Protection Gap /prəˈtekSH(ə)n gap/ (noun)
The Insurance Protection Gap (IPG) measures the difference between optimal insurance coverage and actual coverage in every country. In other words, the protection gap describes uninsured losses in any given country. This gap is naturally dynamic and affected by many factors, such as economic strength, changes in GDP and population, as well as risks such as climate change, cyber, pandemics or technological and behavioral developments. - InsurTech Insights
You may be tired of hearing about the “turbulent” and “unprecedented” we’re living in. But for insurance providers these uncertain times mean new risks are cropping up on a daily basis that we need to be aware of -- and cover for our customers. When the industry fails to provide adequate coverage for new risks it’s what’s known as the protection gap.
In order to help industry players navigate the protection gap and their role in it, we pulled together the research report, Insurance at a Crossroads - the path towards closing the global protection gap. In it are several pieces of critical advice for providers looking to make insurance accessible and available for all, regardless of what’s going on in the world around us.
Let’s take a quick peek inside at some of the key steps providers should take to close the protection gap once and for all.
Navigating the digital world
Let’s face it - most consumers desire digital experiences where possible in their day to day lives. We use an app for almost everything — coffee orders, prescriptions, household supplies, grocery shopping — you name it, it’s online. As we continue to do more business in an online setting, insurance providers need to follow suit.
According to a Bindable survey, 62% of Millennial and Gen Z insurance buyers said they’d be willing to pay more for a policy from a company that offers a user-friendly digital experience. By incorporating digital into insurance sales, providers can reach more potential buyers - it’s all about meeting people at their convenience via their most chosen channels.
Make it personal
Personalized coverage speaks directly to a customer’s specific insurance needs. If they feel your product is something crafted specifically for them, they’ll be more likely to make a purchase. But how do you personalize coverage? Using data.
72% of consumers would willingly share personal data to get lower insurance premiums if given the opportunity, according to a recent Capco Intelligence study. Insurers should keep this trend in mind as they approach their coverage offerings.
Instead of trying to make a “one-size-fits-all” solution work for your entire customer base, use their information to craft coverage that meets their needs. This way, customers don’t feel as though they’re paying for something that they may not need.
Finding creative solutions
What we’re experiencing today – inflation, the effects of climate change, and the fallout from the pandemic – can seem overwhelming. However, these are not impossible to address. If insurers adopt an innovative mindset and embrace new product development, they can work to solve some of the coverage gaps posed by these issues.
Maybe you’ll create a product that taps into a specific consumer segment like protection for vendors on online marketplaces like Amazon or Etsy, or maybe you’ll develop an app that helps people design their own coverage plans.
You could also find creative ways to help serve the underinsured. “Inclusive insurance” specifically focuses on reaching those who may not qualify for traditional insurance, ensuring they have the protection they need.
No matter the solution or approach, finding ways to reach untapped markets could mean not only huge business opportunities, but also the chance to improve the lives of your customers.
No one entity alone is responsible for closing the protection gap - it’s on all of us. Insurance providers should look to partner with brands in other industries like finance and retail, so they can identify and reach new customers at a greater scale and lower costs. Partnerships with well-established brands that have loyal customer bases can generate more business and expand market share.
At the end of the day, insurance providers across the globe need to make closing the protection gap a top priority. Whether you’re working to improve your digital strategy, creating more personalized coverage, designing new products, or pursuing another method highlighted in our report, there are many ways we can help solve the protection gap to meet our collective goal of helping others when they need us most.
Learn more by downloading our report, Insurance at a Crossroads - the path towards closing the global protection gap.