One of the biggest surprises within digital insurance has been the arrival of mobile payments as a springboard for life and health insurance across developing markets – and India is a particularly good example. A 2016 demonetisation initiative accelerated the use of digital payments in the country, and with 800 million smartphone users, the stage has been set for mobile payments to become ubiquitous.
India already boasts 49 mobile payment providers with market leaders including PayTM, Amazon Pay, Flipkart’s PhonePe, Google Pay, and the most recent entrant – WhatsApp Pay. Of these, PayTM is pushing the boundaries of digital insurance furthest, and as the country’s biggest digital payments service, it is worth examining the digital insurance efforts currently underway there. Although many mobile payment providers have attempted to introduce insurance products to their user base or merchants, PayTM has taken a deeper approach that includes three elements, and each is worth considering in turn.
1. Distribution
First, PayTM has reinforced its position as a payments gateway by allowing Indian policyholders to enter their policy number in order to facilitate recurring premium payments, policy management, claims, and the renewal of lapsed life insurance policies.
PayTM has also followed the path laid by other payment services by introducing an aggregator function through the Corporate Agency license of its parent company – One97. This allows PayTM to distribute products from a limited number of insurers including Prudential, Aegon, and HDFC Life in the life segment. Allianz, TATA AIG, and ICBC Lombard in the P&C segment, and Starr Health and Aditya Birla in the health segment.
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PayTM has launched a feature to automate premium payments for millions of Indians.
A belief that providing healthcare is a core responsibility of the government has also prompted PayTM to include educational features in its user journey. As many PayTM users have never purchased insurance before, PayTM has introduced My Insurance to guide users through key policy terms and jargon such as the difference between participating and term life insurance. By doing so, PayTM is not only increasing its conversion rate, but also educating consumers about the consequences of allowing a policy to lapse, an issue that often plagues fast-growing markets such as India. PayTM has also extended the grace period for lapsed policies as part of its effort to streamline the renewal process and minimise lapsed policies.
Ultimately, although PayTM mirrors other mobile payment services in facilitating insurance sales, it is clearly departing from the template by emphasising education over raw transactions in an attempt to become a true financial services provider as opposed to an aggregator. The next phase of PayTM’s digital insurance agenda will determine how successful it has been in this regard.
2. Scenario-based offerings
Although China has become synonymous with digital insurance innovations, PayTM has gone beyond its Chinese counterparts by developing a range of scenario-based products that it currently offers in its capacity as a broker.
Scenario | Product | Features |
---|---|---|
India’s developing and rural regions are afflicted by diseases caused by microorganisms such as bacteria, viruses, parasites and fungi. | Communicable diseases insurance | Payout to PayTM account |
Fire, burglary, and earthquakes are all a reality for PayTM merchants. | Shopkeeper insurance | Payout to PayTM account |
Serious pollution in large Indian cities such as New Delhi causes respiratory illnesses including bronchitis and asthma. | Smog insurance | Payout to PayTM account |
Many self-employed Indians don’t have employer contributed social insurance. As a result, they may suffer a double loss if hospitalised – treatment costs plus loss of income. | Disability insurance + ‘Hospital cash insurance’ |
PayTM users can pay their premium on a per-day basis through PayTM
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Other | Critical illness, Dental, Cyber, Diabetes | Adjustable limit / premium as per users risk tolerance. For example, $300 of monthly cover costs $30 |
3. Health Ecosystems
Finally, several mobile payment services are digging deeper by not only designing products for specific market segments but also attempting to unify Asia’s disparate public health system by leveraging their offline payment terminals which are already present in thousands of hospitals, pathology labs, diagnostic centres and pharmacies. Although these payment terminals are already being used to process payments for treatments, many mobile payment services will extend this to provide claims processing services typically associated with a TPA – such as the ability to calculate co-pay arrangements, validate claims, and identify instances of over-utilisation at hospitals. Through these offline terminals, mobile payment providers will also help patients manage minor ailments through the data gleaned from hospital transactions. Ultimately, increasing visibility into public hospitals, lowering out-patient costs, and optimising the ability to cross-sell tailored insurance products will be key to mobile payments future feature set.
Conclusion
The popularisation of mobile payments in India has catalysed digital insurance initiatives across the country. By extending financial services to millions of previously unbanked and uninsured people, mobile payments now stands among the most important innovations in the industry. Although many mobile payment services are primarily trying to sell insurance as a broker, some are looking past this and towards tailoring life and health insurance to specific consumer segments, in addition to a range of o2o healthcare offerings that will leverage the offline payment modules that lie at the heart of mobile payment platforms.