This March, The Fintech Times is shifting its spotlight towards insurtech, exploring the potential impact of blockchain technology on insurance processes and its role in instilling trust in digital transactions.

As insurers strive to meet the evolving needs of a digitally-savvy customer base while addressing the persistent challenge of financial inclusion, they are increasingly turning to fintech solutions.

These innovative technologies not only enable insurers to streamline operations and enhance customer experiences but also play a pivotal role in extending financial services to underserved communities.

Let’s delve into how industry observers say insurers are leveraging fintech solutions to bridge the digital divide and enhance financial inclusion.

Tailored options

Janthana Kaenprakhamroy, CEO and founder of insurtech Tapoly, addresses how insurers are offering tailored digital insurance options, innovative distribution channels, and advanced technology solutions.

“Insurers are increasingly turning to insurtech solutions to address the challenge of closing the protection gap and promoting financial inclusion, especially in underserved regions. By leveraging fintech innovations, insurers can bridge the digital divide and extend insurance services to populations with limited access.

“These solutions enhance accessibility by providing digital insurance options tailored to the needs of underserved communities. Insurtech enables insurers to offer simplified and cost-effective insurance products, making them more accessible to individuals who were previously excluded from traditional insurance markets.

“Additionally, insurtech facilitates innovative distribution channels and advanced technology solutions, ensuring that insurance products reach remote and marginalised populations. Overall, the integration of insurtech in the insurance sector is instrumental in narrowing the protection gap and promoting financial inclusivity on a global scale.”

Making inroads

Technology simplifies insurance, aiding inclusion, particularly in underserved regions, with embedded products enhancing accessibility and family wellbeing, says Darran Simons, head of insurance, EMEA at data analytics company FICO.

“Insurance policies and products can often be complex, high-touch, and very time consuming. Insurers can leverage technology solutions to both design and offer products that are easier to understand and to purchase. For example, a property policy may have historically required physical inspections, but now that same information might be available directly from public or private third party databases.

“Similarly, there might be enough application and public information available on applications for some types of life or health insurance that may not require time-consuming medical testing. By identifying the kinds of policies that can make a difference in underserved regions, and then utilising the technologies, platforms and analytics that are available in the marketplace today, insurers can make bigger inroads into inclusion across all socio-economic groups.

“We are also seeing this leveraged with the increase of embedded insurers products making insurance more accessible in some regions, and aiding typical demographics that might previously forego vital protection products to support the wellbeing of them and their families.”

Flood risk

Bob Schiller, director of product innovation at insurer SageSure addresses the significant gap in flood insurance coverage by highlighting the role of data in accurately assessing flood risk and facilitating insurers’ adaptation to evolving risks.

“For flood insurance specifically, the gap between the number of homeowners exposed to some level of flood risk and the number of homeowners who have flood insurance is vast. To date, only five per cent of homes in the US and 30 per cent of homes in FEMA-designated high-risk flood zones have flood coverage even though 99 per cent of US counties are impacted by flooding. Recent studies have shown that compared to FEMA estimates, there are 1.7 times more properties that have substantial flood risk.

“Data can support efforts to assess flood risk more accurately, especially as the risk itself continues to evolve. As data increases insurers’ ability to adapt to changes in risk, and as models are updated on a much more frequent basis, decision-makers throughout the insurance value chain are better positioned to educate consumers and connect them to solutions that address their home’s exposure.

“Many insurers are developing competitively priced private flood insurance products that leverage the latest advances in flood risk modeling, which will continue to support efforts to increase flood coverage take up and close the protection gap.”

Harnessing technology

Rob Bauer, group chief MGA officer at international insurtech bolttech, says technology is critical to closing the protection gap, which Swiss Re quantifies at $1.8trillion up from $1.3trillion, just a few years earlier.

“We’re beyond refrigerators telling owners that a critical part is about to fail, or the warranty needs an update. In the developing world, mobile phones can self-diagnose screen damage, and activate a repair network with little human intervention.

