Daily Fintech

Just in Time insurance- only what you need, when you need it

 

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TLDR   It wasn’t that long ago that production and retail inventories were gauged by the space available in which to store the supplies/goods.  Then some smart people determined that in a well-managed, lean operation inventory could be obtained upon instant need, and thus Just in Time (JIT) Inventory principles were developed.

Is the time ripe for ‘Insurance in Time’  (IIT) ?

JIT is an inventory management strategy that:

 

So why not apply similar principles to commercial insurance? Insurance in Time (IIT), a risk management strategy that:

A little crazy?  Maybe not as risk assessment methods become ever more predictive. Why not have insurance cover only when needed, not paid for when not?   Or, cover that is paid for based on use alone?  Seems unorthodox at a minimum, but in a gig economy or side hustle environment, all participants become Subject Matter Experts (SME) or Small Medium Enterprises (also SME), and the need for insurance cover may apply.  Changes in business models, changes in risk management needs.  (Please also review the 2015 Kanban point of view penned by Juan Mazzani here  )There are commercial insurance companies who are positioning themselves to leverage the changes in how insurance policies/cover are devised.  While there are many entrants in the market, for purposes of the article we will look at Verifly (US), Dinghy (UK), mailo (DE), and Grab/Grab Financial Group (SG).

The Dinghy

Founded in 2017, Dinghy Insurance is the founders’ idea of a fast, responsive, flexible, and ‘there when you need it’ insurance for freelancers.  The company’s quote form is intuitive in its use (indicative data and general business activity), cyber, general liability, equipment, and professional indemnity cover.  And, per the site, “Turn on or off, up or down. No fees. No admin charges. Charged by the second, billed in arrears.  The site also has FAQ that help educate less informed SMEs about risk pitfalls.  So for the
new to business or new to insurance, a purchase by the pound option.  Beazley and Lloyd’s are backers for the underwriting activities.  As a capper for the SME types- The Dinghy is active in supporting social good and living wage initiatives- appealing to sector expectations.

mailo

A new entrant to the German SME market, looking to disrupt how and from whom SMEs obtain commercial cover.  Episodic insurance being right or wrong, mailo estimates there are six million (yes, million with an ‘m’) target customers in Germany, suggesting half of the existing SME businesses being currently underinsured or uninsured.  Incumbent carriers address the needs of some of the target businesses but find the line to be unprofitable.  If one considers how the self-employed, gig, or side hustle market is growing, and being under-served by brokers, the opportunity for capture of the entrepreneur/self-employed market through digital methods is high.

Mailo operates as a full stack carrier for P&C covers, with approximately 80% of the firm’s premium being generated through brokers, suggesting customers are looking for the cover and being facilitated through their insurance professionals.  Claims are handled in house and by third party administrators (TPAs) so for the most part the customers’ service is closely overseen by mailo staff.

Mailo is both on demand and in demand, with an eye on operational stability within Germany then opportunities for e2e expansion within Europe.

Grab/Grab Financial Group

As a natural growth offering Grab (ride sharing service in SEA) is now offering on demand microinsurance that is a seamless extension of rides- if the driver is enrolled, premium is contributed from the revenue the ride generates.  No on/off switch other than engaging a rider.  Considering the fact that within the SEA market almost ¾ of the population is under-served for most financial services, offering these micro policies not only engages new commercial clients (and open to individuals), but the offering provides entrée into an ecosystem environment.

Grab has partnered with Indonesia’s virtual wallet co. Ovo, Chubb Insurance, and financial services firm Credit Saison.  Grab have on demand cover, ecosystem connection, and financial and insurance expertise to serve the clients.

Verifly

The foundation of this company’s model is- not everyone works 9 to 5.  This isn’t just a schedule concept, it’s an indication that Verifly wants to be the on-demand carrier that is there for the freelancer who has a gig Saturday evening between 10 PM and 2 AM, and who recognizes a need for cover.  These are the side hustlers who are evolving into entrepreneurs.  The fully digital purchase platform is available to individuals and brokers alike (see verifly.com/broker ), a recognition by the firm that on-demand cover can be supplemental to traditional BOPs, and for as long or short as the customer needs, priced to be the value customers need.  An interesting recent partnership with InsureMyEquipment further expands the flexible coverage options, with on demand capability to insure for temp staffing and equipment.  Brokers engage the company to fill the gap left by traditional carriers for customers who need immediate, small policies.

Verifly is the tech end of the value prop (smooth navigating app and user dashboard); Markel Insurance is currently the underwriting and claim support for the service the firm provides.

It all sounds good- ease of customers acquiring cover, clear underwriting support, and a previously under-served demographic. 

Somewhat parallel inroads to digital SME cover in the UK, Germany, the US, and southeast Asia.  On demand, consumption-based, call it what you will.

I did ask some US-based agents for their input, and to be clear there was skepticism voiced for the efficacy of short-term policies.  The sales and tech approach were seen as good but concerns were voiced:

Insurance in Time– good to have, just as with clever JIT inventory using companies have the new stock coming in the back door as the last of the item is sold and out the front.  But poor supervision of JIT means the X Box is out of stock, or the 3cm threaded bolts are unavailable to fasten the muffler bearings.  Or in the instance of IIT- liability cover is not in place when young Marta rushes the stage and trips over the bass player’s amp.

The four companies can be watched as exemplars of this aspect of insurance product innovation that is enhanced by tech.

Thanks to Pat West, Brett Fulmer, Billy Van Jura and Michael Porpora for their viewpoints.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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