By: Cesilia Faustina
Usage of digital platforms is especially becoming a big deal with emerging markets, such as countries like India, Indonesia, and Malaysia. According to a survey by Swiss Re Institute, 70 percent of respondents expressed interest in using online channels to purchase insurance. The survey had also showed that 68 percent of the 1,800 respondents in these three countries were using digital platforms at least once a week. COVID-19 has pushed government policies to support an online environment in order to create a safer process for consumers.
“With an increasing number of digital platforms extending their business reach into financial services, insurers need to adapt their business models to become more relevant and responsive to the latest customer needs,” said Marianne Gilchrist, Head of Globals and Life & Health South Asia, Swiss Re.
The insurance sector has experienced its fair share of losses through 2020. The IMF indicated global economic losses from COVID-19 of about $12 trillion over 2020-2021, while Munich Re estimated insured property/casualty losses at $30 billion-$107 billion for 2020. These challenging outcomes are pushing re(insurers) to find a more sustainable solution in facing financial shock and risks that comes with epidemic diseases. When it comes to “developing” nations, risks such as these take a bigger toll on these countries, as they may be more vulnerable to intense changing markets. Countries like India, with a $369 billion health protection gap, are looking at digital tools to help close that gap and achieve economic stability.
This is not to say that traditional means of insurance, such as agents, brokers, and aggregators are replaced. They still function as primary channels within emerging markets, however, since the pandemic, many countries are looking to other forms of getting the job done. Creating a digital space for insurance activities, especially with the advancements of today’s fintech, is creating a powerful method to combat a struggling economy. The governments of these emerging markets are also creating a supportive environment to help implement such digitalization. Supportive government and regulatory policies are an important step in mitigating risks faced by (re)insurers. For example, we have witnessed few countries, like Indonesia, partnering with local tech start-ups in achieving economic growth.
Going digital for the insurance sector means sales processes can be done fully online for all the agents and reinsurers out there, it also means faster and simpler methods of issuing a claim and/or reviewing policies. A digital space creates a more secure (when implementing proper security/privacy measures) archive for all claims and policies, which insurers and the insured can always come back to. Simplicity through mobile apps can further the convenience of the insurance process as it makes a manual and tedious mechanism available through a click of a button. Mobile payments and digital wallets help to support the insurance cycle by making payments easily manageable and instant. Utilizing digital platforms allows (re)insurers to conduct their everyday activities and interact with the insured through a safe and shielded environment.
Consumers and governments are looking to these platforms because they can provide all those benefits and more. It also means that insurance companies can also reach larger markets, ones that were not necessarily reachable before; helping the sector diversify and stay afloat amongst an environment of intense competition. As we see more countries make use of digitalization in insurance, we can only expect greater innovation from both the sector and governments. Through the case study of India, Indonesia, and Malaysia, it proves that with a supportive government and taking advantage of digital platforms, the economy can still persevere despite the challenges.
For more information on insurance digitalization, check out ESKADENIA’s insurance platforms and e-payment tools.
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