The increasing popularity and value of mobile devices, particularly smartphones, has created a lucrative growth area for so-called gadget insurance. And at the same time, there’s an emerging marketplace for cover that’s arranged through phone apps. The result is a virtuous circle where insurers can connect with their customers through mobile technology and also insure the gadgets that provide that connection.
Market research consultancy Finaccord estimated that the global mobile phone insurance market was worth about US$13.3billion in 2015, and would reach close to US$17.6billion by 2019. That’s small in comparison to motor and home insurance but it’s already larger than the travel insurance market, and Finaccord says it’s likely to increase at an annual rate well ahead of motor and home insurance.
So this makes a significant opportunity in a market that barely existed a decade ago, and a double plus for insurers who are already playing to the needs of smartphone users and particularly the millennial on-demand generation.
The beginning of 2017 marked 10 years since the launch of the iPhone. During that time, thanks to the proliferation and growing power of smartphones and tablets, ‘mobile first’ has become a rallying cry for all businesses as they cultivate online relationships and respond to changes in consumer behaviour. Insurance is no exception.
With fewer and fewer of us doing business face-to-face or over the phone, there is less need for physical offices and employees. Instead insurers are focusing on web-based channels, which today must include a clear strategy for mobile devices.
Be there, be useful, be quick
Mobile technology is changing consumer behaviour and expectations in ways that no business can afford to ignore. We live our lives online and on the move, and according to Google, our days are punctuated by ‘micro-moments’ when we expect suppliers to ‘be there (on demand), be useful (relevant to my needs), and be quick’ (respond swiftly to those needs). Retail and travel were the first to act, but financial services are catching up, with banking and insurance targeting the mobile market through digital wallets, apps and other innovative tools that connect instantly and directly with customers.
Early in April it was reported that one of the new-style phone app insurance providers had secured $45million funding, bringing its total backing to $85million.
This level of funding underlines an important growth area for insurtech – one that draws on the lifestyles of the millennial generation, the needs of the sharing economy, and in particular the power and ubiquity of mobile phones and apps.
Trov, the company in question, is trying to develop a solution for on-demand insurance that will enable users to buy cover for specific products and timeframes through a smartphone app. Another company, Trice, is about to go live with a similar concept that enables consumers to buy annual and temporary cover after answering only a handful of questions.