“Life insurers are using inputs from wearable technology like Apple Watches to alter mortality tables, which drives precision-pricing and risk selection. For example, if technology can show an individual has run five miles, each under eight minutes, three days a week for the last three months … do you need a comprehensive medical exam?

“Insurers are figuring out how to use the tsunami of data at their fingertips, and make it meaningful to better risk-select, underwrite, and price.”

Brokerage strategies

David Embry, CEO and founder of insurance broker Mylo, says:  “Many small businesses and individual customers have traditionally gone unserved because agencies can’t efficiently grow their own businesses and process a high volume of these often complex transactions.

“Technology is changing this equation – providing an easy and cost-effective way to analyse customer needs quickly, streamline the underwriting process, match needs with carrier appetites and more.

“We have been able to scale while giving underserved customers the personalised guidance and expert solutions they need. Our insurance intelligence engine efficiently analyses data, makes expert coverage recommendations, and matches needs with personalised solutions from more than 100 leading carriers.”

Influence of gen AI

Elad Tsur, a serial entrepreneur specialising in machine learning, big data, and AI, is the CEO and co-founder of Planck, an AI based data platform for commercial insurance. He foresees a substantial decrease in insurance premiums, driven by the widespread adoption of GenAI.

“I believe GenAI adoption is going to dramatically impact overall loss ratios. It will improve loss models and play a huge role in driving down insurance costs.

“And I foresee a significant decrease in premiums, not just one to two per cent. In time, by more accurately assessing risk and pricing insurance, we can make it more affordable and bring access to more underserved businesses and consumers.”

Not so many years ago, Filipinos had to visit bank branches or ATMs to transfer money and manage their accounts. A complex set of geographic and institutional barriers, including the fragmentation of Filipinos across over 7,000 islands, and low levels of financial literacy, are also hampering the use of financial services.

Here, Imran Vilcassim, global solutions lead of digital platforms for BPC, explains how e-wallets are helping to bridge the gap for millions of Filipinos previously excluded from traditional banking and the role that fintechs can play in creating a better and more inclusive financial system in the Philippines.

The meteoric rise of e-wallets in the Philippines has transformed the way financial transactions are made, enabling anybody with a smartphone to electronically send, receive, and save money. By 2025, the country is expected to surpass 80 million registered e-wallet accounts, reflecting a threefold increase within five years.

This rapid growth can be attributed to several important factors, such as the successful advancement of digital transformation, widespread mobile adoption, favourable regulatory policies and forward-thinking government investments in talent and innovation.

The Philippines also has a large, young, and increasingly tech-savvy, population that is more receptive to adopting new innovations. With an internet penetration rate of 73 per cent, Filipinos are increasingly leveraging online platforms for a range of activities, from social interactions to shopping and entertainment.

This comfort with digital platforms has translated into a willingness to adopt e-wallets for financial transactions, appealing particularly to those previously excluded from the traditional banking system. This, in turn, has contributed to the emergence of numerous commercially successful e-wallet platforms, attracting millions of users and laying the foundation for a promising economic outlook for the country.

Benefits of digital wallets

The surge in e-wallet popularity underscores the real demand to address the unbanked population and bolster financial inclusion, fundamentally reshaping the lives of millions of individuals. This development holds significant implications for the Philippines, where 44 per cent of the bankable population remains unbanked, with rural areas, in particular, facing underservice and limited access to physical banks.

E-wallets not only attract those without traditional bank accounts but also appeal to a wide range of consumers, offering a host of great benefits. These include cost-effective transactions with lower fees compared to traditional banking services- a particularly beneficial advantage for small-value transactions.

In countries like the Philippines, where remittances from overseas workers are substantial, e-wallets also provide a faster and more efficient way for people to receive money from abroad. Additionally, the adoption of e-wallets promotes the digitalisation of payments, reducing reliance on cash and enhancing overall economic efficiency.

Furthermore, e-wallets offer enhanced security features such as PIN codes, biometric authentication, and encryption, mitigating the risk of theft or fraud associated with carrying physical cash.

They also provide access to credit and other financial products, including loans, insurance, and investment options, expanding financial services for users. For small businesses, e-wallets enable easy acceptance of digital payments, fostering economic growth and reducing reliance on cash-based transactions, which can be crucial for a thriving SME/MSME economy.

