What will insurance tech change
Insurance Revenue explains why microinsurance is transforming the insurance industry and making insurance more accessible to everyone.
Traditional insurance typically comes as one-size-fits-all policies. Subscribers pay for a policy that encompasses a broad range of circumstances, regardless of whether or not the policy holders will ever have need for it. While people typically are covered for the basics of what they need, they also may not want to pay for extras that they may never use. To accommodate people interested in tailored insurance policies, more insurers are offering microinsurance.
Microinsurance used to be geared toward workers who made less than $4 per day. However, as more people became interested in downsized policies, this coverage began to grow significantly. In 2010, only 76 million people around the world purchased microinsurance policies. However, by 2013 that number had grown to 260 million subscribers.
Given the exponential growth in interest in microinsurance, more mainstream insurers are making such accommodations available. People pay for the coverage they need without worrying about spending money on services that they might never utilize during the time that they own the policy. For example, a farmer who wants crop insurance may favor a microinsurance policy that pays him or her if his crops fail because of a lack of rain. However, if it does rain and the crops grow well, the policy would not pay out, thus saving him and the insurer alike money.
Likewise, people who need car insurance, but only drive occasionally may be interested in microinsurance that covers a minimal amount of miles each month. If the insured driver exceeds the number of miles covered, he or she would pay the overage. The mileage could be tracked with a device issued by the insurer that could be installed in the vehicle.
Subscribers increasingly prefer microinsurance because it covers precisely what they need without costing them extra money. They also like that these policies tend to offer more personalized interactions between the insurer and the customer. Larger traditional policies tend to be handled by multitudes of departments and personnel at an insurance company. Microinsurance, however, does not require the level of scrutiny and handling that come with traditional policies.
As the interest in microinsurance continues to grow, insurance agents are being encouraged to realize the potential that comes with issuing such policies. Many agents typically prefer to sell large, traditional policies because of their commission and earning potential. However, as more people become interested in microinsurance, agents may make up for the lack of commission and earnings found with larger policies with the quantity of microinsurance sold to a growing number of interested clients.
We at Insurance Revenue, have already seized upon this opportunity. We have taken advantage of the technology and marketability of microinsurance and welcome input from our customers and clients. With the breakthrough products that we continue to create for your customers, we look forward to the potential that awaits both our company and our clients in the future.
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