Mobile Wallet Insurance

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Globally, the payments industry is expanding its reach into different horizons of the financial sector, which also includes insurance. Many mobile wallet providers are focusing on creating a separate insurance business portfolio. Moreover, these companies are also evolving as a distribution channel for traditional insurance companies. Low insurance penetration rate in major Asian countries such as India is fueling mobile wallet providers’ confidence to focus on offering insurance to their large subscriber base.

Changing insurance industry landscape

Increasing smartphone penetration across the globe is transforming the insurance industry’s outlook. The rising adoption of mobile wallets as a preferred method for daily payments is creating opportunities for the payment companies. Mobile wallet providers are offering different insurance products at an affordable rate and allowing consumers to pay the premium even on daily basis by using their mobile wallets. Therefore, consumers from the lower income group of the society are also showing interest in purchasing a non-lifestyle product such as insurance. Additionally, these micro insurance policies are also gaining popularity due to low-cost nature and do not compel a policy holder to pay bulk premium. This is not only helping payment firms to expand their business into a new vertical but also helping insurance companies gain market share.

Technological advancement in the payment ecosystem such as application programming interfaces (APIs), allows payment service providers and insurers to design and introduce new insurance products rapidly. For instance, Grab, a Singapore-based ride-hailing company which also offers insurance products through its Grab mobile wallet, uses APIs to offer scenario-based insurance policies. Grab along with China-based online-only insurance provider, ZhongAn’s fushion system - an API platform, allows drivers to activate on-demand auto insurance while at a ride.

Insurance companies and mobile wallet providers are increasingly designing short term insurance policies to mitigate the risk associated with the Covid-19 pandemic. In March 2020, Grab rolled out free Covid-19 insurance policies for frontline healthcare professionals and its driving partners in Singapore. Similarly, Walmart backed PhonePe, a digital payments platform, partnered with Bajaj Allianz General Insurance to introduce Corona care insurance policy in India, April 2020.

Mobile wallets are gaining access to the insurance sector

The rising adoption of non-cash payment instruments across the world is widening the demand for mobile wallets. To capitalize on the trend, governments and insurance regulators of different countries are providing licenses to these payment service providers. It is noteworthy to mention that, the trend is being rapidly adopted by the Asian countries. For instance, in March 2020, Paytm, a mobile payment service provider in India, secured a brokerage license from the Insurance Regulatory and Development Authority of India (IRDAI). Paytm through its wholly-owned subsidiary, Paytm Insurance Broking Private Limited, will offer life, motor, and health insurance. According to the company, it will also roll out these insurance policies through its 16 million merchant partners. Moreover, multinational payment firms such as Google Pay are also showing interest in partnering to offer financial products such as insurance in India.                

In China, two of the leading mobile wallet providers Alipay and WeChat Pay are co-creating their presence in the insurance sector., In February 2020, WeChat Pay along with WeSure started offering insurance policies for small and medium business owners affected by the coronavirus. In July 2020, Alipay launched insurance program for cats and dogs. It allows pet owners to use facial recognition to buy insurance plans.

Also, Singtel’s mobile wallet service Dash, introduced Dash EasyEarn, an insurance savings plan, in June 2020, offered via Dash app and underwritten by Etiqa Insurance. The insurance premium ranges from a minimum of S$2,000, up to S$20,000. The plan also offers up to 2% per annum returns for the first policy year, has no lock-in period and offers unlimited withdrawals with zero penalties.

Besides offering private insurance policies, these companies are also gaining government authorization in the public health insurance sector. For instance, in November 2019, Alipay and WeChat Pay received government approval to provide citizens e-access to the national healthcare insurance system.

The trend is also rising in other Asian countries such as Vietnam, Indonesia, Malaysia, and Thailand where a large number of consumers are open to purchasing insurance products from non-traditional distribution channels such as e-wallet providers and retailers.

Even though mobile wallets are becoming popular as a payment instrument, when it comes to insurance, consumers still prefer direct communication with the insurers. This is largely due to numerous terms and conditions applied by the insurers and to understand the policy better, consumers such as corporate houses prefer direct interaction with insurance agents.