Understanding Contextual Insurance: A Game-Changer in the Insurance Industry

Indian consumers are becoming more selective and tech-savvy when it comes to their lifestyle choices. They prefer payments and financial safety in the form of te-sized solutions. While traditional insurance covers like life, health, and property insurance are still popular, there is a growing demand for contextual insurance.

Contextual insurance offers cover for risks that arise in specific situations. An example of this is travel insurance, where passengers can book a te-sized insurance option along with their tickets. This insurance provides coverage in case of flight cancellations, offering refunds or complimentary food and accommodation until the rescheduled flight.

Convenience plays a significant role in driving the adoption of contextual insurance. The embedded offerings are delivered instantly, eliminating the hassle of paperwork. Examples of contextual insurance include protection offered on purchases of smartphones, household appliances, and car rental packages. Recently, cyber insurance has also emerged to safeguard individuals against cyber-attacks or breaches involving sensitive data.

The rise of contextual insurance can be attributed to the increasing personalization of the consumer experience. Technologies such as Artificial Intelligence, Machine Learning, and Big Data enable insurers to analyze customer data and offer customized policies at the point of sale. APIs help integrate contextual insurance solutions into existing systems, allowing for customer engagement across multiple touchpoints.

Furthermore, contextual insurance is not only limited to discretionary purchases but can also complement traditional long-term insurance plans. A testament to its potential is the prediction McKinsey & Company that the contextual insurance market will reach $270 billion in terms of gross written premiums 2030.

InsurTech firms are partnering with insurers, banks, retailers, and other product and service providers to develop smaller, personalized insurance products. These offerings can be delivered to customers through various digital touchpoints, providing affordable and relevant coverage instantly.

In a fast-evolving world where risks can vary, contextual insurance acts as an essential safety net. It not only meets the growing demands of consumers for transparency, simplicity, and personalization but also drives innovation and growth in the insurance industry. With personalized customer experiences becoming crucial for business success, contextual insurance has the potential to be a game-changer for the industry.

Source: Surjendu Kulia, co-founder & CEO, Zopper

Sources:
– Surjendu Kulia, co-founder & CEO, Zopper