Latin America: Contributions of insurtech during the pandemic

Many years passed, they had to go through a pandemic like the current one, which took us by surprise and gave us a great lesson: we were not prepared to face an event of such magnitude, which is fueled by other problems that we already had worldwide.

The arrival of the Coronavirus has led many economic sectors along paths that perhaps they did not intend to travel in a short term due to the efforts and investment that this requires, but thanks to the insurtech, many companies were able to stay afloat, innovate, stay and continue growing.

  1. Simplified and on-demand products:

This is one of the first changes that we can observe for the insurance industry. The health crisis has highlighted the need to be able to have the backing of insurance, especially associated with health insurance.

Insurtech have been able to identify the previous need and began to popularize simpler, personalized and accessible protection options.

In the auto industry, “pay for what you drive” or “Pay as you drive” has been a benefit for drivers due to social distancing. Clearly, customers who use vehicles less due to all this current situation, are looking for options and benefits that allow them to take advantage and save.

2.Telemedicine heyday

Telemedicine has positioned itself as the complement to health insurance. The benefits of technology have allowed close and fast communication from wherever the patient is with his doctor, making a comfortable and safe virtual experience possible.

This is not everything! But what is missing we will reveal to you in our next article. Wait for the second part that will be available soon.

Keep knowing interesting articles in our news section, we upload content every week!

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!


Can telematics reduce costs?

The insurance industry has been characterized by offering in the vehicle branch, insurance based on linking the costs of these with the way in which a vehicle operates.

Equipment managers can benefit from telemetry data from their heavy duty trucks, as the data can be used to train operators and drivers to improve and change their behaviors:

It allows remote control of processes such as the location of a vehicle, fuel consumption, load status, performance, safety factors, among many others.

Fleets that reduce behaviors that lead to accidents may be able to reduce the frequency (plus associated costs) of accidents and eventually lower their construction equipment insurance premiums.

By collecting data using telematics, current and real-time feedback can be obtained to help identify risky driving behaviors and enable drivers to be trained to improve their performance.

Most relevant characteristics:

1. Contributes to the reduction of claims: by maintaining the interconnection of ioT devices with a main central, alerts of all kinds can be issued in the event of any suspicion. This favors both insurers and their policyholders.

2. Savings on supplies: the systems provide immediate information on the status of the truck, allow programing routes and monitor driving conditions to save fuel and prevent failures due to malfunctions.

The transport company may have precise data on the location, route and speed of the vehicle, fuel consumption, driving mode or stopping times. This will make it easier to manage operator performance.

3. Safety: telemetry is capable of reducing road accidents by 57%, making this technology a strategic ally to minimize costs and optimize processes.


How does telemetry work in Insurances?

Sensors must be installed in the car or at home, which will allow a large amount of data to be sent to a specialized central, where there will be:

1. Data collection: in the case of cars such as speed, location, among others and in the case of home, humidity, any gas leak, among others.

2.Transmission to an installed transmitter: the data collected goes through a wireless transmission to an installed device, which may be a cell phone or other transmitter connected to a network or satellite communication. With the above we can say that all the data collected can be reported and collected in real time.

3. Data lifting: The data collected by the sensors are converted into common quantities that can be read quickly, such as km / h, temperature, fuel levels or location on a satellite map.

4. Satellite communication: Either through a cellular or satellite network, the data is transmitted from the device to a centrally located remotely where your data is centralized in real time.

5. Immediate feedback: The central is able to receive and evaluate the data at any time, which allows sending orders immediately, either by contact with a human operator or by an automated order.

There is no doubt that this type of technology represents a great advance and opportunities worldwide for insurers. With its use, the insurance industry will be able to lower prices for its services and reach a greater range of clients by being more affordable.


Some benefits of telemetry in the insurance industry

As we saw in the previous article, telemetry plays a super important role for any company, especially for the insurance company that, due to its rudimentary nature, has not been able to advance to offer different products and services to its customers. Its most outstanding benefits are:

1.Cost of insurance according to its use: by means of a telemetry device that was installed in cars, the general behavior of the driver can be analyzed and from this, collect information about their braking, speed, distances traveled, among many other things.

Based on the above, the insurance company will receive the data collected and can evaluate it to determine the cost of the insurance premium. For example:

A customer who drives a long distance at a high speed will be charged a higher rate, unlike a person who drives short distances at a lower speed.

2. Strengthens and encourages road liability: this will make customers aware of the way they drive their cars, since the cost of their insurance will depend on this. It is known that people who have opted for this modality have managed to reduce the cost of their insurance by up to 25%.

The general use of telemetry in insurance is located in the vehicle branch to offer completely personalized services such as the well-known “Insurance per km”.

3. Reduction in claims: Based on various studies of telemetry within the insurance industry, we can find that not only does it reduce contracting and operational costs but also, thanks to behavioral assessment, it is possible to reduce costs by 57%. road accidents, transforming this technology into a strategic ally for insurance.

