Why Microinsurance?

Published in

PAL Network

6 min readMay 14, 2019

Insurance is defined as a “risk-transfer mechanism to ensure full or partial financial compensation for the loss of damage caused by event(s) beyond the control of the insured party”.

Insurance is supposed to be simple. You pay an insurer a sum of money a single time, monthly or annually, and you’ll be guaranteed a form of monetary compensation if something bad happens.

Insurance, as a product, has changed over time. Traditional policies were underwritten based on various risk factors and circumstances, eventually coming up with the adequate coverage to match the premium amount the policyholder should pay. Of course, the higher the risk you face, the more the premium you’ll have to pay. Insurance companies offer a full suite of coverage within the same policy, amalgamating to a price tag considered the premium. Besides life insurance, general insurance also covers various types of risks, from earthquakes to cars and even pets.

The right policy for you

There are so many to choose from with insurers offering similar coverage and competitive pricing. Thankfully, there are plenty of comparison websites and applications that allow you to select the right policy for you.

Life insurance is another beast to tackle. A very large portion of people put off purchasing life insurance since they believe that they are still young and healthy. Sadly, death can truly be unexpected, and when the unfortunate event occurs, can leave their family with the huge liability of unpaid debts, which can include mortgage or credit cards.

There are also multiple types of life insurance to choose from. Term life insurance, where you pay premiums and be covered for a fixed duration of time. Whole life insurance, where you pay premiums for a fixed number of years and be covered for the rest of your life; and at least until 99 years for some. Of course, life insurance comes in more variations.

What about microinsurance?

What’s the difference? Micro, meaning small, is exactly what it refers to; mini insurance policies, with small premiums for specific coverage types. Typically developed to target low-income households and individuals, microinsurance is aimed to protect the poor with the basic coverage at a very small premium.

But that’s not necessarily the only case.

With microinsurance, one can pick and choose the types of coverage he or she finds necessary in traditional insurance coverage. The millennial generation is all about owning autonomy and demanding for more personalisation — while not forgoing money-saving hacks. (Think: like an ala-carte buffet where you can pick and choose your favourites from a long list of items on the menu).

With that being said, there’s still a lack of demand for microinsurance products, both developed and developing countries due to the lack of proper education on this fairly new emergence of insurance products.

PAL Network’s Microinsurance

Maybe it’s ingrained into us that the cheapest product can always substitute the more expensive ones since it’s good enough. That’s not quite the function insurtech startups (like PAL Network) intend to put forth.

Microinsurance and traditional insurance should be cross-functional. While traditional life and general insurance cover for the long-term, big-picture assets — microinsurance will supplement as coverage of risks that are typically not covered by traditional insurance.

PAL Network brings you the best bang for your buck with six types of microinsurance products: RidePAL, ScreenPAL, Flight Delay, Flight Cancellation, EarthquakeProtect and CancerPAL.

RidePAL

The innovation of on-demand ride-hailing applications like Uber, Grab and Go-Jek has effected a long-term, everyday-use as users can now “order” a ride at a specific location as and when they want it. More importantly, ride-hailing services offer much more competitive prices.

But competitive pricing is still affected by demand and weather conditions. Ride-hailing fares typically surge at peak hours or during rain/snow.

RidePAL covers the surcharge of ride-hailing fares when a rain of over 4mm is detected at a pickup location. For just a US$1 premium per day, you can claim up to US$5.

ScreenPAL

Fun fact: About 66.72% of the world owns a smartphone. Since the day Steve Jobs dropped the Apple iPhone in 2007, the smartphone industry has undergone a whirlwind of evolution: integrated with Artificial Intelligence, state-of-the-art processors — you name it.

The future of smartphones is full of wonders and anticipation promised with better compatibility and bigger screens. The inevitability of it all is smartphones still incur damages. If you are a smartphone user, ScreenPAL is for you.

For US$40 a year, ScreenPAL covers 70% of the costs for smartphone screen replacement covered (up to a maximum of US$150).

Flight Delay, Flight Cancellation & FlightPAL

A (not so) fun fact: More than 1,000 global flights are cancelled daily. Jetting off to the next picture-perfect destination could have an unexpected turn of events — be it a flight delay or flight cancellation.

Flight Delay, Flight Cancellation, or the 2-in-1 FlightPAL can help alleviate some of the pressure. You are eligible for a payout should your flight get delayed for more than 3 hours or cancelled due to events like terrorism, natural disasters, war, riot or revolution.

EarthquakeProtect

Earthquakes are more prevalent as observed in recent news. EarthquakeProtect is a microinsurance to provide immediate relief for policyholders residing or travelling in earthquake-prone cities.

The payout serves as an additional allowance for immediate relief. Be it paying for a private taxi to relocate to somewhere safer, or finding decent accommodation for temporary relocation — the payout will support one as an allowance.

For just US$0.50 premium, receive coverage of up to US$500 payout when an earthquake of more than 6.0 magnitude occurs within 250 kilometres from the city centre. Claims are effortless since they are automatically triggered.

CancerPAL

The life-robbing monster that is cancer. The occurrences of cancer diagnosis are painfully real. CancerPAL is designed in hopes to provide some emotional relief and help policyholders manage financially upon the daunting diagnosis.

For just US$12 premium, a one-time coverage of US$5,000 will be paid out after a positive diagnosis of any form of cancer.

Research is key

Without a doubt, it is important to conduct thorough research when planning for insurance. Know what you’re getting and make sure you settle with the policies that are most applicable with the most value.

About PAL Network

PAL Network is one of the fastest growing blockchain startup based in Singapore. The company built a dual-layered protocol for financial assets with the vision to build an ecosystem where individuals and partners can design and customise new financial products.

PAL Network designs insurance and finance solutions onto smart contracts within minutes. Through its APIs, PAL Network empowers its partners to cross-sell relevant insurance products at the point-of-demand, thereby bridging the gap between financial products and customer.

PAL Network is a member of Singapore Fintech Association and ACCESS. PAL Network’s affiliated entity, PolicyPal Singapore, has an active user base of 50,000 for its app, which helps users to manage, buy and optimise their insurance policies.

Currently, PAL Network has partnerships with insurance companies, FWD and Ergo, to explore potential use cases of our decentralised protocol together. Furthermore, we have also established collaborations with blockchain projects NEM, QTUM, Sentinel Protocol, MediBloc, Digix and traceto.io to offer CryptoProtect and mainstream insurance products for the projects themselves, along with their respective communities.