Other perks include loyalty programs, cashback rewards, and discounts, incentivizing users to adopt digital payments and promoting customer retention. Moreover, e-wallets can be integrated with government initiatives such as social welfare programs and subsidies, facilitating the efficient disbursement of funds to beneficiaries.

Fintechs driving innovation

With so many consumer benefits on offer, the success of e-wallets seems assured – but the timing is also ripe for fintech innovators to break into the Philippines and contribute to shaping the country’s digital future.

Here’s why.

Firstly, the regulatory environment in the Philippines is conducive to fintech innovation. The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, has implemented forward-thinking policies to support the growth of digital financial services. These include regulatory sandboxes for fintech innovation, which allow companies to test their products in a controlled environment before wider market access. Additionally, the BSP has issued guidelines for electronic money issuers (EMIs), ensuring the integrity and security of digital financial transactions while providing a clear regulatory framework for e-wallet providers.

Technology advancement 

The Philippines is also experiencing significant technological advancements, particularly in mobile internet infrastructure. The widespread availability and affordability of smartphones, coupled with improvements in internet connectivity, have democratised access to digital financial services across the country. These advancements enable individuals, even in remote areas, to participate in the digital economy through e-wallets, facilitating various transactions such as remittances, bill payments, and purchases.

Finally, technological innovations in e-wallet platforms, including advanced encryption protocols and biometric authentication methods, have enhanced security and built consumer trust in digital financial services. These developments contribute to the growing acceptance and adoption of e-wallets among Filipinos, further propelling the digital transformation of the financial landscape.

In conclusion, the rise of e-wallets in the Philippines is a transformative leap towards a more inclusive and accessible financial future. As technology continues to evolve and regulations adapt, e-wallets have the potential to empower individuals, revolutionise businesses, and unlock economic opportunities for millions.

In this sense, the case of the Philippines holds valuable lessons for other nations seeking greater financial inclusion in the digital age.

It also provides incredible opportunities for fintechs to contribute to the success of the nation by creating a more inclusive financial landscape for all.

The next president of the United States is likely to be in favor of central bank digital currency (CBDC), crypto asset manager Grayscale observed in a post on its website, as the current frontrunners in both political parties have expressed their support for it. Neither seems to like Bitcoin.

Joe Biden and Donald Trump currently have healthy leads in the 2024 presidential polls among members of their respective parties. Both of them are “favorable toward exploring CBDC,” echoing conclusions drawn by Forbes earlier this year.

Trump has called Bitcoin (BTC) a “scam,” and Biden’s position was intuited from his support for a 30% tax on Bitcoin mining. Grayscale did not comment on Trump’s overall attitude toward crypto and digital assets. It can be recalled that he is at, a minimum, favorably disposed toward nonfungible tokens.

Joe Biden’s got laser-eyes on his coffee cup
Someone in the White House is a #Bitcoin HODL agent
pic.twitter.com/I5q5uO8zDL

— Bitcoin Archive (@BTC_Archive) August 4, 2023

Biden’s “Executive Order on Ensuring Responsible Development of Digital Assets“ was taken as evidence of his general support. Another White House document, the 2023 Economic Report of the President, was not as complimentary toward crypto, however.

Related: 7 presidential candidates have dropped clues about their crypto stance

The candidates polling in second place, Democrat Robert Kennedy, Jr. and Republican Ron DeSantis, have both been vocal about their support for cryptocurrency and opposition to CBDC.

Trump and DeSantis are not the only pro-crypto candidates in the crowd of Republican contenders. Vivek Ramaswamy, to whom Grayscale ascribes 7% support (compared to Trump’s 63%), is also seen as being pro-Bitcoin and anti-CBDC.

Possibly the most ardent crypto supporter on either side is Republican Miami Mayor Francis Suarez, who made his love for the technology known far before campaigning began. His presidential ambitions have been called “improbable,” however.

Magazine: Powers On… Biden accepts blockchain technology, recognizes its benefits and pushes for adoption