INSURERS said they are adjusting to the economic damage sustained by their clients during the pandemic by evaluating products like pay-per-use auto coverage and offering schemes that feature smaller payments.

The Philippine Insurers and Reinsurers Association (PIRA) said pay-per-use in auto insurance is a timely response to higher unemployment.

“With the domestic unemployment rate, fewer people can afford annual premiums. The premium may be smaller but the risks we’re going to cover are also reduced. With that the volume should also increase,” PIRA Executive Director Michael F. Rellosa said in a recent webinar.

The Insurance Institute for Asia and the Pacific (IIAP) said that the pay-per-use scheme also reflects the driving behavior of consumers.

“There are many ways to skin a cat. Consumes usually insure the most expensive car they’re going to use. In the Philippines, your most expensive cars are used only on Sundays, so just insure it for weekends,” IIAP Executive Director Francisco D. Papa, Jr. said in the webinar.

PIRA sees mobile applications like chatbots driving growth in pay-per-use auto insurance, saying the digital tool has the potential to “grow on you” over time.

Amir Shevat, the webinar’s guest speaker and a former Microsoft Corp. and, Inc. executive, said more chatbots are now designed to offer low-cost insurance in small transactions.

“In our study in India, the minimum amount for apps at that time was $1. We switched to 5 cents minimum and they were willing to pay but are willing to pay in small chunks. Look at how people are willing to spend less but transactions (that) will last for a long time,” Mr. Shevat said.

He said technology firms are upgrading chatbots to equip them not also with human-like intelligence but also feelings. He added chatbots can now detect stress or sadness in users, potentially helping insurers adjust their selling pitches.

“They give it human traits and so the user will not understand it’s a robot but just a service that is always polite and willing to listen to their long stories. We found a lot of people tend to have positive feelings toward chatbots which use emotions in the text,” Mr. Shevat said.

He said chatbots will likely attract younger clients.

“For young people, talking to software is more intuitive. For voice-enabled gadgets like Alexa and Siri, they tend to go to the young population,” Mr. Shevat said. — Kathryn Kristina T. Jose