Executive Q&A with Dan Bratshpis, CEO: On Embedded Insurance

According to research and industry reports, including those from PwC (PricewaterhouseCoopers), the on-demand economy is expected to reach a valuation of US$335 billion by 2025. This growth is driven by changing consumer behaviours, a preference for convenience, and advancements in technology that enable real-time services.

"We’ve known for almost a decade that on-demand rideshare and delivery drivers are propelling the on-demand economy forward, especially since 2020 when buying behaviours shifted significantly. North America is leading the way, with data showing that four-fifths of US consumers used on-demand delivery services in 2023, spending over US$400 per month on average," says Dan Bratshpis, co-founder and CEO of INSHUR.

The Rise of Embedded Insurance for On-Demand Drivers

There is an overwhelming demand for a seamless, in-app auto insurance experience, particularly as on-demand drivers, who often use this economy to supplement their primary income, frequently switch between platforms like Amazon, DoorDash, Lyft, Bolt, and Uber.

"But while the on-demand driver economy booms, incumbent insurance players risk losing their market share to more nimble players with complementary technologies to fulfil drivers’ on-demand auto insurance requirements," continues Dan. 

Many consumers have been enjoying for years the benefits of embedded finance through retail and popular items such as concert tickets, travel, health and car hire. Consumers are digitally smart and demand personalised products, especially as younger generations enter the job market.

"We recently conducted an in-depth national survey about the state of the on-demand driving economy and found that Millennial and older Gen Z drivers are leading the pack with on-demand driving in the US, with the largest age group being 35-44-year-olds (37%), followed by 25-34-year-olds (30%)."

"It’s fair to say that the innovation with embedded insurance is being pushed by this young demographic who lust after the seamless experiences they have across other areas in their digital lives."

That said, the auto insurance industry is beginning to recognise the significant advantages of embedded insurance, which provides drivers with the same seamless and integrated experience they enjoy with embedded finance in retail. This innovation is delivered directly through the apps they rely on, such as DoorDash, Uber, and Amazon.

"For embedded insurance to work effectively for on-demand economy drivers, there needs to be mutual respect between technology and insurance. And for insurance providers to flourish, they need to start offering drivers a seamless, frictionless and personalised purchasing experience which quickly matches them to the appropriate coverage for the type of driving they do (transportation or courier, for example)."

"The product needs to adjust to their lifestyles and factor in a myriad of data points, including duration and location of where and when they choose to drive on-demand. Furthermore, embedded insurance must factor in other aspects of the insurance journey such as claims and keeping drivers on the road and earning with little disruption to their income stream."

Insuring the On-Demand Economy Through Symbiotic Relationships

For embedded insurance to achieve true success, it must fully embrace the opportunities presented by the symbiotic relationship between the on-demand driver, the insurer, and the platform.

"The symbiotic relationship is important to the on-demand economy as users of platform apps such as Instacart, Lyft and Uber need to insure themselves whilst they are driving. Therefore, by using the platform’s real-time proprietary data points (such as trip and location data) married with other seasoned auto insurance providers’ data points on the driver (such as claim and incident history, driving experience, demographics etc.), an accurate and comprehensive view of each driver can be identified."

"This results in better pricing for the driver and a better loss ratio for the insurer. With this symbiotic relationship, each benefits from the involvement of the others as we move away from this ‘blanket approach’ to risk aggregation towards developing deeply personalized underwriting coupled with accurate pricing models. This leads to an amazing customer experience that fosters loyalty, and at the same time better profitability for insurers,  making this a truly symbiotic relationship."  

"If the insurance industry wants to meet the needs of on-demand drivers, it must successfully combine tech and data innovations with its decades long expertise, but also build strong platform partnerships for personalized products to be developed. A good example of this is our partnership with Amazon Flex which resulted in the embedded wallet solution, Pay-as-you-Flex."

"The partners we are working with at INSHUR are implementing our embedded solutions and, together with insurers, we are developing exciting products. We work closely with our platform partners to meet on-demand drivers’ needs, especially as drivers using on-demand apps expect more seamless integrations of services from the platforms they use. Without on-demand auto insurance, on-demand driving will not be sustainable for drivers, and in turn, on-demand drivers cannot fulfill customers’ needs – and that could be quite catastrophic for the on-demand economy as a whole."

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