The un(der)banked is FinTech’s largest opportunity

These opportunities require different strategies for incumbent insurers
and InsurTechs. Two trends are growing to capture the un(der)insured:
1. Highly data-driven customer targeting. Mobile and other
technologies have enabled customer targeting beyond that possible
in the traditional market. This has forced incumbent carriers to move
beyond traditional intermediaries and coverage programs to better
understand evolving consumer behavior.
2. Product bundling. In developing markets, carriers have skipped the
traditional agent/broker model and leveraged mobile and
nontraditional partnerships. Several examples exist where carriers
have formed partnerships to access an existing customer base for the
cross-sell opportunity. Consumer trust is also a factor here when
considering the trust of partner brands. In some instances, carriers
are also able to develop a deeper understanding of the purchasing
habits of this untapped customer base.
Across both trends, digital delivery is the enabler of developing
market success. By integrating the sales activity into an existing digital
purchase made via mobile, carriers can mitigate the cumbersome
nature of shopping among multiple carriers and try to overcome the
negative consumer attitudes toward insurance products.
A secondary reason for nontraditional partnerships is to target
developing markets where physical infrastructure is lacking. In addition
to mobile partnerships, companies as varied as the Chinese search
engine Baidu and Jumia, Nigeria’s online retailer, have formed
partnerships to bundle products and essentially become a channel for
insurance sales. Customer acquisition through these channels is more
effective from both the physical infrastructure and agent network sides.
Integration of the insurance purchase at the point of sale should allow
for insurance purchases to become more relevant and commonplace.
Bima, an
InsurTech
company based
in Stockholm, is
an example of
novel product
bundling.
The company
delivers
microinsurance
in conjunction
with the topping
up of mobile
devices.
New approaches to close the gap ultimately revolve around costs.
Blockchain, the technology that enables a decentralized ledger of all
transactions across a peer-to-peer network, and P2P models are
emerging as approaches to closing the insurance protection gap by
reducing the overall cost and simplifying the process (see Exhibit 6,
next page). Scalability will remain a critical factor for efficiently priced
insurance, and the insurance product will still have complex actuarial
work on the back end. However, the perceived ease of transaction
should lead to increased penetration of the un(der)insured. Blockchain,
for example, enables seamless integration into various sales channels,
potentially creating the ability to rapidly expand a customer base.
18 Strategy&