In a world brimming with uncertainties, the need for accessible and adaptable insurance solutions has never been clearer. This is where micro insurance steps in, offering a safety net to those who often fall through the gaps of traditional coverage.
This is enabled by micro insurance companies – such as MIC Global – who are built with four fundamental pillars: products, underwriting, technology, and distribution. These elements form the foundations upon which a micro insurance venture stands, determining its ability to reach individuals and provide them with timely protections. Each pillar is crucial in order to serve embedded micro insurance products at scale, on a global level, and – most importantly – profitably.
Here, we examine the pillars needed for a successful micro insurance company, how we utilise each within our own business, and what they mean for our development process, partners, and end-customers:
- Simple and Relevant Insurance Products
- Innovative Underwriting Backed by Lloyd’s
- Advanced Technology Built for Scale and Speed
- Global Distribution through Local Insurance Partnerships
Simple and Relevant Insurance Products
Micro insurance products are the first essential element – nobody can be insured without a product to offer them! Where traditional insurance products are comprehensive and cover significant aspects such as life, health, home, and car; micro insurance products are simply worded and focus on the small stuff – everyday disruptions that people face such as accidental damage, minor medical expenses, and income gaps. Micro insurance is all about tailoring solutions to meet the unique needs of individuals with customized product offerings that address specific risks.
These products aren’t concerned with the specific losses or damages that occur – instead, fixed pay-outs are made once defined parameters are met. This approach allows micro insurance to operate in spaces where traditional insurance may provide limited coverages. Early success is being seen within the sharing and gig economies.
Products Designed for Everyday Risks
We have developed a range of simple and relevant insurance products designed to fill protection gaps in the world’s emerging economies that traditional insurance is not suited to cover. The products are split into three distinct categories, each covering different aspects of people’s lives. Within each category are a set of trigger events, which when activated allow insured individuals to make a claim. We work with our partners to tailor these triggers to their requirements and create a digital insurance solution that fits them perfectly. A partner’s micro insurance product is embedded into their platform or service and offered to their customers during the sales journey.
Crucially, these products are repeatable. This means that once we have developed a particular product in a market, we can roll it out over and over, tweaking as required for each partner. Rapid development and deployment enable platforms to take their insurance product from concept to customer in weeks.
Putting Money in People’s Pockets
Our Mi Identity category protects people’s physical and digital lives. For ‘real world’ protection, MiLife Injury provides coverage for unexpected medical expenses such as Emergency Room visits, meaning people can look after their health without the worry of how to pay for it. In the ‘digital world’, MiLife Identity, coupled with our robust Mi Identity platform, provides protection in cases of identity theft and resultant monetary fraud, reimbursing people for lost funds when targeted by malicious actors.
Our Mi Income category covers people’s personal income. Our triggers are designed to protect people’s incomes when threatened by specific circumstances. Mi Income Layoff covers the income of workers that receive involuntary unemployment while they find a new job (for a fixed number of months). Mi Income Health provides income coverage for time that individuals are unable to work due to injury, sickness, or death. Lastly, Mi Income Resilience protects individuals from events that disrupt income, such as weather, transit, and family matters.
Our Mi Incident category offers coverages for personal property, possessions, and disruptions. Mi Incident triggers provide coverages for events that impact individuals in their daily lives. Protections are designed as warranties for tech devices such as mobile phones, IoT sensors, and smart home devices, and inconvenience payments when traveling such as a delayed flight or lost suitcase.
Each of our products give insured individuals peace of mind that should they face the misfortunes that they are covered, they can quickly receive money in their pockets to help bounce back comfortably.
The next step is to underwrite the products in order to insure people. Simply put, underwriting is the process by which insurance companies assess risks and determine the terms, conditions, and pricing of insurance policies.
For consumer insurance policies, this involves analyzing factors like an applicant’s health, age, occupation, and lifestyle to make informed decisions about coverage eligibility and premium rates. Reinsurance – the transfer of a portion of a primary insurer’s risks to other insurers – involves an a different type of risk evaluation. Reinsurers assess the risks that primary insurers take on, with reinsurers focusing on assessing and modelling portfolio before deciding to offer reinsurance. This process helps spread and manage risk, enhancing the stability of the insurance market.
