Insurance Industry

Know the importance of having an insurance

Having insurance has always been something complicated, especially if we rely on all the evaluation that insurers make us, the amount of requirements and papers, in addition to the money that must be disbursed from time to time without neglecting other expenses.

However, thanks to the pandemic and the insurtech with the technology that it offers us, insurers have been able to be more aware and support the insured in their hiring process, offering them a number of new products that are better adapted to them and without pay really exorbitant amounts.

What is financial wellness?

It is about feeling security in regards to the sufficiency of money to be able to satisfy personal needs, as well as those of our loved ones. In the same sense, we can understand it as the control of said finances to make decisions of that nature without problems.

There is an important and essential point within financial well-being to which we must pay all our attention and it is about financial protection and against any unwanted event, it could economically save our family.

Financial freedom depends on the reality of each person, what if it becomes common among all, is that in the absence of income from the family provider, well-being is fractured due to:

  1. Death.
  2. Disability.
  3. Terminal Deceases.
How can we feel protected?

Although there is no single formula to define the amount I need, as an approximation, each person should be covered between 7 and 10 times their annual salary, adding around USD $ 58,000 for each school-age child.

In the case of Chile, about 20% of formal workers are covered (down 18% also considering informal workers). In terms of the number of companies, this is equivalent to the fact that only 2% of companies with more than 10 employees have taken out some type of life insurance, with a concentration in large and medium-sized companies.

It is known that the average coverage amounts of a large company, for a manager can go around $ 146,600,000, that of an executive close to $ 87,960,000 and for employees of medium-sized companies it does not even reach $ 21,990,000.

Obviously these figures leave a clear conclusion, the need for better protection. It is known that 70% of the formal working population does not have coverage, while the remaining percentage has a material shortage and declares to decrease their protection gap.

Insurance Industry

Learn about the new insurance launched as a result of the home office (part 2).

As we saw in the previous article, many insurers have changed their products to offer new alternatives in case the insured is working by teleworking, because despite not leaving, traveling by car or traveling by public transport, it does not mean that inside the house we cannot suffer an accident.

Increase in the contracting of health insurance

In the health area, in Chile, it is known that they expanded their health plans to:

  1. Include all medical benefits associated with the diagnosis and treatment of Covid-19.
  2. Incorporation of video consultations within the coverage.
  3. Benefit $ 0 copay at some clinics.
  4. Term of 30 days to present expenses and others.

In the midst of the pandemic, many sectors changed their way of operating and offering services to meet the real needs of their clients, including those that have a home office modality and are tied to confinement.

In this sense, we can summarize that the contracting of health insurance has increased with great force and momentum, reflecting the value that companies place on the health coverage of their workers.

To conclude and in general terms, in 2020, considering individual and group health insurance, they increased 31% compared to 2019, where group insurance registered growth in the segment of small and medium-sized companies with 172% compared to 2019.

The efforts of the companies and their workers in teleworking modality should be applauded and honored, since in this situation, no one was prepared to operate without having stepped on unfamiliar terrain, to which many companies have responded very well, among which the industry stands out. Insurance by approaching and applying technology to offer more personalized and useful products and services.

Insurance Industry

Learn about the new insurance launched as a result of the home office (Part 1).

Remote work, home office (home office), or teleworking, has been applied for about a year, since the Covid-19 pandemic began to develop. With this, there are many companies that have been developing new products that are more attractive and adapt to this new reality that we live in.

It is known that insurers have offered insurance for companies to contract with a focus on teleworking, and telemedicine has also been added to the coverage. Due to the above, it has been commented that there has been a greater contracting of group insurance, with a growth of 47% in 2020.

At the end of 2020, a personal accident insurance was launched, for companies and that also has some different points to traditional personal accident insurance.

This product would then have the same coverage as a traditional insurance (such as accidental death, medical expenses, disability, reimbursements for hospitalization), but three important health services were incorporated:

  1. Medical assistance at home or via telemedicine.
  2. Psychological assistance (since this type of consultation has been on the rise during the pandemic).
  3. Home assistance, in case the person has a broken pipe, locksmith problems, plumbing, etc.

Joanna Knoeppchen, director of personal lines for Southbridge, says that it was in April 2020 when they incorporated this issue, commenting that just when they realized that the confinement would be longer than expected, they released a product that they called “Stay in home”, which has coverage for reimbursement of medical expenses, telemedicine and at least three consultations with no copayment (in general, it is the deductible or the means of financing a health service for which the user pays an amount each time uses it. This payment is complemented with another means of financing).

