is venturing into untapped markets and creating more efficient insurance business models including more personalized, on-demand coverage for specific events and items.

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“Insurtech companies tend to focus on increased personalization and greater speed and efficiency of services to meet changing customer needs, with many using AI to offer deeper data insights,” reports Forbes senior contributor Alison Coleman. “While some are set on displacing the industry incumbents, others are working with the leading insurance firms as they transition to the age of digital innovation.”

Insurtech companies targeting digitally savvy consumers

According to Grand View Research, the insurtech industry was worth US$1.5 billion in 2018. The firm’s analysts have forecasted that the industry could see a 43 percent compound annual growth rate between 2019 to 2025. Analysts at Technavio have projected that the industry could be worth as much as US$15.63 billion by 2023. In comparison, fintech investment from venture-capitalist-backed investment firms totaled US$13.5 billion in 2016 and had quadrupled to US$55.3 billion by 2019.

One of the biggest drivers of growth in the insurtech industry is the rise of a younger, more digitally-savvy consumer demographic. Consulting firm McKinsey & Company explains that these consumers “value convenience and like to execute transactions remotely—if possible, without direct interaction with the institution. For the plugged-in cohorts, the use of 24/7 digital channels to receive an insurance quote or submit a claim is infinitely preferable to a branch or office visit.”

Insurtech companies taking personalized, on-demand insurance mainstream

Leveraging technological advancements in AI, data analytics and mobile apps, insurtech companies are disrupting the insurance industry by offering personalized coverage models and real-time digitized customer engagement to attract this new generation of digitally-savvy consumers.

These personalized coverage models include usage-based insurance, on-demand insurance and peer-to-peer insurance “all driven by the core ethic of offering customers straightforward, relevant and flexible coverage,” according to WNS Holdings Limited (NYSE:WNS), a leading business process management company. “These innovations are placing customers firmly in the driver’s seat, and encouraging them to actively think of ‘buying’ an insurance cover instead of waiting to be sold one.”

By responding to customer demand, insurtech companies are also taking advantage of niche spaces passed over by the traditional insurance corporations. The resulting marketplace allows for more customization, including usage-based and on-demand packages designed to cover brief events or vacations like those offered by short term rental services like Airbnb.

For example, UK-based Cuvva was the first insurance company to sell hourly car insurance policies and the first to sell policies that can be bought in a couple of minutes via a user-friendly mobile app. “Insurance as it stands no longer serves the needs of all its customers. People want simple, flexible insurance to suit their on-demand lifestyles. When it comes to the sharing economy and insurance, there are also major gaps,” said CEO Freddy Macnamara in a recent interview with Techround. “We’re providing much-needed solutions and breaking down barriers in an archaic industry. By completely modernizing insurance products and processes, we’re able to provide consumers with top quality products they actually need.”

Insurtech companies defining the marketplace

InsuraGuest (TSXV:ISGI) provides specialized insurance products to hotels, resorts, and vacation rental properties. The InsuraGuest software platform and specialty insurance product are available in all 50 US states and the company is expanding into European and Asian markets as well. According to Technavio, the vacation rental market is expected to be worth as much as US$72.97 billion by 2024.

The InsuraGuest platform integrates with clients’ property management systems and the specialized Hospitality Liability policy is automatically extended to guests from check-in to check-out for a nightly fee. The platform and policy product help property owners manage exposure to liability while guests benefit from coverage needs that may not be met by traditional insurance coverage. “Our Hospitality Liability policy combined with our insurtech delivery platform becomes both the property’s and the guest’s first line of defense in case of an accident or loss,” InsuraGuest CEO Douglas Anderson told the Investing News Network.

The paradigm shift in the insurance industry toward more specialized, usage-based and on-demand policy options is also opening up access to underserved customer segments such as small business owners, freelancers and those with less economic means. New York-based Sure Inc. provides on-demand renters’ insurance policies as well as individualized coverage for items such as luggage, smartphones and jewelry. The company also offers small business insurance that includes general liability, property and lost income. Launched in 2017, Dinghy offers freelancers on-demand professional indemnity insurance as well as coverage for public liability, business equipment, legal expenses and cyber liability. Using the Dinghy mobile platform, consumers can retrieve quotes in under a minute and policies within three minutes.

Speed of delivery and convenience are key factors in customer satisfaction, especially for consumers in the digital age. Quick and convenient insurance coverage services like InsuraGuest, Sure Inc. and Dinghy are targeting this market by providing efficient and convenient services within the insurance industry. As the insurance industry continues to modernize, on-demand insurance schemes are expected to become more prevalent as both legacy insurance companies and their insurtech rivals embrace the trend.

“While on-demand insurance may not become the default offering for all insurance types in the next few years, it will become an increasingly important insurance model,” according to Paul Merrey, Partner and Arturs Kokins, Director for KPMG’s Global Strategy Group. “We can expect challengers to grow notable market shares of up to 5-10 [percent] in their chosen lines of business, and, therefore, not only provide a healthy return on investment for their investors but also create a springboard for even more significant impact in later years.”


From personalized coverage for small business owners to short-term property and medical coverage for travelers, insurtech companies are bringing a more customer-centric approach to the insurance industry. By offering a user-friendly experience and more control over coverage, insurtech technologies are widening the playing field for both consumers and policy providers.

This article was originally published by the Investing News Network in March 2020. 

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