New business models in property and casualty insurance

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New business models in Insurance can effectively respond to consumer’s lifestyle changes

Today’s consumers have become accustomed to the transparency, quality, and service speed of firms such as Amazon and Google and now expect similar flexibility and accessibility from their insurance providers. It is not surprising, therefore, that more and more insurers are leveraging technological advancements such as telematics, robo advisors, artificial intelligence, big data, and analytics, to reduce costs, increase efficiency, and improve customer experience.

Transformational technology and changing consumer lifestyles have led to usage-based, on-demand, and peer-to-peer models that are reimagining the way insurance is both offered and consumed. Capgemini’s Top-10 Trends in Property & Casualty Insurance: 2018 report outlines new business models that both InsurTech and traditional firms are exploring.

Usage-based insurance (UBI) is a recent innovation by auto insurers that aims to align driving behaviors with premium rates. Mileage and driving behaviors are tracked using in-vehicle telecommunication devices (telematics) that are either self-installed or integrated within the vehicle’s original equipment. The insurer directly monitors driver behavior and incentivizes safe driving.[1]

For example, Nationwide offers SmartRide, a pay-as-you-drive insurance program through which users receive personalized feedback to help them make safer driving decisions and earn up to a 40% reduction in premiums for safe driving.[2]

Progressive’s UBI program, Snapshot, collects participating customers’ driving information via a plug-in device or mobile app that assesses driving behavior using artificial intelligence. Premiums are based on driving behavior with the safest drivers saving the most – and the average driver earning a $130 discount.[3]

As anytime ride sharing, food delivery, and access to just-released music become the status quo, on-demand insurance offers similar flexibility. Increasingly, millennials and others seek simple, no-paperwork insurance transacted from a mobile device. Therefore, it was no surprise that the World Insurance Report 2017 found that among new business models on-demand insurance has the highest potential for generating new revenue streams and enhancing customer engagement.

Japanese property and casualty insurer Tokio Marine & Nichido Fire Insurance Co., which began selling one-day car insurance in 2012, had written 6.5 million on-demand contracts by early 2018. Moreover, Mitsui Sumitomo Insurance Co. recently launched one-day leisure insurance, which can be purchased in 24-hour units for activities such as golf or mountain climbing. Coverage can be purchased easily via smartphone, with the fee added to the consumer’s monthly phone bill.[4]

Sure, a US-based, on-demand insurance app provides micro-duration insurance for air travel. Travelers use the Sure app to save flight details and their information and then purchase travel insurance whenever required.[5]

All-risks insurance covers losses arising from any fortuitous cause except those that are specifically excluded. All-risks coverage differs from named-perils coverage, which applies only to loss arising out of causes that are listed as covered.

For example, if an all-risks homeowner policy does not expressly exclude flood coverage, the home will be covered in the event of flood damage. All-risks insurance covers a customer’s total risks within one policy with a single premium and enables insureds to easily manage policy details while insurers benefit from lower marketing and administrative costs.

Independently-owned UK underwriting agency, Castle, offers a comprehensive all-risks homeowners’ policy designed for higher net worth individuals. It provides coverage for listed properties, imbalanced sums insured, art or antique collections, high-value items or collections, high-value jewelry, and long periods of inoccupancy.[6]

London-based Aioi Nissay Dowa Insurance Europe provides motor insurance to businesses and fleet companies in Japan and Europe and offers a multi-risk product in which one policy covers motor insurance, electronics insurance, non-life insurance, business liability insurance, and business interruption insurance.[7]

Microinsurance products provide coverage to low-income households or to individuals who have little savings. Microinsurance is tailored for lower-valued assets and compensates for illness, injury or death. Policies aim to bring economically weaker populations under insurance coverage.

Munich-based Allianz, which had offered standard and simple microinsurance policies to people in Africa, recently made a significant investment in Stockholm-based BIMA, a digital microinsurer that uses mobile technology to serve low-income customers in Africa, Asia, and Latin America. The 2017 investment will help BIMA expand its micro insurance portfolio – life, accident and health insurance, as well as a teledoctor service throughout Ghana, Sri Lanka, Bangladesh, Pakistan.[8]

Ghana-based Star Microinsurance provides accident and health insurance to rural areas for micro premiums. The firm also covers the expenses of individuals not able to work because of accident-related disabilities.[9]

Peer-to-peer insurance (P2P) is a risk-sharing network where a group of associated or like-minded individuals pools their premiums to insure against risk. P2P insurance mitigates inherent insurer/policyholder conflict when an insurer keeps the dividends it does not pay out in claims. P2P enables a group to insure itself by pooling premiums. Group members make critical decisions related to their protection, including claims adjudication.

Canadian InsurTech firm Besure offers a software platform that facilitates risk-sharing among communities. Pools are initiated and managed by groups, organizations, and associations with shared risk. Besure P2P communities are equipped with the tools and framework to invite members, exchange ideas, distribute the risk of loss or damage, and adjudicate losses. To ensure the pool’s integrity, Besure offers a Virtual Actuary system to recommend premiums and minimum participation levels.[10]

Berlin-based Friendsurance acts as a broker, putting insureds into small groups, giving cash-back bonuses each year for the claimless, and utilizing group insurance discounts to spread the load. The company offers private liability, home contents, and legal expenses insurance. A percentage of the premium amount is paid in a cash-back pool, and the rest is paid as premiums to traditional insurance firms. If the claimed amount totals less than the pooled amount, the remaining money is shared among the members. If claims exceed the pooled amount, the insurance firm settles the claims.[11]

New customer expectations, new technology, new business models

In today’s sharing economy, a one-size-fits-all insurance policy is no longer sufficient. An avalanche of new technology is allowing insurers to be more efficient in their internal procedures while offering better products, with better risk measurement, for more demanding customers.

New business models are strategically targeting underserved or unserved areas and are already generating new revenue streams for insurers. However, to take full advantage of these new opportunities, insurers must arm themselves with relevant digital and data analytics competency. The World Insurance Report 2018 offers insights for insurers seeking to build a future-ready product portfolio based on synergistic InsurTech capabilities.


[1] National Association of Insurance Commissioners, “USAGE-BASED INSURANCE AND TELEMATICS,” February 6, 2018,

[2] Nationwide website, “Nationwide’s SmartRide® Program Rewards Safe Driving,”

[3] Progressive website, “Snapshot means BIG discounts for good drivers,”, accessed April 2018.

[4] The Mainichi, “Short-term ‘on-demand’ insurance becoming increasingly popular in Japan,” February 28, 2018,

[5] The Digital Insurer, “Sure – Insurance On-Demand”, Hugh Terry,

[6] Castle website, “ALL RISK HOME INSURANCE,” accessed April 2018.

[7] Aioi Nissay Dowa Insurance Europe website, “Dealership Multi-Risk Policies,”, accessed April 2018.

[8] Allianz website, “Allianz X invests $96.6 million in leading digital microinsurer BIMA,” Dec 19, 2017

[9] Star Microinsurance website, “Micro Health Plan,”, accessed April 2018.

[10] Besurance Corporation website,, accessed April 2018.

[11] Friendsurance website, “How P2P insurance works,”, accessed April 2018.

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