Selling 100 million policies a day in China- Zhong An demonstrates clearly the growth potential of Micro Insurance- something that Amazon will hardly ignore.
Insurers have taken notice.
Legal & General recently announced a JV with SLICE to add on-demand home-share insurance to its product portfolio. That gives SLICE brand strength in the UK and L&G an innovative product to add to its existing Annual Macro Home Insurance.
This is an attractive "Go to Market" strategy for insurers offering speed with a proven product but what happens when you add four of five of these standalone products? Each with its own claims process, algorithms and AI, Policy Admin and user experience?
Each with its own team of contractors establishing the product in parallel with legacy systems, compliance and security. A potential pandora's box of product silos.
Tactical success is one thing but what about strategic direction? It is one thing to test market potential but if Micro Insurance is strategically important should this piecemeal approach be taken?
Shouldn't the insurer consider a build rather than buy approach or at least a company-wide platform, containers, interoperability and consistency?
Legacy systems are always an issue of course; do you replace complex, inflexible, costly, high-maintenance core systems with a digital platform that is itself complex and needs a separate deployment for each state and country. Out if the frying pan into the fire!
Or a flexible digital insurance platform that can be customised for every product, peril, state and country without costing the earth? Deployed in months, even weeks for simple A&D Perils and Micro Insurance rather than years.
How best to combine Macro and Micro Insurance products tactically and strategically? What do you think?
Munich Re reports that in the last 10 years, the insurance industry registered a narrow 2% growth worldwide1. However, there is evidence that insurers can achieve huge growth margins if they start thinking “micro”. Zhong An is a Chinese insurtech company. Its business model consists of distributing low-price, high-volume (micro) insurance products through a network of over 200 ecosystem partners like the e-commerce giant Alibaba. Their products are designed to satisfy the needs of the e-shopper; the most popular product is a shipping return coverage that accounts for 35% of Zhong An’s GWP. In 2016 Zhong An’s average GWP per client was around $1.49, but they sold 100 million policies per day on peak days, and have a projected GWP of $1.1bn for 2017. Macro results from micro policies.
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