The country needs a paradigm shift to increase the adoption of insurtech, which was developed for the benefit of the workforce, especially, freelancers. In an email interview with Back End News, insurance solutions company Gigacover highlights the essence of adopting digital solutions to increase financial literacy.
While insurtech is an emerging industry in the Southeast Asian region, the Philippines is still a traditional insurance market and the penetration rate of insurtech is only about 2%. But the more adaptive generation, the Gen Z or the digital natives, has the potential to change it as long as insurance companies are open to leveraging solutions that would serve this market.
“With a median age of 25 and a population of tech-savvy millennials, more Filipinos have been open to purchasing affordable insurance on digital platforms,” said Amerson Lin, co-founder and CEO, Gigacover. “With the rise of freelancing and the government’s push to provide adequate coverage for gig workers, more businesses have also been looking for customizable protection plans that non-regular employees can enjoy as a benefit.”
The previous years proved that the market for digital products and services can grow. Organizations can meet the demand for affordable and accessible insurance given the right platform to reach the target market.
“Partnering with Filipino freelance communities, we actually get to understand what type of insurance products would address their current needs and lifestyle,” Lin said. “As the industry improves coverage of more underserved communities (i.e. educational institutions and farming communities), insurtech companies like Gigacover need to continue improving our technology to address the protection gaps of these communities.”
Gigacover suggests that one way to improve the penetration rate is for the middle class to be brought into the insurance fold by offering affordable and accessible products that address their current needs and lifestyle.
“Financial literacy is also one of the biggest hurdles in improving protection across the country,” Lin noted. “While the pandemic alerted more consumers to think about their safety nets, only a few actually act on them. The government could also assist with deploying regular financial literacy and digital adoption programs to underserved segments that need assistance.”
With a handful of consumers recognizing the ease of use of insurtech, Lin pointed out that among the insurance products available, embedded insurance is doing quite well in the Philippines.
“These are micro insurance products that are bundled together with other purchases, e.g. return shipping insurance for e-commerce purchases or micro credit-life insurance together with a small loan,” Lin explained. “However, these products tend to be small and have lower coverage.”
Lin noted that adjusting the coverage of HMOs (health maintenance organizations) will be highly beneficial. However, he recognized the difficulty of getting this product to market.
“Our healthcare package provides affordable coverage at top-of-the-line health facilities giving our users access to general physicians and specialists while keeping costs affordable,” he said.
Insurance companies, especially the traditional ones, can help drive up insurance adoption through insurtech. Some technologies have the ability to make services affordable making it accessible to a wider market than before.
“We partner with insurance companies and use our technology to drive down costs of premiums and offer more affordable products to the mid-income segment,” Lin said. “As a technology provider, we are also able to offer fully customizable products that insure them for what actually matters.”
Gigacover started its operations in Singapore but has expanded regionally, including the Philippines. It has delivered innovative products to the market, such as freelancer earnings protection, collision damage waiver, and aggregate parcel protection.