How Innovative And Financially Inclusive Insurance Can Empower The Beneficiary It’s Designed To Support
Financial inclusion stands as a beacon of progress, aiming to ensure equal access to vital financial services and education for all individuals. Among these services, insurance holds a pivotal role in safeguarding lives, health, and assets, particularly for those vulnerable to economic shocks. However, despite its significance, insurance accessibility remains a challenge, with marginalised communities facing barriers such as discrimination and limited financial literacy.
In a recent webinar, discussions centered around enhancing financial inclusion through innovative insurance solutions, shedding light on the mission of participating companies like Tribe, Qover and Wakam. Here, we reflect on the key takeaways and discussions, particularly focusing on their contributions.
Understanding Insurance Inclusion:
Insurers shared invaluable insights into defining insurance inclusion and the prevalent challenges hindering its realisation. Insurance inclusion encompasses ensuring universal access to insurance regardless of background, contributing to societal wealth distribution. However, factors such as lack of education, complex processes, and biases perpetuate exclusivity within the insurance landscape.
Their role in assisting various sectors underscores the importance of insurance coverage tailored to diverse needs. For instance, in the gig economy, where freelance workers do not have traditional employment benefits, insurance becomes crucial for both workers, work providers and third parties. However, when optional, uptake remains minimal due to multiple factors such as language barriers and the prioritisation of immediate costs over long-term benefits.
Innovative Solutions for Inclusion:
Inclusive insurance products developed by Qover and Wakam exemplify a proactive approach to addressing the insurance gap. By offering tailored micro-insurance solutions despite regulatory challenges, they promote financial resilience and societal inclusion.
Tribe emphasised the effectiveness of Group policies in fostering inclusivity. These policies transcend traditional underwriting criteria, focusing on purpose-led coverage tailored to specific communities' needs. For instance, group policies for micro-mobility users align insurance coverage with the evolving transportation landscape, ensuring accessibility and fairness. The products do not rely upon the individual risk assessment and underwriting of each beneficiary.
Mission-Driven Initiatives:
Becoming B Corp certified signifies their commitment to social impact, reflecting a shift towards mission-driven insurance. By aligning corporate objectives with societal welfare, initiatives like “Qover for Good” exemplify the transformative power of purpose-led business models.
Technology's Role in Inclusion:
InsurTech offers promising avenues for enhancing insurance inclusion through innovative solutions. By synchronising insurance with beneficiaries' consumption patterns, technology enables activity-based charging and personalised coverage, ensuring fairness and accessibility. What’s more, insurance might be more accessible and paletable if designed for the technologies that are commonplace (like smart phones) aligning to common software applications (such as Whatsapp).
Maximising Loss Ratio for Inclusion:
A target loss ratio emerges as a crucial metric in promoting and proving insurance inclusion. Regulators continue to impose oversight to prevent high-commission or low-loss ratio deals, ensuring that premiums accurately reflect risk and coverage. But a healthy culture is ethical self-monitoring; simply put unacceptably high and disproportionate commissions and/or loss ratios suggests that price should be lowered or cover increased. Insurance inclusion will be enhanced when done.
Challenges and Opportunities Ahead:
The insurance industry has a duty to address challenges such as confusing language and overly complex data input to foster inclusivity. By prioritising user-centric approaches and embracing technology, they can drive meaningful change in the insurance landscape.
In conclusion, fostering financial inclusion through innovative insurance solutions requires collective commitment and purpose-driven initiatives. By embracing technology, aligning corporate objectives with societal welfare, and prioritising user-centric approaches, they can build a more inclusive and resilient insurance ecosystem for all.
All insurance should have two key considerations in mind; a) what is the purpose of this protection? and b) how does this work for the beneficiary? Whilst important, you could say that the rest is just detail.