There are many underwriting companies out there that can assist, however, legacy systems, processes, and convoluted distribution chains have lumbered much of the industry with high costs and premiums for end-customers – which isn’t ideal for micro premiums. Fortunately, there is another way!
Data-driven Underwriting, Backed by Lloyd’s
To keep our premiums low and be able to sell our products globally, we set our sights on underwriting in-house. First, we built an underwriting team consisting of underwriters, actuaries, and operations and compliance experts. Next, we undertook the monumental task of opening a Syndicate with Lloyd’s of London, MIC Global Syndicate 5183, which we achieved in June 2022 – after an immense amount of hard work and dedication from all involved!
We have a clear and focused product development process where we simultaneously carry out data analysis, risk assessment, decision making, wording development, and premium pricing. This ensures our digital insurance products are designed efficiently, reducing cost and increasing speed to market.
With our underwriting operations in-house, we can better understand our active accounts. As data begins to flow from partners – usually using APIs – our team analyses the information and creates detailed reports. This enables us to discuss pricing strategy and make informed recommendations to our partners and local insurance partners quickly to drive growth and profitability, while feeding more data into our own pricing models to facilitate future projects.
Advanced Technology Built for Scale and Speed
Selling insurance to customers inevitably leads to claims, which need to be processed and settled. It’s possible to achieve this through spreadsheets and file systems, which is fine when there’s only a few policies to handle… but this method soon becomes complicated and difficult to maintain where there are millions of insureds.
Technology for the Digital Marketplace
We invested in technology early on, creating our own tech company – MICology. This team specialises in low-code technologies and the development of powerful AI and machine learning algorithms.
Our low-code tech platform – MiConnect – enables us to configure partner systems rapidly, using pre-built components that can handle the entire insurance process, from policy management, to claims handling, to complaints. Importantly, these systems are built on cloud platforms, giving flexible scalability as insurance programs grow and more customers sign up.
Configured systems are integrated with our partners’ websites and services via API, so when a claim is raised, we can start handling it swiftly. The process is automated, with our AI calling in real world help when necessary. Claimants are paid quickly once a settlement is reached.
Global Distribution through Local Insurance Partnerships
Products, underwriting, and technology – it’s nearly time to start insuring people! Now these carefully crafted coverages need to get into people’s hands so that they can begin to reap the benefits. This is where distribution partners come in.
Our Lloyd’s of London Syndicate 5183 allows us to utilise Lloyd’s international licenses to write business globally. We have been building a worldwide distribution network of local insurance partners, to which we provide our digital reinsurance solutions. These local insurers are experts in their local markets with all the necessary licenses in place to insure individuals.
Our insurance partners issue insurance policies, taking on the local responsibilities of policy issuance and management, claims payment, and compliance with local regulations. Working with insurance partners enables us to offer coverage in a wider range of markets than would otherwise be possible.
Full Stack Digital Embedded Micro Insurance
The elements discussed above are all required to be classed as a full stack offering – this capability enables micro insurance companies to serve embedded micro insurance products at scale and on a global level. We have carefully combined these pillars to build the world first full stack digital micro insurance company we are today, and in doing so we uniquely differentiate ourselves from similar companies worldwide.
- A robust product portfolio tailored to the unique needs of diverse communities lays the foundation for trust and relevance.
- The meticulous underwriting process, brought in-house through our Lloyd’s Syndicate, ensures both long-term sustainability and optimum premiums for end-customers.
- Cutting-edge technology transforms the insurance and claims process, streamlining operations and improving user experiences.
- A global distribution network ensures that these valuable services reach the farthest corners, leaving no one beyond the reach of security.
Contact us to find out how these essential elements can be used to create a micro insurance product perfectly suited to your target market, adding value to your business, and increasing customer retention and satisfaction.