Investors have pledged $39 million for a technology platform that allows consumers to insure their valuable things and turn the coverage on and off whenever they want with swipe of a finger on their smartphone.
In the words of the founder of the on-demand insurance service, Trov, it is built around “insurable moments” rather than long term contracts. Trov allows people to insure valuable things such as smartphones, laptops, cameras and sports equipment for just the time they want coverage, directly from their smartphone, without the involvement of an insurance agent.
Consumers can decide whether they want coverage for hours, days, months or longer and they can move the bar on a sliding scale to choose their deductibles.
Trov today announced it has closed on $25.5 million in Series C funding led by Oak HC/FT, bringing its total funding to $39 million. Other investors in the latest round include major Australian insurer, Suncorp Group insurance technology provider, insurance tech firm Guidewire and fintech venture capital firm, Anthemis Group.
According to founder and CEO Scott Walchek, the target market is the generation of “digital natives”—or young consumers who are comfortable with everything digital and many of whom up until now have not gotten very involved in insurance but whose involvement will grow as they age and acquire more.
Walchek won’t divulge his research into the size of the market except to say that the current millennial generation is “87 percent” unprotected and thus whatever Trov captures is new money for the insurance system.
“Even if someone is protecting something to the extent of $5 to $10 per month, we think that that kind of growth of premium actually can return terrific returns around the world, particularly because it’s this new generation who really doesn’t want to protect any other way,” he said.
Down Under First
The on-demand insurance platform is being launched first in Australia this month with plans to enter the United Kingdom in the second half of 2016, and the United States and other territories in 2017. Walchek said the service is being launched in Australia and the United Kingdom ahead of the U.S. because there are fewer regulatory hurdles in these Commonwealth countries and because Trov hopes the experience it gains will give it data on “micro-duration single-item coverages” that it can use to develop rates that regulators in the U.S. might approve.
Trov will act as the agent, while insurers including Suncorp in Australia and AXA in Europe will assume the risk.
“In both cases, we become what’s called an appointed representative. They take the balance sheet and the heavy regulatory risk. The platform takes care of the end-to-end, both binding the policy and the claims management. So, it’s literally a virtual insurance company in the cloud,” he said.
This is a new iteration of Trov, which originally launched in 2013 as a high-end inventory service in the cloud. Trōv software makes it easy for consumers to digitally store information about their belongings including art, cars, wine and jewelry as well as determine and track their value. Users can synchronize their inboxes to their Trōv accounts so that anytime they get an electronic receipt, Trov grabs it. Based on the receipt, Trov can automatically add photos and values of the item.
“It literally has taken the frictions entirely away from collecting information about things. It’s this auto-inventorying,” Walchek says.
Since it went live in 2013, Trov says consumers have stored 940,000 items worth more than $8.5 billion in what it calls digital lockers. Some insurers offer premium discounts for high net worth insureds who set up Trov accounts.
Users can make their confidential information available to their insurance broker, tax preparer or appraiser whenever they want.
Walchek said he and his team of technologists felt there was more they could do with the Trov concept.
“You’ve collected all this information, and our users, just like us, go, ‘OK, that’s really nice, and I know the value of my things. I know the changing values of my things. I have all this description. It’s a single place where all this information resides. Now what?’ That was exactly where we were going with the ‘now what?'”
The “now what” turns out to be giving these users and new users of Trov an easy way to get insurance to protect these valuables.
Owners of high-end things will still be Trov customers but Walchek does not see these older buyers he calls the “last analog generation” as the customers most likely to be excited about insurance on-demand.
“All that information about the stuff that they’ve acquired or accumulated really lives in an analog world. That’s what made it entirely non-scalable. It’s hard to collect it. That information resides in file boxes; it resides in receipts. Maybe on a spreadsheet somewhere, but never is it maintained, updated, and easily done,” he says of the high-end market of older consumers.
These older consumers also already have home, auto and other insurance to cover their valuables.
But younger consumers are just entering their acquisitive years; they are in a different position and comfortable with everything digital. These “digital natives” are the real target for the new Trov on-demand insurance. Walchek calls them “the most unprotected generation and the largest consumer block to come through the markets in history.”
“That means our target audience moved from the laggard to the digital native or to the emerging connected generation,” says Walchek.
“They only have a few things that they care about, and they don’t understand why, in a world where they’re buying all of their entertainment and doing all their banking in these atomized micro-durations — Spotify for music, Netflix for video, Venmo for payments, and etc., etc. — why can’t they just protect a few things that they care about when they need to protect them?”
So what is it exactly that these digital natives own that needs protecting?
Trov’s founders cite phones, laptops, cameras, sports equipment, headphones and speakers, musical instruments and appliances as among the items they will insure.
“Anything that powers their lifestyle choices,” he says, adding, “Things that move with them that help them to either enjoy or to remember their experiences.”
Many of these items come with warranties but Walchek says those are insufficient. Trov insurance covers accidental damage, theft or loss.
Trov’s underwriting is more sophisticated than just having a bar code of an item and attaching a value. What and where people buy reveals a lot about them personally.
“The things are not risky. There’s no inherent risk in a computer. Only when it’s in the hands of a human is there risk about loss, damage, theft,” Walchek explains. So in addition to collecting information on the items, Trov is developing profiles of the users based on their credit (everything is billed via the application), their purchases and their interaction with the platform.
Trov is not the only player in the on-demand insurance space although it may be the only one for insuring single items.
New York-based instech startup Slice Labs has raised close to $4 million to launch an on-demand platform to sell insurance to participants in the on-demand economy. Slice has said its first product will be a pay-per-use policy for Uber and Lyft drivers that covers the driver from the time they turn on the rideshare app until they turn it off.
People can also buy travel insurance and insurance for one-day events like weddings online. Multiple insurers offer insurance for ridesharing drivers for when they have passengers. The difference, according to Walchek, is that Trov does it all over the cell phone.
Walchek resists looking too far ahead to “adjacencies” or other scenarios where on-demand insurance might take hold.
But he can envision a situation where, for example, manufacturers might offer to insure customers’ snowboards for the ski season if they put the purchase information into Trov. Or adding locale notifications, so there could be coverage for videographers or musicians who only want to protect their equipment on weekends at certain venues.
But for now Trov is staying disciplined, focused on single items.
“We are single items. It’s on-demand coverage, on-demand insurance for individual items, for individual possessions, individual things for now, and we think there’s a terrific opportunity there,” Walchek said.
*This story appeared previously in our sister publication Insurance Journal.