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COVID-19 altered the world's financial landscape in 2020. It dramatically boosted mobile payments last year particularly in the emerging markets of Asia Pacific[1] and Latin America[2]. Data from these regions showed that the pandemic contributed significantly to the usage of mobile payments and mobile wallets. This phenomenon is a major force in opening the door to financial inclusion for the mass market segment.

Mobile payments have already brought billions of new consumers into the digital economy, with help from a wide variety of digital payment services. They enable many consumers to make financial transactions online for the first time. Boku, a mobile payment processing company, reported that more than 2.8 billion mobile wallets[3] were in use in 2020 worldwide. The report forecasts this number to increase by nearly 74% over the next four years, to reach a total of 4.8 billion by the end of 2025.

 

Unbanked segments will shrink soon, thanks to digital

The unbanked segments in Asia Pacific and Latin America  remain large, although some countries in Latin America[4] have narrowed the gap due to the pandemic. We believe that with increased smartphone usage, internet access, thriving entrepreneurship, a flood of venture capital and strong innovation, a booming digital economy is shaping up.

 

Companies like Grab, Revolut, Rappi, Mercado Libre and Nubank are opening their financial doors to the unbanked. These companies create new possibilities in financial services for billions of businesses and people who previously had access to only a cash-based economy.

 

As global mobile wallet users are predicted to reach 1.6 billion in 2023[5], with an average transaction value per user to hit $1,289, that’s good news for everyone.

 

 

 

Implications for insurance:  new possibilities, new ways of doing things

What are the implications of these changes for insurance? We need to create a new “possible.” How? Below are some strategies on how we can do that effectively:

  • Financial inclusion: Swiss Re Institute estimated that the insurance protection gap worldwide hit US$1.4 trillion[6] in 2020. The Geneva Association has defined insurance protection gap as the difference between the amount of insurance that is economically beneficial and the amount of coverage actually purchased[7]. One of the elements creating this gap is the lack of digital payments and bank accounts. With the expansion of digital payments to billions of people, however, more consumers can take advantage of the digital economy. These consumers can now pay for protection for their businesses, families and properties while building their wealth.  
  • Embedded offerings: As part of the platform and triggered by data, the insurance protection experience has to be contextual. An insurance offering can be embedded into or in conjunction with transactions relating to the purchase of goods or services that users are making. That will make the offer meaningfully related to the need for these services and add real value to it.
  • New value proposition: Plugging a complex product designed for the offline world into the digital world doesn’t usually work. Something new needs to be explicitly created for the online world. Working closely with digital partners enables Chubb to create unique, relevant and disruptive value propositions, like our life insurance offering with Nubank in Brazil, trip delay insurance (Ride Cover) with Grab in Southeast Asia, and small commercial insurance products with CoverWallet in France.
  • Micro-insurance: While many new mobile wallet users do not have large sums of money in their wallets yet, they do have small amounts. To help them understand the need for insurance, the products must be simple. Ride Cover, distributed by Grab, offers a trip delay insurance at less than .25 USD, paying out USD4 voucher for late pickups as well as a lump sum payout for accidental death for passengers in Southeast Asia is a fine example.
  • API integration: To scale and make the business model efficient, the experience needs to be 100% digital, integrated with a seamless user experience.  But you'll need a solid and secure API infrastructure to do it. That enables companies to trigger and embed at scale in any digital experience with efficiency.  
  • Data Analytics: Analytics and data drive product innovation and enhancements. There should be ongoing optimisation based on customer demands. Data also helps create new products. For example, Chubb launched a new travel insurance known as “pay as you roam” globally. It provides travel insurance from the time your network operator detects that you're traveling outside your country. That, in turn, created a new insurance experience with carriers using data like no one has used it before.

 

 

Chubb is making the embedded insurance journey easy for partners

Chubb is a market leader in this journey. It is focused on creating new possibilities for insurance by partnering with leading consumer brands in retail, e-commerce, banking, fintech, airline, telecommunications, and other industries.

We are actively leveraging the full capabilities of Chubb Studio®, a global platform that simplifies and streamlines the distribution of insurance products for consumers. We collaborate with various third-party brands to add digital insurance options to their products and services through a website, a widget, or an instance of deep integration, whichever works best to define the new possible, with all involved parties committed to structuring transactions in ways that help ensure they are compliant with applicable insurance laws and regulations.

At the end of the day, the unbanked customers must finally be able to access simple, affordable, and relevant insurance products so that they are protected.

 

 

Disclaimer - The content of the above article is not intended to constitute professional advice. Although all content is believed to be accurate, Chubb Insurance Singapore Limited (Chubb) makes no warranty or guarantee about the accuracy, completeness, or adequacy of the content of this article. Users relying on any content do so at their own risk.

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Partner with us

If you are keen to learn how Chubb can collaborate with you, get in touch with:

Serene Neo
Division Head of Accident & Health
Chubb Singapore
serene.neo@chubb.com

 

Tulio Puente
Division Head of International Personal Lines
Chubb Singapore
tulio.puente@chubb.com