In the same sense, telemetry may warn in advance about some mechanical failures that put vehicles and workers at risk, avoid criminal acts and have the possibility to report the facts immediately to the authorities.

Insurers from their origins have worked to support difficult times such as claims, once they occur. However, with the emergence of technologies such as telemetry, they can be more competitive and efficient thanks to the fact that they can anticipate unfortunate events that may occur due to excess humidity, short circuits, theft, and even increased vehicle speed.


Know more about the telemetry and its impact

It is a system that allows real-time monitoring of various values ​​and variables, being able to collect all the metrics and characteristics of an asset exactly, which are sent to the system operator.

Generally, its use allows the optimization of the processes and actions on which the correct operation of a business depends, collaborating with asset management and improving all security systems.

Its general uses

It is used in large systems such as chemical plants, electricity supply networks, gas supply networks, among other companies that provide public services, as it facilitates automatic monitoring, the recording of measurements, the sending of alerts or alarms to the control center, in order for the operation to be efficient and safe.

Can telemetry be used in the insurance industry?

It is used especially in the vehicular branches, since this allows multiple benefits such as:

  • The monitoring of each of the insured cars in real time and automatically.
  • It allows insurers to analyze the behavior of their drivers, providing warnings and the creation of warning systems for unsafe behavior behind the wheel.

We explain better with an example:

Let’s imagine a company that can create a system capable of sending alerts directly to the dashboard of your vehicle, notifying about the quality of fuel, engine oil and also if there are changes in the climate of the usual route or in the behavior of the car.

In the same sense, the monthly price of a vehicle insurance can be valued, just by monitoring the insured’s driving style or even establishing a fixed value based on the metrics that the system shows according to the way in which they drive.

This technology can also be used in the home insurances, allowing it to even detect theft, locate objects, detect suspicious movements, control weights and much more.

In the same sense, we can mention that it allows monitoring liquid levels, fluid parameters such as temperature, pressure, flow rates, even detecting dangerous gases (Something that can help prevent fires, for example). It has even been said that telemetry can prevent when natural disasters can occur. The foregoing translates into a springboard of opportunities worldwide for the insurance industry, as this would lead to enormous growth, competitiveness and within reach of a greater range of policyholders.

Claims Prevention

How the natural disasters have impacted the insurance companies?

One of the clearest examples we got to this point was the earthquake that struck Chile on February 27, 2010, which cost the insurance and reinsurance industry between USD 8,000 and USD 10,000 million.

An important fact is that the losses were borne almost entirely by the world reinsurance industry, as local insurers transferred these risks to them due to their catastrophic nature.

Volume of claims processed

It is known that at least 222,065 claims were reached, where 190,199 corresponded to housing risks and 31,866 to claims in various risks of homes such as offices or shops.

These figures translate into more than eight years of claims in the fire industry and it has been one of the most difficult situations in testing the ability of insurers and adjusters to respond to such colossal demand. These events forced the insurance industry to seek a large amount of internal and external resources, both human and IT, to comply with the settlement and payment processes.

The premiums

Regarding the economic and financial effects in this sector, it was learned that the fees charged in catastrophic lines were insufficient. The earthquake and subsequent tsunami exceeded what was collected in the last 30 years in catastrophic premiums and in fact, the reinsurance industry reacted by adjusting the terms and conditions offered in the renewals after the unfortunate event, both in proportional and non-proportional contracts, in a manner increase in rates, decrease in commissions, and imposition of limits by event and validity, among others.

Natural disasters always happen suddenly, that is why it is important that we all be aware and work to prepare ourselves and know well what we can do in the event of one, in order to remain calm, to be able to be for our insured and give them satisfaction and help they so badly need at that time.

Claims Prevention

Earthquakes: Everything you need to know to be prepared

Understanding that tsunamis, earthquakes, and natural disasters in general, happen unexpectedly, do you know how you can prepare in case they happen?

Here are some tips that you can take into account are:

1.Always have your personal documents, emergency numbers, flashlights, batteries and a first aid kit at hand, in this you should have the following products:

Wound disinfectant, antibiotic ointment, individually packaged alcohol pads, aspirin, acetaminophen, antidiarrheal and commonly used prescription drugs, eye drops, bandages and gauze, cotton, tape, scissors and tweezers, thermometer, soap, tissues, sunscreen, plastic bags, thread and needles, sanitary napkins.

2. Have these tools on hand:

Ax, shovel, broom, screwdrivers, pliers, hammer, adjustable wrench, thick shoes, gloves, candles and matches, change clothes, sheets, tent, fire extinguisher, toilet paper and cash.

3. Try to have emergency food stored:

Non-perishable products such as canned food, food that does not need to be cooked, baby and pet food, food that is not salty or spicy, as they increase the need to consume water.

4. Prepare a plan that you can apply with your family or co-workers.

5. Periodically check the electrical installations and repair them if necessary.

It is important that we all be aware and work to prepare well to be able to cope with the situation in the best possible way and thus be able to help others. That they may need our support and help.