In September, Munich Re announced a partnership with Trov, a digital platform that allows customers to insure certain personal items. Policies are purchased via the Trov mobile app, and can cover a range of products for a range of time periods. Arlene Kern, SVP and strategic innovation leader for the insurer, spoke to INN about the emergence of new data- and mobile-powered insurance models.

INN: What is different about what Trov and similar companies compared to traditional insurance?

Kern: It’s the product itself. You’re going to see the blending of the personal and the commercial. It’s the digital so that’s really going to disrupt how people actually buy their insurance. They’re not going to brick and mortar agents or anything like that. They’re going to do everything on their phone. And then the third is units of insurance. Instead of everything being a standard annual policy, you’re going to see policies that turn on and off very, very quickly. But in order for that usage base to happen, you have to get to where the product and the distribution are so simple that it’s easy to turn insurance on and off.

INN: What came first, the demand or the technology?

Kern: I think a lot of it starts with the digital experience. Insurance on demand is really being fueled by just such readily available and cheap technology and specifically the cell phone, that now everyone carries a computer in their hand. It allows them to transact business at anytime from anywhere. This exists now for retail, it exists now for banking and fintech, and it doesn’t really exist in any substantial way for insurance. We can look to fintech and say what they’re done in terms of changing banking and securing loans and just securing transactional activity on the phone. That’s what insurance would like to do. So the digital is a huge piece of it.

INN: What are some of the factors driving the demand?

Kern: As we look at car-sharing and home-sharing, it means we need new products. What used to be strictly personal and commercial, we’re finding that a lot of the on-demand economy is causing those two things to blend. And the insurance industry doesn’t really have a good product to respond to that, so that’s something we’ll be working on as well.

INN: How do other insurance tech trends fit into these new models?

Kern: On the claims side we’re seeing the usage of drones for taking pictures and submitting your claims. I think that will all come to a new level. IOT, I think really has the impact to change the claims process in terms of the sensors and when something happens and how severe it is. But the distribution is what we’re really focused on right now. So how do we really engage with the digital customer? How do we enable someone to buy their insurance on the phone? It can’t be just putting the old application on the phone, otherwise nobody’s going to want to buy insurance on their phone. So you have to change the way you think about engaging the customer. You have to make the questions simpler and easier to understand and meaningful for the product that they’re trying to buy.

INN: Is there an opportunity for incumbents here, or is it all about new startup companies?

Kern: What we’re seeing in the startups right now is they want to be first with the product that’s going to change the industry, but they don’t want to be an insurance company. That’s an advantage for the incumbents.

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