Insurance protection gaps exist on a global scale, senior insurance executives discuss what the industry can do to improve this and enact a positive social impact.
In partnership with the Association of British Insurers (ABI), FinTech Global recently held a “Tech for Good” event to hear from experts on the latest developments in making insurance more inclusive. A special partner event to the Global InsurTech Summit 2023, senior insurance executives came together to discuss how insurance can be improved to widen coverage for all and enact a positive social impact.
After an introduction from Mervyn Skeet, director of general insurance policy at ABI, the moderator Anushka Patchava, former deputy chief medical officer at Vitality, introduced the panellists.
Bringing their expertise to the stage was Mathilda Strom, co-founder and deputy CEO at BIMA; Vaibhav Kashyap, co-founder of Wellx; Natalia Svirshchevsky, head of strategy and PMO at AON and Taffy Jo Mayers, global proposition leader, commercial P&C and specialty lines at Willis Tower Watson.
The discussion began with the introduction of the key focus: insurance protection gaps. This is essentially the difference between the amount of insurance that is economically beneficial and the amount of coverage that is actually purchased.
Patchava, noted that in the UK there is a clear protection gap between those that can afford or are offered health insurance as part of their employment; and those that can’t or aren’t offered it. “With increasing pressures on the health system as a whole, this protection gap leads to in effect a two-tiered health system, increasing societal inequality, and poorer health outcomes for the population as a whole,” she said.
Patchava added that it is our social responsibility to change that, through designing and delivering products that not only target wellness and prevention but are affordable and accessible.
“As a society, we have a responsibility to build more inclusive products where we don’t bias against cancer survivorship, mental health or chronic conditions as now most of the population will have one or more of these.”
Protection gaps and pre-conceived notions of risk
Working to close protection gaps is all the more vital when considering that insurance is essentially the social and economic safety net of society. Yet these gaps exist across the world, and across a multitude of sectors.
In light of this, the panel drew attention to some of the insurance industry’s shortcomings when it comes to how it perceives risk. For example, in the health insurance industry, insurers are not underwriting very well to cater to cancer survivors, or those dealing with chronic health conditions.
Tackling this will require a significant mindset shift, the panel agreed. According to BIMA’s Strom, this involves taking a “scalpel-like” approach to pricing mechanisms and re-thinking pre-conceived notions of risk. “Sticking with the healthcare industry as an example, insurers would do well to take a more holistic view of the healthcare journey. Insurance may cover its policyholder if they require surgery, but the events leading up to the event as well as the aftercare should be considered of equal importance,” she said.
For Wellx’s Kashyap, insurers need to update their definitions of insured risk. “Being insured needs to be a positive experience that delivers care, prevention, and security. Mitigating the risks that are understood and perceived by customers is becoming increasingly important and insurers will need to innovate on their definition of insured risk to keep up.”
The role of technology
Technology is vital in these efforts to transform pricing mechanisms and re-think risk. It can significantly help in understanding what needs to be delivered in the market.
However, the panellists noted that technology is not the solution in itself to closing protection gaps. By focussing too much on technological innovation, the industry could lose sight of the importance of keeping products simple. Just by making insurance digital, won’t ensure its success.
BIMA’s Strom said, “We realised very early that technology should be used to make the experience more convenient and frictionless for the customer and more scalable for the business, but it cannot solve all of the problems of customers who have never had insurance before. For that, in emerging markets, some element of physical interaction is still needed to drive understanding and trust.”
It can oftentimes be easy to think that a “shiny new tech solution” could be the answer to capturing customers, Strom continued, but this is not the case. Technology is more important in the back-end processes.
According to Patchava, although technology can play a powerful part in increasing accessibility, particularly given very high, near 100% smartphone penetration in some markets it is not the only solution. “The success of insurance for underserved populations starts with raising awareness, rolling out education and building trust within communities – and ends with proving value,” she said.
Nevertheless, Willis Tower Watson’s Taffy Jo Mayers was keen to stress that innovation and transformation is a team sport. “Ensuring technology enables and data informs inclusive practices and access to underserved, underrepresented or excluded populations and commercial risk will require collaboration between visionaries, disruptors, legacy institutions, policy makers and governments,” she said.
Building trust and relationships
The panel highlighted the importance of building trust and relationships, in order to access populations or business that are historically underserved by the insurance industry. To do this, insurers should be going into the communities in which they are trying to serve to truly understand their motivations. It was also suggested that insurers would do well to invest in communities where they may not even be writing insurance, to build trust first and foremost.
Building trust may go hand-in-hand with advancing insurance education. Customers need to be able to understand the product and its value. Physical sales could be helpful in such scenarios, the value of individuals or businesses being able to talk through their concerns or questions should not be underestimated.
BIMA’s Strom said, “Customers new to insurance, especially those we encounter in our markets, are constantly asking us – what do I get for it? – the value has to be clear and tangible. And I think this goes for all consumers these days, regardless of which countries they are in.”
Alongside building trust, the panel began to conclude their discussion by acknowledging that product innovation will prove to be of vital importance in closing protection gaps. The insurance industry, at least from the perspective of the commercial carrier, can sometimes be guilty of a lack of willingness to innovate thoughtfully in products. Insurers have a tendency to be risk averse, as opposed to risk-aware and thoughtful. The insurance industry would do well to adopt a culture of meeting the customer where they are at.
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