How Insurers can unlock new business opportunities with Digital Wallets

Digital wallet integration with microinsurance service providers has contributed to the accessibility and convenience of insurance services for underbanked and underserved populations.

Africa has one of the lowest insurance penetration rates in the world: less than 3% compared to the global average rate of 6.8%

Poorly tailored products, unbanked population, cumbersome claims processes, unsuitable premium collection methods, coupled with limited awareness, and low purchasing power are some of the factors constraining the growth of the insurance industry in underdeveloped nations.- Africa Insurance Outlook Report, 2022

Microinsurance services have become increasingly popular in recent years, as they offer low-cost insurance coverage to the underbanked population.Insurers offer microinsurance services through mobile platforms, making it easier for people to access and manage their policies with the increasing smartphone penetratio

In emerging markets such as Bolivia, Bangladesh, and Nigeria, microinsurance is often used to protect assets such as livestock, crops, and homes against natural disasters, theft, and other risks. People in this region may not have access to traditional banking and insurance services, and microinsurance provides a way for them to protect their livelihoods and assets.

In more developed markets such as the Netherlands, microinsurance is often used to protect pets, gadgets, and other personal belongings. This type of insurance is especially popular among millennials who have a high affinity for technology and often carry expensive gadgets.

How digital wallets are enabling microinsurance services:

95% of the world’s population is now covered by a mobile broadband network. According to the State of Mobile Internet Connectivity, report 2022, 55% of the world's population is now using mobile internet and the vast majority of this growth is being driven by people in low- and middle-income countries (LMICs)

Using mobile-based microinsurance services through low-cost omni-digital platforms can play a significant role in promoting financial inclusion among unbanked populations in developing economies or LMICs. By leveraging the widespread use of mobile phones in these countries, digital wallet companies can help to bring more people into the formal financial ecosystem and provide them with greater financial security

Reasons Why Digital Wallets are Gaining Popularity for Insurance Services

-Digital wallets have made the entire insurance process frictionless where customers can easily choose and purchase various types of insurance policies. It eliminates the agent cost since there is a direct interaction between the insurer and the customer.

-Wallets can provide easy access to insurance products directly to the unbanked population, who may not have traditional bank accounts or access to traditional insurance services.

-Digital wallets combined with contactless technologies such as QR pay, multilingual chat-based interactions, voice interactions, and frictionless authentication will increase the insurance penetration rate in unbanked and underbanked markets such as rural areas.

Real-Life Examples

-M-Pesa offers a variety of insurance products to its users, such as life insurance, health insurance, and education insurance. Customers can purchase these insurance products directly through the M-Pesa platform using their mobile phones.

M-Pesa's insurance services are designed to be accessible and affordable, catering to the needs of customers who may not have traditional bank accounts or access to traditional financial services. The platform enables customers to purchase and manage insurance products seamlessly through their mobile devices, eliminating the need for intermediaries such as insurance agents or brokers.

-Paytm offers various insurance products, such as life insurance, health insurance, motor insurance, and travel insurance, among others.

Through the Paytm app, customers can compare and purchase insurance policies from different insurers, and the process is entirely digital, quick, and hassle-free. Paytm Insurance also provides personalized insurance solutions based on the customers' needs and requirements. Moreover, customers can also manage their insurance policies and claims through the Paytm app or website, making it more convenient and accessible.

-Grab Wallet offers a range of insurance products, such as personal accident insurance, health insurance, and car insurance services. These insurance products are provided by third-party insurance providers and Grab acts as an intermediary between the insurance provider and the customer. Customers can purchase insurance policies through the Grab app and manage their policies and claims through the app. It also offers insurance protection for its ride-hailing and delivery partners, including accident and injury coverage, medical expenses, and loss of income protection.

-LINE Pay is a digital wallet service offered by LINE, a Japanese social media app. It offers various insurance products to its users, including personal accident insurance, medical insurance, and travel insurance.

Additionally, it provides personal accident insurance coverage for accidental death or injury, with benefits such as lump sum payments and hospitalization allowances. Users can purchase insurance through the LINE Pay app, and the policy is issued by a third-party insurance company.

-Cuvva is a UK-based microinsurance company that offers pay-as-you-go car insurance, which is a form of usage-based insurance. Its digital platform allows customers to purchase coverage in under 10 minutes, making it a fast and convenient option for those who need insurance quickly. It also offers flexible coverage options, allowing customers to choose the duration of coverage they need, from 1 hr upto 28 days

OKO provides crop insurance to farmers in the West African region and emerging markets. It uses innovative technologies such as satellite imagery and radar-based technologies to define weather risks with precision, allowing them to offer more accurate and affordable insurance coverage to the farmers.

Oko Insurance has partnered with several digital wallet providers, such as M-Pesa and Airtel Money, to offer a seamless and convenient insurance experience to farmers. Through the digital wallet, farmers can purchase insurance policies and make premium payments using their mobile devices. This eliminates the need for farmers to travel long distances to insurance offices or make cash payments, which can be time-consuming and costly.

So, let’s look at what Insurance digital wallets have in store for the Future:

OmniDigital Wallet: Offers StaticUI (web & mobile), a multilingual conversational interface across channels including WhatsApp, Facebook, Web, and mobile. It helps policyholders to access and manage their insurance policies, including health, home, auto, life, and other types of insurance. It serves as a one-stop-shop that allows customers to easily monitor their insurance coverage, premiums, and deductibles, as well as file claims and communicate with their insurance providers.

QR code management - QR codes can be used to provide customers with quick and easy access to their policy information which includes policy details, coverage limits, quotes, add-ons, claim processing options, etc. Self-service static, dynamic, and embedded QR codes for making premium payments.

Multi X: Supports multiple payment methods, currencies, entities, languages, and algorithms for calculating premiums, claim charges, fees, etc.

Persona-Based AI Recommendations -Identify behavioral patterns from structured and unstructured customer data and hyper-target products based on AI recommendations. Variety of add-on insurance covers that come with multiple benefits such as personal accident coverage, rental car damage coverage, etc.

Manage Beneficiaries: Manage multiple beneficiaries' details such as name, change name, update policy coverage amount, etc.

Policy Renewal: Instant renewals of expired insurance policies by sending out reminders to the prospects using artificial intelligence (AI)-based solutions.

AI-based claim Management: Hassle-free claim reporting, FNOL & updates with image & location capture, and instant coverage assistance with partner ecosystem integration.

Talk to us to see how Insurebuddy enables insurers to innovative wallet solutions with pre-built customer journeys, security, and core adapters.