On-Demand Insurance Market by Coverage (Car Insurance, Home Appliances Insurance, Entertainment Insurance, Contractor Insurance, Electronic Equipment Insurance, and Others), End User (Individual and Business), and Region (North America, Europe, Asia-Pacific, and LAMEA): Opportunity Analysis and Industry Forecast, 2023-2032

On-demand Insurance Overview

On-demand or pay-as-you-go, or usage-based insurance is a flexible option allowing individuals to purchase coverage for periods or events—specific conditions rather than long-term contracts. On-demand insurance has gained popularity thanks to advances in digital technology and the rise of sharing economy platforms. Policyholders can activate or deactivate coverage based on their needs with on-demand insurance, providing convenience and cost savings. Pricing is typically based on actual usage or duration, such as distance traveled or time spent, and coverage can be customized to specific risks. On-demand insurance is easily accessible through digital platforms or mobile apps, allowing for quick coverage activation. It is commonly used for short-term rental properties, ride-sharing services, events, and temporary travel. While on-demand insurance offers immediate protection and personalized coverage, traditional insurance policies may still be more suitable for long-term needs.

Global On-demand Insurance Market Analysis

The global on-demand insurance market size was $957.40 million in 2022 and is predicted to grow with a CAGR of 22.5%, by generating a revenue of $6,253.72 million by 2032.

COVID-19 Impact on Global On-demand Insurance Market

The COVID-19 pandemic has had a significant impact on the on-demand insurance market. It has increased demand for specific types of coverage, such as travel insurance, event cancellation insurance, and health-related policies. The pandemic has highlighted the need for insurance against unforeseen events and risks. Additionally, the pandemic accelerated the digital transformation in the insurance industry, leading to the growth of on-demand insurance. Insurance companies have invested in user-friendly apps and online platforms to make purchasing, managing, and claiming policies more accessible for customers.

The pandemic has also changed risk profiles, prompting insurers to offer customized on-demand policies to address emerging risks associated with pandemics, business interruptions, and remote work scenarios. The pandemic has influenced consumer behavior, with a greater focus on health and safety, leading to increased demand for health and life insurance. Contactless processes have gained prominence due to social distancing requirements, with insurers adopting technology to provide contactless experiences for policy purchasing and claims management. However, challenges and uncertainties remain as insurers need to reassess and reprice their products, and the unpredictability of the pandemic continues to pose difficulties in accurately assessing risks.

Digital Transformation to Drive the Market Growth

The on-demand insurance market is fueled by several key factors contributing to its rapid expansion and popularity. Firstly, the digital transformation of various industries, including insurance, has played a crucial role. On-demand insurance leverages digital platforms and mobile apps, giving customers the convenience and accessibility to purchase coverage for specific events or time frames. Secondly, evolving customer expectations have driven the demand for personalized and flexible insurance solutions. Additionally, the rise of the sharing economy and peer-to-peer exchanges has created opportunities for on-demand insurance. Platforms facilitating sharing services often require insurance coverage, and on-demand insurance provides a suitable solution by allowing individuals to purchase coverage when needed. Another significant factor is the adoption of usage-based pricing, enabled by telematics, IoT devices, and data analytics. This approach considers real-time data on customer behavior, allowing for fairer and lower premiums. The streamlined user experience offered by on-demand insurance platforms and the emergence of innovative insurtech startups have further propelled market growth.

Regulatory Challenges to Restrain the Market Growth  

The on-demand insurance market has experienced impressive growth and development in recent years, but several variables can impede its further expansion. One of the essential challenges is navigating the complex regulatory landscape that administers the insurance industry. Compliance with these regulations can be time-consuming and costly as a barrier to entry and growth. Additionally, consumer trust and perception play a significant role as on-demand insurance is still a relatively new concept. Limited product offerings, which focus on specific risks rather than comprehensive coverage, may not meet the diverse needs of consumers, further hindering market adoption. Underwriting policies based on real-time data and usage-based pricing models can also present challenges, making accurate risk assessment and profitability difficult for insurers.

