Microinsurance as Blue Ocean Strategy in Mature Insurance Industries
People in mature insurance markets grow up ‘just buying insurance because they are born and bred with the ‘necessity of having insurance’. The Millennial generation though, is very different, also in mature markets. They do not see the need of having insurance and are therefore less likely to have any health, rental, life, and disability insurance.
Millennials, as well as Generation Y, the Silent Generation, Baby Boomers and Generation X are now all part of the so-called “connected generation”. Empowered by technology, these individuals look for authentic services they can access across platforms and screens, whenever and wherever they need them. Their protection gap however is estimated over 3.5 trillion dollars as they do not see the need.
The key to selling insurance to the “connected generation” is to reach them with the right proposal at the right moment using engaging touchpoints on the device they swipe, tap and pinch thousands of times a day: their smartphone.
IBA sees this is similar to players in emerging markets offering microinsurance for years: presented as a prevention service or protection add-on instead of pushing a product. In IBA’s view micro-insurance is becoming the new way of selling insurance and creating new demand in mature insurance industries. And this microinsurance proposition is conveniently offered as part of (mostly) digital customer journeys. Making the purchase easy, relevant, convenient, and cheap. It can be embedded in experiences like travelling, socializing, entertaining or exercising, making it a new and smart way to protect these life and business experiences, answering major societal trends that ultimately require enhanced protection.
Even virtual AI based insurance engines can start selling micro policies. All based on data, smart agents can propose the right cover to the right customer at the right time.
Several examples are appearing in the Mobility market for instance where you’re insured ‘by default’ when you take an uber-style cab or hire an e-scooter for the day. And in a similar way when you purchase online, your delivery is insured against theft and loss.
“What is really interesting is that the services cover different experiences throughout the day and come already insured. The customer feels more protected.”
Blue ocean opportunities with microinsurance
Modern microinsurance can give insurers new sources of income generation through the acquisition of new customers and improved cross-selling and up-selling. Insurers also gain cost efficiency, raise customer loyalty and enhance corporate branding. From a customer point of view there is a benefit coming from additional protection in their daily life and improve their financial wellness, avoiding accidents and unexpected expenses. On a society level, protection gaps are reduced, and awareness, maturity and resilience rise.
How does it work?
The main challenge is to escape from legacy and to be able to properly and efficiently address new customer needs and compete in the digital arena with neo insurers and non-insurers. The market is demanding agility and speed. Becoming an agile digital incumbent is a real challenge, to accelerate and position for future generations.
The insurance industry is opening to connect with digital platforms that offer modern experiences that require enhanced prevention and protection. That move is currently happening, but mostly on the front-end, via a middle layer that is mitigating the tech legacy.
Next phase is to enable modern and open microinsurance from the back-end, powering flexible core insurance processes in real time via APIs. Modern (micro)insurance requires digital enablement at the core, from back to front, on a fast, scalable and secure core platform and a comprehensive API stack.
In microinsurance, volume is the name of the game and to get here, you need the right partners and distribution network. To attract this, you need the right digital technology and operations, enabling flexible and real-time experiences. An empowered product management team, with business, commercial, technical, design and legal competences, needs a flexible product configuration capability to quickly design and launch new protection propositions at scale.
As part of your digital core, you need digital talent and superior commercial capabilities to establish partnerships and design the microinsurance offering as part of an ecosystem proposition. Insurtechs can have several roles in originating partnerships, creating demand and enabling part(s) of the microinsurance value chain.
Who is IBA?
IBA has been operating since 2010 and has 70+ employees with offices in Spain, The UK, Denmark, Germany, Romania and the US. Its platform provides customers with the core insurance solutions they need to run their business today and tomorrow – fully managed and supported by IBA. Getting from concept to launching a new business in 12 weeks.
IBA offers a cloud native end-to-end insurance platform that handles everything from quote to bind, and a policy administration that drives automation and efficiency allowing users to be self-sufficient in a modern claims handling system. The IBSuite platform is multi-country, multi-currency and multi-language, supported by a powerful API first integration layer.
The IBSuite allows the P&C insurer, MGA and Insurtech to focus on their business enabling digitalization, new business models and emerging technologies with no technical debt. Its solutions make the insurer always on and always available: 24/7 – fully managed and supported by IBA. IBSuite provides insurers with the technology they need to configure a new microinsurance product, automate the process and integrate the insurance ecosystem.
Visit their website here!