Why are Bite-Sized Insurance Products all the rage?
Products like mobile screen damage insurance, house content insurance, pet insurance, or dengue insurance, are making sense to customers today, and the demand for such bite-sized insurance will only continue to rise.
Several insurers have been introducing life and non-life covers with bite-sized premiums through various digital channels. These innovative bite-size insurance products address immediate issues and are highly effective too. They cater to the needs that were largely unmet in high-cost traditional insurance covers.
Today, the idea of the traditional insurance product has evolved and bite-sized insurance, usage-based insurance, P2P insurance models are in high demand. The new face of insurance is driven by entirely new demands of the next generation, and the ease of digital insurance.
01 Changing Consumer Demography
The demand for bite-sized products is fueled in part by the millennial and Gen Z consumer enthusiasm. They view insurance differently, as their financial vulnerabilities have made the kind, and extent of coverage they need very important to them. Digital-savvy generations seek ease and convenient processes without complex documents, tardy processes, and periodic payments.
Insurtech identifies these under-insured consumers and first-time buyers who want to do financial planning without neglecting their income and lifestyle needs. Their bite-sized products are simpler and affordable versions of the traditional insurance policies with very low premiums. They provide wide coverages and are accessible without any lengthy forms, hidden clauses, and deliver ease of purchase and claims.
02 Increasing Customer Expectations
Customers’ expectations are getting set by digital-only offerings for their convenience and simplicity, leaving them disappointed if their insurance experience does not match their lifestyle and needs. Today’s task-rich and time-poor consumers now expect more than just round-the-clock access, competitive prices, and good quality in their products. Consumers across markets expect personalized high-touch service. Insurance by its very nature had remained a low-touch industry, and so only offerings with high-quality interactions can inspire loyalty.
An effective CX strategy balances personalization, empowerment, and efficiency using a combination of human and digital solutions at every touchpoint throughout the customer journey. And the strategy must be flexible enough to accommodate a wide range of preferences, with hyper-personalization becoming a baseline expectation.
03 Shifting Product Needs
Lesser number of customer touchpoints and increasing innovation in insurance product offerings has ushered non-insurance services, which are a natural extension of the core product. Ecosystem services not only build loyalty but also increase profits.
Insurers follow different underwriting methods for bite-size insurance plans as compared to traditional products, where insurers arrive at the value of premium considering the risk and exposure of the policyholder. In case of bite-size plans, a single premium amount is offered to all customers as the underwriting method varies completely. With deep data science abilities and third-party plugins, fraud mitigation is achieved through a separate process.
For consumers, the key benefit of this is the nominal premium that such products typically charge. Bite-sized insurance not only gives a simple one-click solution to young customers but helps the younger customers get accustomed to the concept of more comprehensive insurance.
04 Blurring of industry Boundaries
Businesses that once seemed disconnected are now fitting together seamlessly with unexpected synergies. Opportunities have arisen for insurers to reinvent customer relationships by providing an ecosystem of services beyond traditional products.
The changing forces have enabled all sectors to redraw its borders with wider product and service offerings. As digital connectedness blurs industry boundaries, opportunities now extend across ecosystems. Hence, an ecosystem-based approach, which involves a set of interconnected products and services related to core dimensions of home, wealth, mobility, or lifestyle, has captured the consumer imagination.
Insurance Market of the Future
The insurance market of the future is driven by technology and personalization, a hallmark of bite-sized products. A holistic view of customers for better interaction through the consolidation of customer information has the potential to drive deep insights into customer behavior. These insights ensure that interactions are personalized, relevant, and meaningful.
As customers are also willing to share their data to avail these customized solutions with personalized pricing, insurers have to create responsible mechanisms to maintain data privacy while they design solutions that meet customer’s requirements.
The rise of bite-sized insurance, be it with a taxi-hailing service for each of its ride becoming a norm, or a dating-app offering broken-heart insurance, we can never know which service will innovate next. But the challenge for growth remains in creating ecosystems with secure data exchange which technologies like blockchain, cloud, and new stakeholders are intersecting in to ensure a better last-mile delivery.