The next level of Evolution in the insurance market


I’ve been thinking recently - there are at least two products which offer automated insurance on the pay per use basis, and I am actually happen to use one of them - a per day health insurance, and I get automagically charged for each day I am abroad (yes, it is a mobile app that tracks me).

It is not cheap - I think about 5$ per day, but it is extremely convenient, and since I travel only a few days per month - I do not feel how expensive it is.

The other insurance solution is to pay you automatically when your plane is late. You get money as soon as the plane starts with delay.

Those two show the trend in insurance, a migration towards fine-grained insurance charged pay-per-use.

I’m trying to imagine how such insurance could work, for example, as a vehicle insurance (you pay for travel only, depending on where you travel and how fast), civil liability insurance (going to party with kids… better prepare for damages) or during-vacation house insurance (a couple of days per year I am away and want my belongings to be protected), etc.

I have to admit I have difficulties with imagining how to automate the payout process (verify the claim, and fight with abusers).

What are your thoughts and opinions? I’ll try to draw a map as soon as I will be able to imagine how things could work.


So, my further thinking:

  • there is a significant shift with the practice of calculating models. Suddenly, it is not enough to know how many f.e. traffic accidents are in a given area, but it becomes suddenly important to know how many traffic accidents happen usually per hour of driving. Quite easy with cars (sensors, monitoring, estimating mileage based on data from petrol stations), way more difficult with insuring house against burglaries.
  • open claim API (health in particular) is a necessity. Imagine a car insurance, getting emergency situation abroad or your kid breaking a TV of your friends while you are at their party. You need an immediate reaction to verify the authenticity of that claim (ask for pictures, situation description) and estimate damages. More, if the insured person is not available, somebody else needs to claim on his behalf. (a medical, firefighter).
  • building trust becomes an issue. Assume there is a car accident. Whose fault was that? It can be confirmed by the policy or by both parties, but how to discover potential frauds here? Story of previous claims? Relationship between parties? Reputation (as in China)?

A fundamental question - can I insure automatically some of the activities I will do in my life? f.e I’m going to withdraw money from ATM, then I could get insured against robbery. Going for a walk in winter? Broken legs are not that uncommon. Flying gliders? Insure your source of income in case your landing goes wrong… etc.