Insurance products that can be switched on and off – in contrast to traditional, annual policies – may well be the future of the industry, according to one insurer keen on getting a slice of the pie.
The on-demand market worldwide has “exploded in the last few years,” thanks to the rise of the gig and sharing economies, says Cheryl Agius, CEO of Legal & General’s (L&G) GI business.
Earlier this month, L&G revealed a partnership with insurtech Slice Labs – a US firm known for its pay-per-use insurance offering – to provide on-demand cover for UK home-sharers.
“Slice Labs are well-established in the US, where they have started to be a strong competitor to Lemonade in terms of how you provide solutions to customers in that gig industry,” Agius told Insurance Business.
But while the US and Asia are out in front when it comes to offering policies that fit around consumers’ changing behaviours – just look at Lemonade or ZhongAn – the UK has so far been behind in the race.
“In the US and Asia, insurance is something that people do switch on and off. They are much more aligned to that,” said David Robertson, L&G’s director of digital transformation.
The UK’s “very established insurance market” has seen less of that change filter through, but demand from consumers and global trends mean it’s on the way.
“We are being approached by people asking us to provide on-demand insurance, around particularly home-sharing,” Robertson said.
“So, although we are starting with home-sharing, I think a lot of the market will move in the direction of dynamic insurance in the next five years.
“Millennials are pushing that demand, but I think also the overseas influence is beginning to tip into the UK market.”
With almost all insurers now looking at how technology and automation can change their business, L&G’s focus has been on providing customer-led solutions, Agius explained.
“Instead of coming up with products that you think might fit, it’s actually about what customers are looking for, and what they are feeding back to us,” she said.
“It’s about how you match not only the journey the customer is looking for, but also the insurance products themselves.”