Emerging Models in P&C Insurance: IaaS and On-demand
We live in an instant, mobile and on-demand world. Consumers and businesses expect to buy everything they need online, in a matter of minutes. We’ve already seen these trends disrupt many other industries and the insurance industry is not immune. It’s time for insurers to move beyond online quotes to online everything.
With this necessity in mind, here’s a quick look at two emerging models – insurance as a service (IaaS) and insurance on-demand.
The Rise of aaS Models
The software as a service (SaaS) market is booming. Valuates Reports predicts that the global SaaS market size will reach $307.3 billion in 2026, up from $158.2 billion in 2020. Given this success, the emergence of Iaas shouldn’t be too surprising.
For buyers, key advantages of aaS models include online accessibility, better affordability, automated maintenance, increased scalability and reduced upfront investment costs.
It’s not just software. In fact, the as a service model has been applied in many areas. There’s platform as a service (PaaS) and finance as a service (FaaS) – and that’s just the tip of the iceberg. There are so many aaS possibilities that “anything as a service” is known as XaaS.
Insurance as a Service
A recent article in Carrier Management looks at how the FaaS model could spill over into insurance. Asha Vellaikal, Managing Director & Global Head of Digital Labs for Marsh, says, “SaaS [software-as-a-service] companies and [others] will start looking at fintech as a monetization channel in addition to subscriptions. And I think that kind of concept also applies to insurance.”
European provider, Quover defines IaaS as: “A 100% digital insurance offering that covers end-to-end requirements for simpler onboarding, claims management and customer support.”
How is IaaS Different Than Insurance On-Demand?
Another emerging trend is insurance on-demand. The NAIC says, “On-demand insurance allows consumers to purchase insurance coverage on their smartphone whenever and wherever they want, usually when the asset requiring coverage is in use and at risk.” Examples of insurance on-demand options for consumers include Trōv (for personal possessions), Verifly (for drones), Metromile (for car insurance) and Slice (for home-sharing). Sure Inc. provides coverage for both consumers and small businesses.
On the commercial side of the industry, Thimble, biBERK and THREE by Berkshire Hathaway all provide on-demand small business policies.
The user advantages of insurance on-demand are very similar to the advantages of IaaS. However, for insurers, the insurance on-demand model is a little trickier, primarily because insurance on-demand is more erratic than IaaS, which involves a subscription.
Viability
The one thing missing from both aaS and on-demand insurance offerings is predictability.
When you allow policyholders to turn coverage off and on as needed, what’s to stop them from turning it on when they know a claim has either occurred or is imminent? With aaS and on-demand offerings, both premiums and claims become unknown variables, making underwriting and pricing infinitely more difficult.
The Digital Insurer points out that the financial model will need to work for insurers before these trends really take off.
Silvervine’s Evergreen Helps Insurers Pivot & Grow
While you may not know the future of your insurance offerings, you do know that change is imminent, which means you need a policy administration system that can pivot with you and allow for continual growth.
Similar to SaaS, Silvervine’s Evergreen policy administration system offers a multi-tenant model that facilitates one-to-many upgrades, meaning your Evergreen software is always up to date with the latest bells and whistles available.
With many optional add-ons including digital payments, mobile apps, direct-to-consumer, e-Signature and virtual mailroom, you are fully equipped to compete in the modern world. With Evergreen, your growth is powered by an agile, cost-effective solution that serves you as well tomorrow as it does today.
Request a demo to learn more.