Insurance, Technology + Start-Ups

Michael Spiar, Member Engagement & Communications Specialist | IBAO Blog, April 5, 2016

Insurance,  Technology + Startups

Most of us are familiar with the sharing economy now that tech firms such as Uber and Airbnb popularized the concept of sharing peoples’ personal vehicles or properties in place of traditional taxis and hotels. It has taken longer for tech start-ups to disrupt the insurance space, but 2016 appears to be the year that tech start-ups begin disrupting insurance in a big way, presenting challenges – and opportunities – for today’s enterprising insurance brokers.

Peer-to-Peer Insurance

The peer-to-peer (P2P) insurance model has made headlines recently with companies such as Lemonade, besure and Friendsurance offering a new take on traditional mutual insurers. P2P insurance behaves like crowdfunding websites such as Kickstarter or Indiegogo, facilitating the on-demand creation and management of insurance pools covering specific risks for small groups of policyholders. This model leverages social networking connections to build trust among policyholders and requires less overhead than traditional insurance, often resulting in lower premiums.

Friendsurance, a German company established in 2010, was one of the first P2P insurance start-ups. Part of its model is to reward policyholders by offering a cashback bonus every year their pool submits no claims. When asked how she thinks the P2P insurance concept affects independent brokers, Eva Genzmer, Head of Corporate Communications at Friendsurance, replied, “We cooperate with insurance brokers who want to profit from the advantages of our business model such as increased customer satisfaction as well as access to a young target group and social networks.”

Michelle Priest, Marketing Manager at Calgary-based besure, agrees that independent brokers have a role to play. “P2P insurance can help fill a gap in the market because everyone needs auto insurance but not everyone can afford the deductible. As a broker, if I had clients on a tight budget and a policy with a $1,000 deductible, to help them from paying out-of-pocket, they could join a besure auto deductible pool, and therefore reduce their overall insurance cost. P2P insurance can also be a great relationship-building tool for brokers to use with clients, such as creating a bike pool specifically for cyclists.” In this way, brokers can offer customized insurance to customers who share a risk that is not typically covered by traditional carriers.

Mobile First Insurance

According to a 2015 survey from Forrester Research, 68% of Canadians now own a smartphone and 69% of mobile owners access the Internet weekly on their device. Recognizing this trend, some insurance start-ups are focusing entirely on the mobile space. US-based Trōv, to be launched this year, uses an app that “will let you insure just the things you want – exactly when you want – entirely from your phone.” The app allows users to upload receipts, track the market value of their property, identify opportunities for insurance pools with other users, and process claims.

Traditional brokers can leverage mobile apps to accommodate an insurance broking exchange. Knip, a Swiss start-up, provides a mobile app allowing customers to track and access all their insurance policies in one place. After users sign a Broker of Record letter, the app can even act as an insurance broker, recommending increased or decreased coverage and identifying suitable policy providers.

Start-up Incubators

Many insurers are proactive about engaging with insurance start-ups, such as Europe-based Allianz and its Digital Accelerator program. Allianz provides financial and business development support to such firms, connecting entrepreneurs with its existing teams to prototype and validate business concepts with the potential to impact the insurance sector.

Aviva launched its Aviva Ventures arm in 2015, providing venture capital to early-stage start-ups that exhibit the potential to make insurance easier for customers through digital innovation. The program targets a number of innovative areas, including the internet of things, data analytics and new sharing economy platforms.

Although most brokerages may not adopt the P2P or mobile-based insurance concepts as their primary operational structure, brokers can nonetheless leverage these innovations to strengthen their competitive edge. Visit the Advisory Services section of to read about other technology solutions that can benefit your brokerage.