The insurance industry has also been disrupted by the COVID-19 pandemic. Like almost all industries adapting to the new normal, the sector was also urged to innovate.
For one, to maintain their connection with consumers amid the lockdown restrictions and safety concerns, insurance companies were pushed to shift to the digital space. Hence, the number of consumers who moved online to connect with their agents increase from 25% prior to the pandemic to 57% since the beginning of the pandemic, according to professional services firm EY Philippines.
“One key insight here is that insurance companies have the opportunity to re-examine and adjust their digital distribution and communication offerings to address shifting consumer preferences,” SGV (EY Philippines) Consulting Partner Charisse Rossielin Cruz noted in an article published on the firm’s website.
Given the urge for innovation in the sector during and much likely beyond the pandemic, what does this mean for insurtech?
According to management consulting firm Boston Consulting Group, as the need for digital transformation in insurance sped up amid the pandemic, global insurtech funding rose to $7.5 billion in 2020, increasing 21% from the year prior.
“The record-breaking amount of equity funding invested in the space, as well as the large number of M&A deals, IPOs, and strategic reinsurer contributions, show that technology plays a key role in the evolution of the industry,” the firm said. “It is now time for incumbent insurers to accelerate their digital transformations and acknowledge the strategic role that insurtechs can play in helping them rapidly adapt to, and survive in, a post-COVID-19 world.”
Merging insurance with technology, insurtech refers to the utilization of innovations or technologies that could support in enhancing business operations and efficiency as well as the customer experience in the insurance sector.
In the Philippines, where access to some financial services is a challenge for many Filipinos, it was thought that insurtech could support in improving insurance penetration. BusinessWorld reported last month that some financial technology (fintech) firms were looking to offer microinsurance products via online channels or insurtech to help raise the insurance penetration in the country.
“Interestingly enough, the Philippines scored very low on insurance penetration, but higher on microinsurance penetration. Our job is to really enhance and further penetrate the microinsurance level of the Philippines,” Mario Berta, country manager at insurtech firm Igloo, was quoted as saying.
For Mr. Berta, the insurtech market must be developed, which could help increase the insurance penetration in the Philippines. — Chelsey Keith P. Ignacio