‘Just-in-time coverage’: Buying insurance may soon be as easy as a swipe on a smartphone


Smartphone apps already allow consumers to summon cars and order food with a few swipes of a finger. Could insurance on demand be next?

Policyholders pay premiums to get coverage that’s often good for six months or a year, and, fingers crossed, give it little thought until the time comes to renew.

But a generation of consumers who are increasingly connected and accustomed to getting what they want and when they want it, particularly from their smartphones, have spurred several startups to develop apps or technology making it possible to turn protection on or off or to customize coverage to meet their needs. And at least one industry giant, Northbrook, Ill.-based Allstate, is toying with a more flexible way of charging for coverage in the future.

“We’re in the era where we no longer need to buy an entire music album but instead we can purchase just one song, so why can’t we just buy the types of coverage we want as consumers?” said Wayne Slavin, co-founder of Sure, whose products include what it calls “episodic” insurance around travel through its smartphone app.

Matthew Wong, senior research analyst for venture capital data gatherer CB Insights, says it’s also called “just-in-time coverage” and the “unbundling” of policy terms and coverages.

The sector is seen as promising due to such technology as smartphones but is also driven partly by demographic changes, he said. Homeownership rates, for example, have been trending down.

“Startups are seeing new opportunities to create brands that adjust to new lifestyle and locational trends, including those of millennials,” Wong said.

Funding for insurance-technology startups hit $2.65 billion in 2015, up from $740 million in 2014 and $223 million in 2013, Wong said earlier this year at the OnRamp Insurance Conference in Chicago.

Here’s what four companies are doing with on-demand or more customized insurance:

TrovSan Francisco-based Trov says its “smart insurance” app makes it possible to “protect just the things you want, exactly when you want, entirely from your phone,” with no need for an insurance agent or a long-term contract.

Users create an online inventory of what they consider valuable and then swipe on the items that they’d like to protect and choose a price and deductible that’s right for them.

Examples: insuring a MacBook Pro or an iPhone 6 against loss, accidental damage or theft when leaving home; or protecting skis for the weekend, or a bike for the afternoon. Trov is now available in Australia but will be in the United Kingdom in the second half of the year and plans to be in the United States in 2017. Claims are submitted through text messages.

MetromileMetromile in 2014 brought its pay-as-you-drive coverage to Illinois, one of seven states that it’s currently in. The San Francisco-based company measures mileage through a device that plugs into a car.

Customers pay a base rate — say, $30 a month, because cars might need insurance even when they’re sitting idle — and, on top of that, say, 3.2 cents a mile, according to a hypothetical example on Metromile’s website.

“This is happening now because you have all of these devices, whether in your car or on your phone, that are allowing you to tailor more directly to customers’ needs,” Chief Executive Dan Preston said.

Metromile is well suited to urban areas where residents both drive and take public transportation, he said.

AllstateIn 2015, Allstate filed for a patent called “Risk Unit Based Policies” and received it last month.

The patent notes how insurance policies today generally provide coverage for a certain term, regardless of how, where or when the driver operates the vehicle.

The idea for Allstate’s new patent would be to allow the motorist to buy a certain number of “risk units” that would be consumed while driving. If someone was speeding, they’d use up more units than someone who wasn’t. If the balance of units falls low, the policyholder might get an alert through a mobile app, tablet or on a vehicle display, or the headlights might flash or the horn blare.

The app would have their payment information and could refill the risk units as needed, “akin to renewal of a conventional insurance policy.” Or the account might include funds that might be reduced based on how the vehicle is being driven.

Motorists would also receive tips on how they could reduce the rate of units that they eat up, such as reducing speed, keeping a safer distance between vehicles and taking a less-busy route.

The system could determine the cost to insure a user for a period of time that includes a month, a week, a day or a year, the patent said.

SureSure’s policies include life insurance for people who, at the last minute, decide they want protection during airplane travel, from departure to landing. Its products also include baggage protection for a trip.

“They can be standing at the gate and download the app and get coverage instantly,” Slavin said.

Already there are coverages on the market for lost bags and for airline disasters.

For example, one airline’s website says its liability for loss, damage or delayed delivery of checked baggage is limited to the actual value of the baggage or $3,500, whichever is less. It doesn’t assume liability, however, for checked baggage items that include antiques, artwork, books, computers, eyeglasses, medicines, video equipment and precious stones. If an item is eligible for coverage and is valued at more than $150, the flier must submit a receipt as proof.

Slavin said airlines’ claims procedures not only have significant exclusions but also generally require more documentation and take longer to process.

Sure’s baggage coverage starts at $5.

“If we’re not able to retrieve the bags for the customer within 96 hours, we provide them a no-questions-asked payment of $1,000 or $2,000 per bag, depending on the level of coverage, regardless of the contents of the bags,” Slavin said. Nor does Sure ask for receipts for the contents of the luggage, he said. “If the bags are ever returned, the customer can keep both the payment and their baggage.”