Role Insurtech companies like "OneAssist" playing in the ecosystem...
I'm often posed with these questions: " Is Insurtech competing with incumbent and/or, what are Insuretch companies solving for the ecosystem?"
My response in all the honesty is "NO", we aren't competing with the incumbent; rather we are acting as tailwinds ,and collaborating with Insurers to solve the most wicked and deep rooted problems for the ecosystem . Will come to the details of this in a while.
Historically insurance has largely been dominated by life insurance. Data implies the same, insurance penetration ( Insurance premium to GDP) for life insurance is over 3%. In the last 2 decades this has almost doubled. We are on par with the global average for life insurance penetration; India's non life insurance?( health, motor, fire, personal electronics, embedded insurance)?is piddly 1% in comparison to the global average of?~4%. But as always the case averages hide a lot more than they reveal.
Just to contextualize this, in the monetary value,Insurance density (premium collected per capita/population ), we Indians spend merely $90 as compared to the global average of $900 on all sort of insurance/protection products. Of course, this is merely a data point in isolation , if we see this in conjunction with GDP per capita, revelations and interpretation would be different.?This number is merely $19 for non life insurance vs $400 global average.?
In terms of opportunity,?life insurance,?GPW ( gross premium?written) is poised to grow by?almost 4X in next 8-9 years, from ~$90 Billion to $317?Billion?which translates in the growth at the?CAGR of ~15%. similarly?non life is expected to spill over $100 Billion GPW?by 2030?.
So that's a lot of data, but context is important to bring everyone on the same page. While the market is exploding BUT?Accessibility, Affordability, and Trust?remain the key issues for the consumers and?Risk management, and Strong PnL?remains a sore point for the incumbent. Precisely where Insuretch plays a crucial role. Let's understand these concerns in bit detail.
Accessibility
It has remained the sore point because of the limited distribution. Physical distribution comes with its own set of challenges plus also the limitation to penetrate into every nook and corner of India .Just to give perspective, still, ~65% of India's population is rural population living in cities which are beyond the reach of incumbents. How do we solve accessibility, let alone affordability.
Insurtech is not only solving for accessibility but product customization too, which essentially leads to affordability.??All these years, innovation in core products hasn't happened, barring some tinkering here and there to create differentiation that too largely with the lens of?marketing gimmicks. With technology leading distribution, it solves the large part of the conundrum.
- Low cost distribution ( COA, cost of acquisition is one of the biggest cost for incumbent)
- Reach at the click of button
- customised?products;Cxs?persona, segmentation, usage etc. With the application of?AI/ML, systems create products real time with the options of riders. This is what Insurtech is solving for! One size fits all has been the recipe for disaster and surprisingly prevailed for a long time but with millennials and gen Z forming over 70% of the population, customization plus personalization is the flavor of this era.
-?Guaranteed?products - We understand it comes at the cost but Cxs need peace of mind and they are ready to pay the price for this. People buy policies for peace of mind and not for ear full of trouble, especially when you need them the most:)
Affordability
We as the consumers of insurance/ non-insurance products are paying the hefty prices ,and compensating for those who use these products extensively, which is an unfair game. Ideally we should be paying for what we use and the benefits for not using too:)
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Just to give one anecdote here, "for an instance if I didn't utilise the motor insurance policy in a specific year still chances are,I may land up in paying higher premium next year despite the value of vehicle depreciating, this is owing to "let us higher claims" in that year by other customers and therefore insurance company consuming more dollars to settle the claims. To keep the futuristic profits and therefore shareholder value ( market capitalization, share price, earning per share etc) in fact, insurance companies will increase the price. so technically you were charged more to manage risk ( which is nothing: frequency of claims + value of claims). So you see how this impacts affordability.
Now just imagine there are cohorts of Cxs identified by system based on actual usage, probability to use and other variables and subsequently risk is also isolated for these different cohorts. It will solve for three things
Trust
I always believed "simplicity breeds transparency and transparency + promise adherence drives TRUST". Given the complexity of the insurance products with 50-60 pages of TnC document, even the guys who designed the product will be lost, let alone the consumers like you and me who don't understand the insurance language. Keeping it simple and stupid, which not only drives trust but also reduces the cost of managing claims. Infographics covering key TnCs
Risk & PnL
Risk is the vital factor in deciding the premium you pay for the policy and equally important for incumbents to ensure they create sufficiency in the form of adequate profits so that it makes it worthwhile for insurance companies to even run the business. This is yet another area where Insurtech companies offer inordinate value to conventional insurance companies. For instance health insurance forms 40% of non life insurance penetration or?GPW. While consumers keep the policy for decades, BUT insurers assess the risk through a medical test that, too, only once at the beginning.??Any lifestyle changes later can affect insurance risk, but insurers ignore them.?
?With smart watches/IoT, Insurtech is building capabilities to manage risk real time and keep the risk as variable to increase/decrease the premium that consumers pay. This could mean "IMPROVE YOUR HEALTH=PAYING LOWER PREMIUM", which doesn't seem to be the option currently with the incumbent. These data points can be used to create more value add products by insurance companies like prescription services to manage health to reduce the premium by improving health ( killing two birds with one stone, making consumers more healthy with the benefit of reduced premium plus new revenue streams from these value add services), preventive services at the click of button and many more..
Insutech is still in its infancy , and we at OneAssist are in the journey to make Insurance/Assistance/protection products more cost-friendly (Affordability), personalized (every Cx is unique) and easy-to-use (Accessibility, trust) with deep focus on experience and reliability of our services ( Promise adherence).