The microinsurance industry in the Philippines has gained traction due to its affordability, accessibility, and the rising need for financial protection against unexpected events. Patrick Bühler, Group CEO and founder of discovermarket, shared with Back End News in an email interview the factors fueling this trend, highlighting the role that microinsurance plays in bridging the gap in financial protection, especially in Southeast Asia (SEA).
Insurance has traditionally been viewed as a costly service, often placing it out of reach for many low-income individuals and small businesses.
Bühler pointed out that one of the biggest challenges of insurance, in general, is making it both affordable and accessible. Microinsurance addresses this issue by offering smaller, more focused coverage at lower premiums, allowing a broader segment of the population to benefit from financial protection.
“Affordability and accessibility is the biggest challenge of insurance in general,” Bühler said. “Apart from this, we see that the rising environmental catastrophe frequency and frequent cyberattacks highlight the urgent need to mitigate losses, enhance financial resilience, and ensure economic stability.”
Beyond the Philippines, there are significant protection gaps in many markets in the SEA region. Microinsurance, with its lower premiums and targeted coverage, is designed to bridge these gaps by providing essential protection for those most vulnerable to economic disruptions.
Digital platforms
Digital platforms have been instrumental in the growth of microinsurance. As connectivity and digital technology become increasingly integrated into daily life, these platforms present new opportunities to make insurance more accessible. Bühler refers to these digital platforms as “trusted brands” that help fight the protection gap through market pressure and the ability to offer insurance close to their core services.
“If you purchase a laptop, you can get bundled insurance for the device at the point of sale, without providing further information and without being overinsured,” Bühler said.
This type of embedded insurance, integrated seamlessly into the purchase process, reduces barriers to access and allows customers to opt for coverage specific to their needs without being overwhelmed by unnecessary or irrelevant options.
These trusted brands, Bühler explained, are crucial in making insurance accessible to the masses, as they can offer insurance products directly linked to their core offerings. For customers, this provides an immediate and relevant option to protect their purchases or activities, whether they are buying a new device or booking a hotel stay. By embedding insurance into everyday transactions, these platforms make the process more intuitive and customer-centric, fostering trust and relevance in the process.
Microinsurance trends
Microinsurance’s growing popularity is not limited to the Philippines. Globally, the market is experiencing significant growth, highlighting its potential as an attractive insurance model. Citing data from Data Bridge Market Research, Bühler said the global microinsurance market, which was valued at $78.4 billion in 2021, is projected to reach USD 131.71 billion by 2029, with a Compound Annual Growth Rate (CAGR) of 6.70% from 2022 to 2029.
Bühler identified the most popular microinsurance products globally, which focus on life and health, property, agriculture, and credit & loans. However, he emphasized that growth in the microinsurance market hinges not just on creating new products but also on cultivating trust and relevance among customers. This approach is particularly effective through embedded insurance, which can be seamlessly integrated into customers’ daily transactions.
In the Philippines, the microinsurance sector has seen growth in recent years. By 2023, it covered 56.62 million lives, with total premiums amounting to $240 million (P13.54 billion) — a 17.35% increase from the previous year. Mutual Benefit Associations (MBAs) dominated the market, insuring 28.6 million lives and collecting 55.26% of the total premiums. Meanwhile, life and non-life insurance sectors contributed 27.05% and 17.69% to premium collections, respectively. Despite these strides, Bühler believes there is still a gap for more comprehensive and specialized insurance products that can address a wider range of risks.
“Overall, while the Philippine microinsurance market has made significant strides in offering basic protection, we at discovermarket believe that there is still a gap for more comprehensive and specialized insurance products,” Bühler said.
Microinsurance for low-income market
Traditional insurers often struggle with relevance, accessibility, affordability, and trust due to their broad, generalized approach. Microinsurance, on the other hand, is tailored to meet the unique needs of low-income individuals and small businesses. discovermarket uses anonymous customer behavior data to identify the right product for each customer and proposes a specific solution based on the information gathered. This data-driven, customer-centric approach allows insurance to be seamlessly integrated at the point of purchase, ensuring it is tailored and relevant.
For consumers, embedded microinsurance simplifies the application process by eliminating lengthy assessments, high premiums, and extensive personal data disclosure. discovermarket’s vision is for insurance to be so seamlessly delivered that customers can enjoy peace of mind without having to actively think about their coverage.
Bühler emphasized that insurance should be “effortlessly tailored and delivered at the point of purchase.”
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