On-demand insurance: idea, development, impact on market equilibrium

Abstract

The article presents the definition, idea, development, and current state of a new business model known as on-demand insurance which has been in existence since the early 21st century. Moreover, the article does not only describe the premises behind the development of this new method of creating value for clients of insurance companies and the opportunities that appear in the market but also addresses the challenges that insurance providers can encounter. Based on the analysis and available source materials, the most interesting types of these insurance products and the entities that include such products in the portfolios were presented. In addition, some new regulatory challenges and trends were described.

The purpose of this study is to analyse the behaviour of the insurance market after the introduction of on-demand products in light of the classical definition of equilibrium in a competitive insurance market under conditions of information asymmetry.

The authors analysed the economic implications of implementing on-demand insurance, demonstrating its potential to enhance the overall welfare of the insured population by increasing utility for certain risk groups of clients.

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