The Digital Wallet Race intensifies

Picture by Mohamed Hassan

survey from Chubb reveals that a majority (56%) of financial executives involved in insurance decision-making globally expect to generate more than 10% of their revenue from embedded insurance within three years.  In Asia, the majority is even greater: 62%.

Further, an overwhelming 81% say digital insurance embedded in websites and apps is becoming a must-have rather than a nice-to-have offering. This sets the stage for accelerating adoption of insurance products in financial services platforms.  The trend is most pronounced in emerging markets in Asia and Latin America.

“Banks and the Digital Wallet War – The Embedded Insurance Strategy,” a global survey of 2,000 consumers and 200 finance leaders conducted during the second quarter 2023, reveals the rapid adoption and investment by banks and fintechs in embedded insurance to meet blossoming consumer demand. 

Over half of consumers globally, and even more in Asia (60%), are interested in purchasing more insurance and 43% of consumers in Asia believe that digital is the obvious way to buy it.

“The race to win a greater share of consumer digital wallets is intensifying – and banks and fintechs are taking the lead with expanded offerings of insurance products to deepen customer relationships, drive growth and narrow the protection gaps of their customers,” said Sean Ringsted, Chubb’s Chief Digital Business Officer.

“Digitized insurance is already widely popular with global consumers, and financial service providers are building trust and loyalty while unlocking new avenues for growth by offering customers simple, relevant and affordable insurance protection options embedded in their digital customer journey.

As highlighted in the report, this is a global phenomenon, with companies in Asia and Latin America investing heavily in these digital insurance capabilities.” Banks and fintechs in North America are in the race too, but not yet at the pace of their counterparts in other regions.”

Booming Consumer Demand, Led by Emerging Markets

According to Chubb’s survey, consumers are responding to a growing landscape of risk exposure with booming demand for insurance. Overall, 56% of consumers globally believe they are underinsured. These figures are more pronounced in certain markets: Sixty-two percent of consumers in Latin American and 60% in Asia expressed interest in purchasing more insurance that not only protects their “stuff,” but also their lifestyle.

Opportunity for Established Firms

Established banks and insurers have a unique opportunity to leverage these trends, especially in developed markets, all while structuring the insurance offers in compliance with applicable insurance laws and regulations.  

In Asia, 64% of consumers expressed high levels of trust purchasing insurance from established banks, and 57% indicated the same for established insurers. This compares with over 40% expressing high levels of trust in insurance purchases with digital-only insurers and 31% with digital-only banks.

Globally, 55% of financial executives agree that established insurers have an edge over digitally native insurtechs because they have consumers’ trust. 

“Markets in Asia and Latin America already demonstrate the massive growth opportunity for banks and fintechs with embedded insurance,” said Gabriel Lazaro, Head of Digital, Chubb Overseas General Insurance.

“Consumers view legacy banks and insurers as the benchmark in this space, and as a result, we have seen our network of digital distribution partners around the world continue to scale.

“Global consumer demand is massive for embedded insurance, and we believe the next stage of expansion will come in developed regions and from established financial institutions.”  

“Consumers’ growing digital-first expectations and partners’ focus on building new, sustainable revenue streams are fueling the adoption of embedded insurance by fintechs and banks in Asia,” said Isabella Carvalho, Head of Digital at Asia Pacific.

“This is likely to continue: the strong interest in added insurance protections revealed in the survey will further propel growth in Asian markets, and help to narrow protection gaps in the region.”