And what are the benefits of taking out insurance of this type?

There are occupational accident insurance that does not fully cover the accidents that a worker may have in teleworking mode. This is supported by figures released by the Superintendency of Social Security (Chile), which produced around 1,600 complaints for personal accidents in remote work mode, where more than 50% of these complaints were rejected.

Of the accidents that occurred at home, the personal accident rate of women increased considerably, from 40% in 2019 to 70% in 2020.

What other benefits can we get from the new home office insurance? Find out in the second part of this article, which will be available in a few days.

Do not miss it!

Insurance Industry

Why Latins Americans do not tend to get insured? (Part 2)

In the previous article, we left you a question on the air, and now we will answer everything that has to do with it. Why is life and non-life insurance still rare in Latin America? We will tell you in detail below:

  1. Low financial inclusion makes insurance less accessible:

It is known that less than 50% of Latin Americans have access to traditional financial services, including insurance policies, since they, especially in the Life category, are distributed by banks and other financial institutions, the same pattern of exclusion tends to follow both finance and insurance in the region.

In the case of Brazil, it is a country with an exception to this rule, since banks play an indispensable role in the distribution of life insurance policies.

Chile’s public-private health system also helps ease some challenges related to health insurance distribution in a region with low financial inclusion. However, this regional exclusion of financial products continues to contribute to the slowdown in the local insurance market.

2. Technology has been slow to be used:

The vast majority of insurers in Latin America today rely on rudimentary risk calculation methods to set the price of insurance plans. While for now there are three companies covering 42% of the regional life insurance market, there is still an ideal space to innovate in the non-life category and new companies are beginning to reinforce existing insurers with new technology to improve. risk calculations and customer experience.

These same companies have been collaborating to develop digital channels to reach the growing middle class. Startups are using new technologies not only to reach customers, but also to calculate risk more accurately and to provide insurance that rewards good behavior for incentives.

The Innovation within the insurance industry has been a challenge and insurtech have played a very important role in intervening during this process, as they have collaborated with the traditional market to make it possible for premiums to be more accessible to clients and more accurate for providers.

3. The growth of insurance products continues to seek to reach the new middle class:

In the last 10 years, the middle class in Latin America has increased by 50% and currently represents 30% of the population. Many of these young professionals come from families that struggled to meet their basic needs such as health, nutrition and education, so insurance products often seem «intangible» when daily challenges are most urgent.

There is an imperative need to change the perception of insurance products from a cost «in case something happens», to something more tangible, with its implications and daily updates, in addition to just hearing from an insurer and when something bad happens like an illness or accident.

As more insurance companies allow them to partner with startups to obtain technologies such as the Internet of Things (ioT) or Artificial Intelligence (AI), they could become more tangible, attractive and achievable for more people. An insured population is less vulnerable to unexpected events, which promotes local economic stability in the long term. As the insurance market in Latin America becomes more modern and technological, they can help the population stay out of poverty and insure those who have previously been excluded by the traditional system.

Insurance Industry

Why Latin Americans do not tend to get insurances?

Perhaps very little is known about the insurance world, since it is a minority of the population that can enjoy this benefit thanks to its economic stability, especially if we talk about the Latin American case.

The truth is that we contract insurance to be protected in the event that we go through an accident that compromises our integrity or that of our material assets, and we only maintain contact in a very limited way with our insurer.

The global context of the Insurance Industry

The insurance penetration rate in Latin America is very very low and is around 2.7%, well below the world rate of 6.5%. The leader in the global insurance market is the United States, where the ratio of premiums to GDP reaches 7.4%.

Did you know that Americans spend an average of only $ 247 a year on insurance? Which leaves the population underinsured.

Extracting information from a study by Fundación MAPFRE, one of the largest insurers in Latin America, it is perceived that the Latin American insurance protection gap (IPG), calculated as the difference between the current incidence and the amount of insurance needed to benefit society at an economic level, stands at 254.3 billion dollars in 2018.

In 2018 alone, the growth of the insurance market worldwide was located at 1.5%, reaching the value of 5.2 billions dollars in direct insurance premiums and the main impulse had come from the Non-Life lines, favored by the dynamism that maintained the global economy, mainly in the first half of the year.

Growth was solid, mainly in Asia, highlighting the evolution of the two largest markets, China and India. Latin American markets, for their part, moderated their growth.

How can we make sure that more people can be insured and protected against any misfortune? And why is life and non-life insurance still rare in Latin America? We will tell you about it in detail in our second part that will be available this week. Do not miss it!