Micro-Insurance as a VAS for Telco
Value added services from your Telco can afford to add more value
The telecommunications industry is navigating one of its toughest phases as many service providers battle to survive. It’s not a question of making profit, but staying afloat amidst the brutal competition on price and value proposition. The proliferation of mobile apps for messaging and voice over IP (VoIP) for example, have made short message services (SMS) and voice calls almost redundant.
With disruptive technology and change in consumer behaviour affecting the telecommunications industry, Mobile Network Operators (MNOs) are currently experiencing a slowing average revenue per user (ARPU), a key indicator of an imbalance between profitability and sunk cost in their existing infrastructure investments. This is ironic considering that globally, mobile phone penetration is gradually moving towards 100% with some countries already surpassing it; Singapore is currently at the 150% mark. In fact in Singapore, smartphone penetration hit 76.32% in 2018 and continues to grow rapidly. There are currently 4.3 million Singaporeans active on mobile social platforms, comprising 75% of the population. Phones have become our daily companions, making mobile platforms the perfect delivery mechanism for insurance.
Insurance adds value; real value to daily lives. While insurers are seeing significant growth in some emerging markets, the mobile insurance model has experienced setbacks such as fraud, Data Analytics, Fraud Detection Models, and Artificial Intelligence (A.I.), and technologies need to be used to address these problems to make the partnership successful at scale. Additionally, poor insurance penetration rates in developing markets give MNOs’ existing infrastructures great potential to support insurance penetration, and for insurers to enter these markets. Therefore this is a significant opportunity for MNOs to use their existing infrastructure to take advantage of this growth in the insurance industry and offer services that impact their customers’ lives.
- Customer Satisfaction: Instead of providing promotional VAS such as free caller ID, international roaming for 12 months, I can imagine that customers would appreciate being offered a battery insurance coverage by their mobile operator free for the first 3 months. I do not expect mobile operators to educate their customers about insurance, but having the option to insure their batteries is valuable and viable, as people do not upgrade their mobile devices as often anymore. The problem of low awareness can be tackled by education through a partnership with insurers, while fraud detection can be tackled using technology to maintain a consequently low claim ratio.
- Datajacking: We have already seen how digital-first car insurers track where customers are going and how fast they are driving to determine risk and pricing of their premiums. Telcos have the advantage of using their vast repository of consumer data to genuinely improve the quality of life. For example, there is the option of customising and bundling holiday, car, and house insurance together to provide a ‘pay as you go’ option or lifestyle insurance on the basis of your exact location. Roaming data for instance, may be used to infer that the customer is overseas; he could then be offered travel insurance, a higher coverage level of house insurance, and potentially less car insurance.
- Utilisation of distribution channels: MNOs already own a distribution channel reaching millions of customers — a reach that insurers desperately want access to. This makes the partnership very strategic as today’s telcos collect enormous volumes of consumer data, from the location of the individual, where they are travelling and how fast, content they are consuming, who they are interacting with, to what they are buying.
I foresee the next generation telcos will transform new businesses out of their enormous amount of data. With increased competition and tough regulation and falling service subscription prices, creating new revenue streams is crucial to their survival. The best way to do this is a strategic partnership with technology businesses, particularly the enterprise market to scale into developing markets.
What makes this partnership very successful is the technology layer that is able to utilise this data for dynamic pricing of micro-insurance and training fraud detection models. Also, the software is able to customise new insurance products to reduce the time to market release of the products. This would dramatically result in more insurance product differentiation in the market, and is a chance for a value added service to offer relevant and much needed services.
Kenneth is currently the Chief Marketing Officer, directing business development, marketing and operations at the Hearti. Hearti provides an InsurTech platform that utilises Artificial Intelligence (A.I), Data Analytics, and Underwrites Insurance Smart Contracts on Blockchain. Our Platform enables Insurers to manage healthcare and insurance events, claims, product distribution and fraud detection. Hearti provides Digital-First Insurers a new way of doing business using disruptive technologies such as Blockchain and A.I with a Customer-centric Approach.
Find out more at https://hearti.io!
