Microinsurance to bridge protection gap
SPECIALIZED microinsurance products that cater to underserved sectors could help address the protection gap in the Philippines, insurance technology (insurtech) firm discovermarket said.
“Overall, while the Philippine microinsurance market has made significant strides in offering basic protection, discovermarket believes that there is still a gap in more comprehensive and specialized insurance products that could address a wider array of risks and provide greater protection to the underserved in terms of financial insurance for those who are challenged with job loss and accidents as well as victims of fraud and cyberattacks,” discovermarket Group Chief Executive Officer and Founder Patrick Bühler said in a recent e-mail interview with BusinessWorld.
For its part, discovermarket said it innovated its distribution through embedded microinsurance products in partnership with local companies.
“We see that embedded microinsurance products are not just a solution but a paradigm shift, offering new possibilities in addressing the protection gap but also having the potential to reshape industries, offering new avenues for protection coverage and empowering individuals and businesses alike,” Mr. Bühler said.
“At discovermarket, we have led this shift with innovative, embedded microinsurance products that address the needs of end-customers, which ranges from cybercrime protection to personal accident protection,” he added.
These partnerships allow the company to manage costs, making its products more affordable.
Embedded insurance also simplifies the application process by eliminating lengthy assessments and personal data disclosure, he added.
“discovermarket’s strategy modernizes insurance by partnering with major brands in sectors like telecommunications and hospitality. discovermarket embeds insurance into their core products, such as connectivity services, enhancing their value and market differentiation while providing added benefits to customers,” he said.
The insurtech firm expects mobile and digital channels to become the primary means for the underserved sectors to access insurance products.
“We’ve observed a promising trend of microinsurance availability on digital platforms, which bodes well for the industry’s future,” Mr. Bühler said.
The Philippine microinsurance market’s growth is still hampered by a lack of consumer awareness, affordability and integration issues, as well as trust and transparency concerns, he said.
“Addressing these gaps can make insurance more accessible, affordable, and tailored to the needs of consumers, given the rapid adoption of smartphones in both countries, ultimately driving higher adoption rates and better protection for all.”
Microinsurance premiums collected by the insurance industry grew by 17.35% to P13.54 billion in 2023, latest Insurance Commission (IC) data showed.
Insurance density, or the amount of premium per capita or average spending of each individual on insurance, rose by 14.37% to P1,907.19 in the first half of 2024 from P1,667.50 a year prior.
Meanwhile, insurance penetration, or premium volume as a share of gross domestic product or the sector’s contribution to the economy, went up to 1.71% from 1.63% previously, based on IC data. — A.M.C. Sy
