Indian consumers are becoming more discerning and tech-savvy when it comes to their lifestyle choices. They prefer convenient and customized solutions, especially when it comes to their payments and financial safety. Traditionally, we associate insurance with long-term and expensive covers like life, health, property, motor, or jewelry insurance. However, with a wide range of products and services available today that vary according to individual needs and contexts, contextual insurance is gaining popularity.
Contextual insurance offers coverage for risks that arise in specific situations. For example, travel insurance provides passengers with the option to purchasete-sized insurance when booking their tickets online. This insurance covers flight cancellations, refunds, and even complimentary food and accommodation until the rescheduled flight. The key factor driving the adoption of contextual insurance is convenience. It eliminates the need for paperwork and provides instant coverage.
Apart from travel insurance, popular examples of contextual insurance include protection offered on the purchase of smartphones or household appliances, as well as insurance included in car rental packages. Recently, cyber insurance has emerged to safeguard individuals against liability in case of a data breach or cyber attack. With affordable premiums and ease of management, cyber insurance has become a must-have for tech-savvy consumers.
Contextual insurance is not limited to discretionary purchases. It can also complement traditional, long-term insurance plans. The market for contextual insurance is growing rapidly, and McKinsey & Company predicts that it will become a $270 billion market 2030.
Technologies like Artificial Intelligence, Machine Learning, and Big Data play a crucial role in enabling contextual insurance. These technologies allow insurers to integrate customized offerings into existing systems and analyze customer data to offer personalized policies. Personalization is a vital aspect of the consumer experience, and contextual insurance aligns with their lifestyle choices, spending preferences, and financial goals.
InsurTech firms are collaborating with insurers, banks, retailers, and e-commerce platforms to develop smaller, personalized insurance products. These offerings are delivered to customers instantly at the point of sale, eliminating the need for them to search for coverage. Contextual insurance serves as a safety net, protecting consumers from unforeseen situations in an increasingly digital world.
In conclusion, contextual insurance is poised to be a game-changer for the insurance industry. With its personalized customer experiences and emphasis on transparency and simplicity, contextual insurance meets the evolving needs of consumers. It will undoubtedly drive industry growth and consolidation in the coming years.
– Surjendu Kulia, co-founder & CEO, Zopper