Personalised protection in the digital age

ByHindustan Times
Sep 18, 2023 02:40 PM IST

This article is authored by Surjendu Kulia, co-founder & CEO, Zopper.

Indian consumers are increasingly selective and tech-savvy about the quality and experience of their lifestyle choices, which is why they prefer their payments and financial safety in the form of byte-sized solutions. Typically, if we were to think about insurance, our thoughts mostly lead us towards life, health, property, motor, or jewellry insurance. These covers are usually expensive and are long-term in nature. However, Indian consumers today avail a wide range of products and services, whose use varies from person to person and time to time, depending on the context. This is where contextual insurance comes into the picture.

Representational image - Digital privacy (Getty Images/iStockphoto)
Representational image - Digital privacy (Getty Images/iStockphoto)

Just as its name indicates, contextual insurance offers cover for risks that could arise in specific situations. Travel insurance, for instance, is a good real-life scenario to consider. Passengers can book their tickets online, and they are given a digital option to also book a byte-sized insurance option so that they can avail a refund in case of a flight cancellation or get complimentary food and accommodation until the time of their rescheduled flight.

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Convenience is a key enabler for expediting the adoption of embedded offerings that are delivered instantly. There is no hassle or stress of going through paperwork. Popular examples of contextual insurance also include the protection offered on the purchase of smartphones or household appliances, and the insurance that is offered with car rental packages.

Lately, we have seen the emergence of cyber insurance, safeguarding people against liability in the case of an attack or breach involving sensitive data. Easy-to-manage, affordable premiums make cyber insurance a must-have solution as most tech-savvy consumers would have no hesitation in signing up for it. Today, most Indian consumers – many of whom are millennials – spend a sizable portion of their income on travel, leisure, technology, lifestyle purchases, and new experiences. Micro-insurance offerings draw their curiosity and interest as it is instant, on the go and offers a smart choice to cover any potential risks or losses that they might entail with a small-sized, one-time insurance policy. That’s not to say that contextual insurance is meant only for discretionary purchases; it can very well be used to complement traditional, long-term insurance plans.

A growing market for contextual insurance is a testament to the massive potential of such offerings. In fact, McKinsey & Company predicts that contextual insurance will drive further insurance penetration in Asian markets and grow on to become a $270 billion market by 2030 in terms of gross written premiums.

Today, personalisation drives every aspect of the consumer experience, and it is largely possible due to technologies such as Artificial Intelligence, Machine Learning, and Big Data. Contextual insurance solutions can easily be integrated into existing customer management systems or the point-of-sale systems of service/product/experience providers through open application programme interfaces, or APIs. These APIs can help insurers analyse customer data – such as previous transactions and browsing history – and offer a customised policy at the point of sale. Also, importantly, they allow for customer engagement across a range of touchpoints including laptops, smartphones, and call centres.

Technologies such as Artificial Intelligence, Machine Learning, and Big Data enable deep, data-based understanding of customer behaviour and shape the development of tailor-made offerings for different customers and varying customer segments. This is important because consumers naturally prefer products and services that are aligned to their lifestyle choices, spending preferences and financial goals. A brief analysis of consumer-centric data, spanning lifestyle habits to career moves to travel preferences, highlight that insurers can create an accurate risk profile for every person, thereby determining a fair coverage and premium for every individual or group.

Insurers, banks, retailers, e-commerce platforms, and different types of product and service providers are increasingly partnering with InsurTech firms to develop smaller, personalised insurance products. These customised offerings can be extended to consumers through multiple digital touchpoints. Affordable, relevant, and customised coverage is delivered to customers instantly at the point of sale; eliminating the need for them to go looking for it. Till the exact moment when they are presented with coverage options, many consumers are unaware of how it can shield them from unforeseen situations.

Contextual insurance is primarily about protecting the interests of consumers in a world where risks can be varied and occasionally unforeseen. It will be a key growth driver for the insurance industry and an innovation hub that will witness solid consolidation in the coming decade. Undoubtedly, with personalised customer experiences increasingly becoming the touchstone of business success, contextual insurance could emerge as the game-changer for the industry. In a fast-evolving and increasingly digital world, contextual insurance serves as an essential safety net that consumers, seeking transparency, simplicity, and personalisation, will be more than happy to pay for.

This article is authored by Surjendu Kulia, co-founder & CEO, Zopper.

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