Digital insurance, takaful operators to reach out to vulnerable and underserved segments

KUALA LUMPUR — The introduction of digital insurers and takaful operators (DITO) helps to reach out to more vulnerable and underserved segments such as those in the gig economy, small and medium enterprises (SMEs) as well as millennials.

DITOs are businesses that conduct insurance or takaful operations by utilising digital platforms and technologies for end-to-end operations from underwriting, customer onboarding to claims processing and payments.

According to Ernst & Young Consulting Sdn Bhd partner Ravi Kittane, DITOs seek to deliver superior client experience, alternative underwriting, enhance accuracy of risk-profiling, improve relevance of products, and offer more affordable pricing and flexible payment terms for the underserved populations in Malaysia.

“DITOs are developing products based on customer value propositions, where plans are intuitively offered at the right place, time, price and level of coverage.

“The role of a successful DITO is to find commonalities across the value propositions and vulnerable segments, and to identify areas where they can bridge the gap,” he told Bernama.

Ravi said insurance products are perceived to be complicated and require in-person sales that would increase costs for customers.

Hence, this is where relevance and personalisation count for DITO propositions as products

should be right-fitted to customer needs instead of the other way around, and without requiring extended sales pitches or convincing.

“The industry and consumers will also benefit from removing channel reliance and diversifying touch points,” he said.

Based on recent studies, 26 per cent of the Malaysian labour market is part of the gig economy with 38 per cent signalling that they may consider joining the industry.

However, gig workers usually struggle to find medical and life protection plans that are comparable to the group benefits of their full-time counterparts.

Meanwhile, over 85 per cent of SMEs are reportedly underinsured, and it is likely that the percentage may be higher among micro-businesses.

On another note, statistics showed that only 25 per cent of working adults in the lower-income households are insured compared to 59 per cent of the general working population.

Additionally, Malaysia’s insurance and takaful sector remains largely untapped with penetration rates remaining low at between 54 per cent and 56 per cent.

On outlook, he expects DITOs to offer simplified and low-ticket size products.

“As DITOs build their market presence and customer affinity, they will become increasingly entrenched in the segments they choose to operate in, and we can expect more comprehensive offerings as their business capabilities mature,” he added. – Bernama