Startup Trov aims to disrupt insurance with the swipe of an app

By John McCrank

Nov 21 (Reuters) - The on-demand economy, which uses smartphone technology to immediately fill consumer needs, has changed the way people order food, a car, or a place to stay. Now (Frankfurt: 11N.F - news) , technology startups are targeting the next business frontier - insurance - offering coverage with the swipe of an app.

Trov, a San Francisco Bay Area firm that provides smartphone-based on-demand insurance for individual assets, like computers or cameras, for any duration, launched in the United Kingdom on Tuesday, backed by insurance firm AXA SA (LSE: 0HAR.L - news) .

"We literally track risk to the second so when you turn something on, it turns it on to the second and then it prices your usage to the second should you want to turn it off," Scott Walchek, Trov's chief executive officer, said in an interview last week. "It's literally the same swipe right to turn it on, swipe left to turn it off."

The multitrillion-dollar dollar insurance industry is poised to be transformed "beyond recognition" by new technologies like artificial intelligence, new payment systems, drones and blockchain, CommerzVentures GmbH said in a white paper in March.

"Effectively cooperating with startups may be the only way for incumbent insurers to fend off potential competitors such as Google, Amazon, Facebook (NasdaqGS: FB - news) and other non-traditional players," said CommerzVentures, the fintech venture capital fund of CommerzBank (Xetra: CBK100 - news) .

Trov has been doing business in Australia for the past five months in partnership with Suncorp Group Ltd and plans to launch next year in the United States, where it has teamed up with Munich Re, Walchek said.

Trov's main users are millennials who live "untethered" lifestyles, meaning they might work from home or from a coffee shop with their laptop, which they want to protect, Walchek said.

The firm started with electronics and photography equipment coverage in the UK, and will add other insurance categories going forward, such as sporting goods, Walchek said.

The insurance industry has been slow to adopt new, potentially disruptive technologies, in part because it is subject to moral hazard and adverse selection, said Erik Brynjolfsson, professor at Massachusetts Institute of Technology's Sloan School of Management.

"Meaning that one party may know information that the other doesn't and markets tend to break down in those situations," he said in an interview.

Technology firms' ability to mine vast amounts of web-based data, along with the type of ratings systems used by firms like Airbnb and Uber to verify trustworthiness and reliability, may help insurers overcome those barriers, he added. (Reporting by John McCrank in New York; Editing by Matthew Lewis)