DURING the height of the pandemic, my wife bought my mother’s health insurance coverage that included unlimited consultations, be they physical or virtual, and unlimited lab tests, all for an annual premium of P13,000. She did so without entering the insurer’s office or herself to meet in person with an agent.
When dengue started to rise in 2021 my wife also bought us dengue insurance with free GInsure Covid-19 coverage from GCash through its partnership with Singlife.
This is how insurance should be in the country – smooth and convenient – all powered by digital technologies. Just as the financial services industry has been disrupted by the global health crisis, the insurance industry has been shaken by people’s need to stay at home. But beyond that, there was a realization of the preciousness of life and the need to take care of yourself. Health; This has led to increased demand for life and health insurance over the past three years.
These drivers are pushing insurance industry players to embrace digital technologies to automate their processes, leverage digital channels and deliver a seamless customer experience. According to McKinsey, the industry is “not immune to the technology-driven disruptions that other industries are facing — customer demands are changing, traditional operating models are under pressure, and new players are emerging,” McKinsey said.
An obvious driver is that customer requirements have fundamentally changed. I quoted my wife’s behavior in purchasing health insurance over the Internet. Not only was she looking at ways to conduct transactions digitally, but also how seamless and integrated the customer experience is. It is no longer enough for industry players to digitize the buying process or the storefront, but consumers must now seamlessly and uninterruptedly move from one difficult point to the next.
Additionally, the digital natives – Millennials and Gen-Z – who now have the awareness and purchasing power to buy insurance, are demanding the same seamless customer experience that traditional insurers cannot deliver.
This is why the insurance industry is now being disrupted by insurtech (insurance technology) players. Aside from GCash, which has partnered with an insurance company to integrate an insurance offering into its app, insurtech companies provide the digital platform where incumbent insurers act as insurers rather than compete against them.
For example, Bima, an insurance and fintech company founded in Sweden and operating in the country since 2014, aims to cater to emerging middle-class consumers through subscription model payments for just 120p a month that can be purchased online. The underwriter is Pioneer Life Inc., an established insurer, which brings trust and credibility to the fintech player.
Another example is Igloo, a regional insurtech player that works with insurance companies in every country it operates in to take a product they’ve already made, digitize it, upload it to Igloo’s system to integrate it into the e-commerce ecosystem and distribute the insurance product online. In the Philippines, it develops insurance products for small and medium-sized businesses and microinsurance products.
In these models, the insurtech provides access to the customer via a digital channel, while the insurer acts as the risk bearer. What the fintech company is enabling is an integrated customer experience that the insurance buyer cannot otherwise buy from traditional models. In these cases, McKinsey refers to the insurtech as an “ecosystem orchestrator” who “owns the client relationship and offers a wide range of ecosystem-driven services beyond insurance, such as: B. Mobility as a Service and Activity Tracking”.
But there are other business models that traditional insurers and insurance companies can jump into to meet the growing demand for insurance products.
According to McKinsey, one model is the “B2B2C operator or product and back office provider”. This “applies to insurers operating a highly efficient operating model based on large internal efficiencies or market-leading levels of digitization.”
Another model is the “enabler and value-added service provider” where the actor “provides selected enablers and value-added services at scale”. Examples cited by McKinsey include “core system providers (like Guidewire and msg global solutions), large service and technology providers (like Cognizant, HCL and Infosys), insurers entering the space (like Syncier) and specialists (e.g. in sales or complaints, such as ControlExpert).”
There is enormous potential for the insurance industry in the Philippines to experience spectacular growth in the coming years driven by digital technologies. Established players and fintech companies need to collaborate and create new business models to create new insurance products for specific market segments.
The author is CEO of Hungry Workhorse Consulting, a digital and cultural transformation consultancy. He is an Institute Fellow at the US Institute for Digital Transformation. He teaches Strategic Management in the MBA program at De La Salle University. The author can be contacted by email [email protected]