Supportive government policies and a COVID-enforced spike in digital activity are pushing consumers – and their insurance needs – online.
The growing presence of e-commerce and digital wallet apps presents opportunities for innovative partnerships between insurers and digital platforms to bridge the USD 498 billion health protection in India, Indonesia and Malaysia, according to the latest Swiss Re study.
The Swiss Re Institute study, titled "Going Digital – Insights to Optimise Consumer Appetite for Online Insurance" surveyed 1,800 consumers in India, Indonesia and Malaysia in June 2020 to understand their attitudes toward digital platforms and perceptions of buying insurance online. The survey also tested their acceptance of selecting and purchasing six life and health insurance products tailored to fit digital platforms.
The three Asian economies represent a combined population of over 1.5 billion people, with a burgeoning middle class increasingly dependent on digital to drive their decision making.
Survey respondents were household decision-makers aged between18 and 65 and had used digital platforms at least once within three to six months prior to being surveyed. These digital platforms include e-commerce apps/ websites, payment/ digital wallet apps, health-tracking apps, connected commuter platforms, among others.
Enforced lockdowns or restricted movements in these three countries have pushed consumers to begin looking digitally for solutions that may not have been there prior to COVID-19. This confluence – COVID, increased digital penetration, faster download speeds and smarter phones – are changing the insurance purchasing landscape in these countries.
“Health and safety measures intended for curbing the spread of COVID-19 have now driven a clear paradigm shift towards digitalisation in the post-virus era," said Marianne Gilchrist, Managing Director, Head of Globals and Life & Health South Asia, Swiss Re.
"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,“ she said.
Increasing receptiveness to buy insurance digitally
The survey results indicate that digital platforms have high penetration rate in the three surveyed markets, with an average 68% using these channels at least once a week.
Among them, e-commerce apps or websites (such as Amazon in India, Shopee in Indonesia and Malaysia) are the most popular, used by 85% of Indian respondents and close to one-thirds of respondents in Indonesia and Malaysia at least once a week.
Digital wallet and e-commerce apps are suitable for online insurance distribution
There is also a growing trend in seeking insurance information online and buying insurance digitally. Traditional channels, such as agents, brokers or referrals, are still the primary channels for insurance-related information searches in the three markets. However, the survey shows that payment/digital wallet apps will become the primary channel for insurance information for India and Indonesia in the future.
In addition, an average of 70% of respondents in India, Indonesia and Malaysia expressed interest in using online channels to purchase insurance. Among the different types of digital platforms, consumers in India and Indonesia indicate a stronger preference towards purchasing insurance through digital wallet platforms, such as Google Pay in India, OVO in Indonesia; while Malaysians prefer to purchase from bank or insurer websites or apps. These preferences are driven by the respondents' trust in the platform. The survey reveals that Malaysians put greater trust in traditional online channels from banks or insurer websites (68%) while respondents in Indonesia (50%) and India (49%) rank payment/digital wallet apps as most credible.
Combining online and offline customer support will be key
When respondents were asked why they want to purchase insurance digitally, ease of application and getting the best premium rates are the top reasons across three markets. However, respondents also expressed various concerns when buying insurance online. 45% of Indian respondents find it hard to decide on the best product, 57% of Malaysian respondents wanted an agent to help explain the terms while half of Indonesian respondents were not sure who to approach when they needed help.
“Our survey results reveal that while digital insurance is becoming more popular, offline support is still necessary due to the need for guidance and assistance. It is important for insurers to adopt an omni-channel approach to complement online customer journey with personal assistance to address consumer concerns.” said Ms Gilchrist.
Strong preference for simpler critical illness and medical reimbursement insurance on digital platforms
The survey tested six hypothetical life and health products to gauge consumer interest in insurance offered through different digital channels. They include medical reimbursement insurance, cancer reimbursement insurance (to cover cancer-related medical expenses), critical illness pay-per-use insurance, cancer insurance (pays a lump sum upon cancer diagnosis), hospitalisation cash – parametric haze/ smog protection and income protection for gig workers. The results indicate that critical illness and medical reimbursement insurance sold through digital channels are the most popular, followed by hospitalisation cash and cancer reimbursement.
Critical illness pay-per-use insurance has the highest chance of success for digital distribution in Indonesia and Malaysia, as consumers find its bite-sized transaction amounts palatable. The simpler cancer reimbursement product is also preferred over cancer lump sum insurance, especially in Malaysia.
Indian consumers (nearly 80%) are strongly inclined to purchase hospitalisation cash and critical illness pay-per-use insurance through digital platforms, but the other four products also have relatively high levels (over 70%) of interest.
Opportunities for insurers and digital platforms to leverage insurance solutions
The survey illustrates partnership opportunities between insurers and digital platforms that will benefit the entire insurance value chain and unlock demand from new insurable risk pools.
Partnering and working with digital platforms and ecosystems will give insurers access to millions of consumers that are often under-protected, especially in markets across Southeast Asia. Insurers should leverage data collected from the platforms, such as health tracking apps, for personalised wellness programmes and a more holistic risk assessment by incorporating lifestyle factors like physical activity and sleep. This could transform life and health insurance, where risks evolve over time and individual behaviours influence health outcomes.
Meanwhile, digital platforms can benefit from business diversification and stronger customer loyalty by offering financial services online. Partnerships across industries can also offer digital platform expertise in different domains at low cost of failure and minimal risk to their mainstream offerings.
Digitalisation unlocks more opportunities for insurers to continually improve the customer experience, starting from digital distribution and predictive underwriting to efficient claims management. At the same time, insurers should personalise their digital offerings to drive uptake. According to the survey, majority of the respondents (79%) are willing to share some form of personal data for a more relevant experience. Around 20% are willing to share such information only when there is a premium discount.
“In 2021, it will be a priority for insurers to carefully calibrate their digital strategies to capitalise on the opportunities offered by digital platforms. Leveraging Swiss Re's underwriting expertise and risk management experience, insurers and platform partners can not only learn but also apply their consumer insights to enable more customers to narrow their protection gaps.” said Ms Gilchrist.