Covid-19 crisis to give rise to need based products in insurance industry by Navdeep Arora Source- https://bfsi.economictimes.indiatimes.com/blog/covid-19-crisis-to-give-rise-toneed-based-products-in-insurance-industry/4295
We are witnessing a refreshing and much-needed Consumerisation of Insurance where insurance products will be bought (versus being sold) on “use as needed” basis at key “moments of truth” and serviced remotely and seamlessly in the growing digital, virtual and remote e-commerce ecosystemin the post-Covid economy. The Covid 19 pandemic is exposing some of the structural opportunities in how insurance has been productised, priced, sold, and serviced to meet our personal and commercial protection needs, and galvanising the changes that have been long overdue. The risks associated with the pandemic are challenging the fundamental pillars of the insurance industry, and giving rise to new and unique need-based products that are here to stay. Insurance has traditionally implied managing risks across large homogenous populations through products that have predominantly been sold through intermediaries and provided protection against a static set of risks regardless of individual exposure and needs over time. Claims have been settled through case by case assessment of damages and associated indemnity. In addition to resulting in adverse selection for some products (low risk consumers subsidising higher risk consumers within a population), these products have failed to address individual risk exposures and coverage needs when most needed by us. We pay for home insurance for a fixed policy period regardless of whether we occupy the property during that time or not. We pay for car insurance based on risk factors such as the routes we drive on and average mileage regardless of whether we drive the car during the policy period or not. Many small businesses have gone out of business for lack of business interruption coverage in their standard SME policies during the pandemic. Similarly, traditional life and health insurance products are not only complex and difficult to understand by average consumers, they have failed to meet short-term emergency needs arising from hospitalisation, loss of employment, quarantine expenses, disability, and loss of a loved one, risks that are pervasive during pandemics such as Covid 19. GIG jobs that enable us to work on demand on part-time basis will continue to grow in the post-Covid economy and require on-demand insurance coverage. So, what does this mean for new need-based insurance products that are on the horizon? First, we will see more pre-underwritten, fixed price and fixed benefit simple insurance products such as hospital cash, unemployment, and short-term disability benefits that are sold and serviced
(claims settlement) directly through smart devices with the click of a button in real-time. Innovative technology companies such as Dubai-based Democrance are revolutionising how insurance companies can use plug-and-play platforms to deliver these products as well as services like telemedicine directly, digitally, and seamlessly to their customers. Second, we will see insurance products that enable the growing need for mobility and social distancing (e.g., e-bikes, shared economy and GIG work) that address risks associated with the pandemic. Companies such as London-based Laka are providing innovative insurance policies for coverages needed by bikers in the UK and other European countries that are experiencing a massive growth in mobility via bikes. Third, we will see new and innovative policies to meet short-term needs of micro-businesses and SMEs, the life and blood of most emerging economies. MariaHealth, a Philippines-based health insurance distributor is packaging and bundling short-term need-based health insurance coverages for individuals and SMEs, the first of its kind in SE Asia.VESLhas launched a new per-invoice based trade credit insurance product to help SMEs in securing credit from financial lenders and banks. Fourth, we will see “on-demand, pay as you use” insurance products. PolicyPal has collaborated with FinTech firms Revolut and StashAway to launch a new programme called 'Medical Energizer' which offers insurance, financial and ride benefits to frontline medical workers to support their wellbeing during the COVID-19 crisis. Zego, which sells a range of cover to drivers and riders in the gig economy, is offering 14 days free insurance to any of its customers who have to self-isolate. Those affected can claim up to two weeks free insurance when they renew their policy. Fifth, new products will focus more on helping us in preventing and mitigating adverse events, in addition to providing standard protection. Technology start-ups like Bangalore-based Gypsee are working with insurance companies to pilot innovative ways of measuring driving behaviour and vehicle health to help prevent auto accidents. We will also see more comprehensive digital health offerings, including remote diagnostics, tracing, monitoring, real time advice (telemedicine), pharmaceutical support, early response communication and international cover. Finally, we will continue to see insurance products with remote claims visualisation, assessment, and on-the-spot settlement for auto, property and small commercial claims enabled by innovative claims technology providers such as Munich-based MotionsCloud. What we are witnessing is a refreshing and much-needed Consumerisation of Insurance where insurance products will be bought (versus being sold) on “use as needed” basis at key “moments of truth” and serviced remotely and seamlessly in the growing digital, virtual and remote e-commerce ecosystemin the post-Covid economy.
About Navdeep Arora Navdeep Arora is a seasoned strategist, advisor, and investor in Insurance and Financial Services. Navdeep’s particular focus and areas of expertise are Insurance Strategy and Innovation. He works across the Insurance ecosystem including Insurance companies, data and technology providers, strategic investors, and start-ups in the InsurTech space.
Formerly, Navdeep Arora was a Senior Partner with McKinsey & Company (16 years), and a Partner/Global Head of Insurance Strategy with KPMG (3 years). Navdeep’s educational qualifications include a Bachelor’s and a Master’s degrees in Engineering, and an MBA from Harvard University. Connect with Navdeep Arora Website – https://navdeeparora.com/ LinkedIn – https://www.linkedin.com/in/n-arora-801ba613a Twitter – https://twitter.com/InsNavdeepArora Quora – https://www.quora.com/profile/Navdeep-Arora-43 Medium – https://medium.com/@navdeeparora Facebook – https://www.facebook.com/InsNavdeepArora