As insurtech sector heats up, Pinsent Masons highlights data implications of short term insurance.
AXA Insurance is claiming the launch of the UK’s first ‘on demand’ insurance cover, through its partnership with Silicon Valley start-up Trov, which teams Trov’s free mobile app with insurance underwritten by AXA.
The insurer is positioning this development as a response to the evolution of traditional insurance needs. It says using the Trov app, consumers can upload items to their cloud-based inventory and purchase individual insurance for them at the touch of a button. This gives them control, enabling them to obtain cover for items they want to protect, for a period of time that suits them.
As Gareth Howell, managing director at AXA Insurance, says: “It is essential for insurers like AXA to adapt and innovate.” Insurtech is rapidly becoming one of the hottest fintech segments and incumbent insurers need urgently to respond to innovative new customer propositions in the space.
That said, short term insurance provision is not without its challenges. Speaking at the ABI Annual Conference in London, Luke Scanlon, head of fintech propositions at Pinsent Masons, has highlighted the data issues this kind of product innovation raises.
"In terms of product innovation, there are interesting developments that are highlighted such as insurtech businesses providing short term cover,” he said. “Data is central to ensuring those businesses can price products and create and collaborate with others in the sector to provide those services. There is of course the additional issue of assessing risk and the long-term need to increase accuracy in underwriting. For example, with motor insurance, for some time we've seen the promise of telematics data being used to provide more accurate data than the traditional means, for assessment of risk."
One major concern continues to be around the use of data in profiling individuals, Scalon added. This can be more pronounced in an insurance context than in other sectors as it can have a direct implication on an individual's personal finances. "Data protection regulation has been updated to deal with these issues and now focuses more specifically in guaranteeing that explicit consent is obtained when data is used in these contexts," he said.
Finextra recently hosted a live webinar on the topic of insurtech, which pitted new entrants against incumbents to debate issues around innovation, data protection and the future of collaboration between insurers and start-ups. Listen to the webinar on demand here.