CEO of INZMO, a Berlin-based insurtech for the rental sector & a top 10 European insurtech driving change in digital insurance in 2023.
If you thought that the digital nomad was a temporary trend that would soon blow itself out, think again. In 2022, 69% of digital nomads reported that they plan to continue their lifestyle for at least the next two to three years. This is up from 54% in 2021 and 49% in 2020—and the rate is only continuing to accelerate.
Employers get it. Work-from-anywhere employment policies are increasingly becoming a common way to attract skilled workers at a time of continuing shortages. A new report based on 50,000 global remote job offers has just identified that companies in talent-shortage hot spots are rated best in the world when it comes to remote and flexible working policies.
However, the legacy insurance market still has some way to go to catch up on this new reality; I see most still pricing mid-term policies as if digital nomads are high-risk drifters. The reality is that these changing patterns have created a new multi-billion insurtech opportunity for the growing number of digital platforms that now exist to service this market’s needs.
The Rise Of The Digital Nomad Platform
There are an estimated 35 million digital nomads worldwide who contribute a global economic value of $787 billion per year. The market for platforms servicing this economy is large and growing rapidly, embracing services across travel, work, community and education.
From this medley of possibilities, the impact of the digital nomad lifestyle just on property rental trends alone is intriguing. Society is moving to be more comfortable with short- and mid-term arrangements. Alongside Airbnb, there are services from Housinganywhere, Anyplace, Flatio, Nomad Stays and Selina—to name only a selection of those available. There are even platforms like NomadPass and BoundlessLife that will organize the entire trip for you.
Thanks to the speed and simplicity of embedded APIs from insurtechs, these platforms now have the option of offering insurance products customized to the needs of the nomadic lifestyle in mid-term rentals. I have identified five immediate opportunities in this space:
Five Insurtech Opportunities For Servicing Digital Nomads
1. Zero-Deposit Rental Insurance
The conventional three months upfront deposit can be a deterrent to digital nomads who may only want to stay for a few months and who are less likely to have the funds to cover these hefty demands every time they move.
Rental insurance is an innovative way to eliminate deposits, providing landlords with a level of security that is far above the classic cash deposit or rent guarantee, and it can be easier to manage too. Insurtechs can offer this through a digital approach that allows landlords to offer this solution to tenants at the point of application so that they can let their properties out more quickly.
2. Property Insurance
Digital nomads tend to rent properties for longer periods than typical tourists, often for months at a time. This mid-term rental wave means that nomads may have more responsibility and liability for the condition and maintenance of the property they occupy. They are also likely to have a larger number of higher-value personal belongings at the rented property.
Typical tourist policies do not cover these circumstances, leaving digital nomads in need of more appropriate property insurance. From a property owner’s perspective, digital nomads may pose new risks or liabilities such as damage or wear to the property and its contents due to frequent use or movement.
3. Income Protection
Digital nomads often work as freelancers or run their own businesses, and therefore income can be unstable and unpredictable. An insurance product that provides a safety net in case of loss of income or contract could be highly attractive to this group.
To cater to unpredictable income streams, this product could offer flexible premiums such as pay-as-you-go premiums based on actual earnings or project-based premiums tied to specific contracts. These approaches can help enable digital nomads to align their insurance expenses with their income, providing greater affordability and ensuring they are appropriately covered during both prosperous and lean periods.
4. Remote Work Protection
This would cover any incidents that may affect a digital nomad’s ability to work remotely such as equipment theft or damage, cyberattacks or data loss. It could also extend to providing coverage for unexpected costs that may arise like finding alternative working arrangements on short notice.
I would recommend including coverage for things like temporary co-working space rentals, internet connectivity solutions or travel expenses incurred when relocating to a new workspace. By offering comprehensive coverage for both the physical and logistical aspects of remote work, insurance policies can provide digital nomads with peace of mind and financial protection in the face of unforeseen disruptions.
5. Cancellation Insurance
Many guests would prefer to book with a host who offers insurance to cover cancellations or a trip cut short. Both parties benefit: Hosts get to see some income if guests change their minds, and guests get the reassurance of knowing they don’t have to pay if their plans change.
Even if hosts do not include cancellation and interruption insurance in their offering, platforms can offer it to guests as an optional extra. I find that nomads are inherently interested in mobility and may seek to extend or cancel their stays as needed.
In each case, insurtechs may well have a built-in advantage with their ability to use AI and data analytics. Offering additional services in this way is now a fairly established part of affiliate partnership programs in many industries. And embedded APIs have made it simple and rapid. However, I find that mid-term insurance targeted at digital nomads remains a relatively under-explored opportunity where specialist platforms can add service benefits for customers.
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