Potential of Virtual Insurance for Hong Kong

With today’s pandemic challenges, as the people of Hong Kong and around the world are told to avoid unnecessary people interactions, it is easy to feel relieved Hong Kong at least has Virtual Insurance.

Simplistically, a Virtual Insurance company sells insurance online directly to customers without using an intermediary like agents. By removing intermediaries, Virtual Insurers can reduce the price of insurance and enhance protection by excluding investment elements. Of course, without intermediaries providing advice to customers, Virtual Insurers must innovate solutions to encourage customers to buy protection.

Online Insurers around the world have developed interesting approaches to attract customers and I wanted to share two important approaches:

1. Education and guided customer experience

Insurance, especially life insurance, is often viewed as complex and difficult to understand. Without an agent, it is critical to reduce barriers and guide customers through an informed insurance purchase.

Ladder Life (USA) reproduces the agent experience with a natural flow of simple interview questions, just as an agent would, exploring a prospect’s knowledge of insurance, family and financial situation, and health condition. There is also a simple calculator to help customers quickly assess the appropriate amount of protection with ~7 fields including mortgage, debt, dependents, savings, etc.

2. Insurance seamlessly a part of everyday life

Most people rarely consider shopping for insurance and often require time to consider a long-term purchase. Thus, virtual insurance companies need to inspire customers to consider insurance protection as a natural part of financial planning, like savings.

Snack by Income (Singapore) ventures to do this by working with various partners to take small bits (Snack) of spare change from payments for everyday activities like transportation using their transit card (EZ-Link) to contribute to their insurance protection. This way, customers do not need to consciously allocate large sums of money towards protection, and naturally pay for insurance protection just by going along their daily lives.

Besides these two approaches, Virtual Insurers can leverage technology to create more dynamic and unique products without the legacy of old technology and need to balance the demands of an existing big business. Virtual Insurers are unconstrained and can create products faster and address more specific needs of smaller groups of communities but are also challenged to overcome the traditional expression, “Insurance is sold, not bought”, and need innovative approaches to engage customers without intermediaries.