Personalization to Drive Excellent Opportunities

The on-demand insurance market offers several exciting opportunities for insurers. One key opportunity is personalization, as on-demand insurance allows customers to customize their coverage based on their unique needs and circumstances. This flexibility and convenience attract customers who prefer insurance that aligns with their transient or sporadic requirements. Additionally, on-demand insurance can be cost-efficient by leveraging technology and data analytics to assess risks more accurately, resulting in more precise pricing models and potential cost savings for customers. Another opportunity lies in targeting underserved markets, such as gig economy workers, renters, or short-term travelers, who traditional insurers may have overlooked. By integrating with other industries like travel, transportation, and sharing economy platforms, on-demand insurance can expand its market reach and offer embedded or bundled insurance products.

Global On-demand Insurance Market Share, by Coverage, 2022

The car insurance sub-segment accounted for the highest market share in 2022. Car insurance has dominated the on-demand insurance market. First, strong demand for auto insurance with a variety of vehicles on the road provides a solid base for auto insurers to expand their offerings in demand areas. Additionally, auto insurers have been at the forefront of deploying innovative technologies such as digital platforms, mobile apps, and communication devices that enable them to offer insurance options on demand. The rollout of usage-based insurance models, which use telecom data to personalize coverage and premiums, further strengthens their position in the on-demand market. In addition, car insurance providers have formed strategic partnerships with various partners in the transportation industry, allowing them to provide coverage to on-demand, short-lease motorists: term and non-traditional vehicle ownership models. The well-established regulatory environment around car insurance has also facilitated its dominance in the on-demand market, providing stability, compliance, and consumer protection.

Global On-demand Insurance Market Share, by End-User, 2022

The business sub-segment accounted for the highest market share in 2022. Businesses have emerged as dominant forces in the on-demand insurance market by leveraging technological innovation, forming collaborations, and adopting customer-centric approaches. Through developing and implementing advanced technologies like mobile apps, AI, and data analytics, businesses have created platforms that provide instant access to insurance products and services. Collaborations with insurance and technology firms have allowed companies to tap into existing expertise and distribution channels. By focusing on personalized and customer-centric solutions, industries have catered to specific needs, attracting previously underserved customer segments. They have also improved risk assessment and pricing through advanced data analytics, offering fairer premiums. The flexibility and convenience of on-demand insurance provided by businesses have further appealed to customers seeking quick and tailored coverage.

Global On-demand Insurance Market Share, by Region, 2022

The North America on-demand insurance market generated the highest revenue in 2022. First, the region's progressed technology landscape and strong digital infrastructure have paved the way for the development of on-demand services across all businesses, including insurance. In expansion, North American customers have shown a solid interest in and eagerness to embrace on-demand insurance solutions due to their convenient, flexible and personalized nature. Moreover, the region's favorable regulatory environment and supportive stance towards technological advancements have facilitated the growth of on-demand insurance. Lastly, the thriving startup ecosystem in North America, particularly in areas like Silicon Valley and New York City, has nurtured the emergence of numerous insurance companies, contributing to the region's dominance in the market.

Competitive Scenario in the Global On-demand Insurance Market

Investment and agreement are common strategies followed by major market players. One of the leading market players in the industry is Zuno General Insurance. In July 2022, Zuno General Insurance Limited launched India's first comprehensive on-demand auto insurance product, the IRDAI SWITCH sandbox initiative. SWITCH is a fully digital car insurance based on mobile telematics. This policy is designed to detect motion and automatically enable coverage as the vehicle is driven.

Some of the leading on-demand insurance market players are Slice Insurance Technologies Inc., VSure.life, Xceedance, Inc., Sky Watch Insurance Services, Inc., Zuno General Insurance Limited, JaSure, Thimble, JAUNTIN, Cuvva and Snap-it cover.