Exclusive: ‘Infinite Ways To Bridge The Gap’ – Sean Ringsted, Chubb in “The Insurtech Magazine”
Embedding insurance in someone else’s transaction flow can create endless opportunities for large-scale insurers, says Chubb’s Sean Ringsted
The global protection gap is widening. According to one report, it reached US$1.2 trillion in 2019, the chasm between economic and insured losses driven by natural disasters, mortality and health, with Asia and Latin America emerging as the most exposed regions.
But that was before the world was plunged into a risk scenario that was off the scale. As lifestyles and employment practices across both the richest and poorest societies in the world changed as a consequence of the COVID-19 pandemic, underinsurance became an issue for us all. Take the number of people forced into gig work, many for fast-growing platform companies, who have little or nothing to fall back on when laid off due to illness or injury.
In Latin America, few have had access to the ultimate protection – life and disability insurance, including unexpected funeral expenses, which have hit many families in the current crisis hard. It was against this background that global insurer Chubb and the world’s biggest neo, Nubank, leveraged API-driven technology to launch a fully digital life insurance offering in Brazil, embedded into the bank’s app last December.
Underwritten by Chubb, Nubank Vida was one of the first to use the integration capabilities of Chubb Studio, the global digital product distribution platform rolled out by the company three months earlier. Described as ‘insurance in a box’, it aims to simplify and streamline distribution of Chubb’s insurance products through partners’ digital channels around the world. The Nubank Vida initiative enables quotes, bill payment and account management all to be transacted digitally – basic coverage including natural or accidental death, as well as funeral assistance for family members and living benefits covering hospitalisation for accident or disability.
“The Nubank partnership is a great opportunity for us,” says Sean Ringsted, chief digital officer and chief risk officer for Chubb Group. “It has 40 million customers in Latin America and we’re offering them life insurance with literally three clicks. We’re taking a product you might think is pretty complicated to buy, involving a lot of paperwork, and putting it there in the app, with three questions.”
Such is the power of embedded finance – the ability to provide coverage and protections as a native feature within a product transaction, a user service or as part of someone else’s platform. It has the potential to transform the distribution model and Chubb is an incumbent insurer demonstrating it can be monetised at scale. The Chubb Studio concept enables the insurer to penetrate the value chain in retail, e-commerce, banking, fintech, airline, telecommunications and many other of its partners’ industries, exploiting the still nascent concept of open finance.
“It provides the foundation for you to layer on additional services, offered at the right place, at the right time: in the case of insurance, to offer products in a way that’s seamless and very contextual,” says Ringsted. “Chubb Studio allows us to pass on our products and services, through an API tech layer to our partners and ride the rails of embedded finance.”
While the launch of Chubb Studio signalled a strategic shift towards this new model for the insurer, it had already implemented API integration with third parties, notably through its 2018 partnership with southeast Asia’s super app Grab. It began by giving Grab’s driver-partners access to insurance services, including loss of income, per-ride schemes, personal accident policies and motor plans, through their Grab driver app.
At the start of 2020, travel insurance, underwritten by Chubb, was made available to Grab’s Singapore-based customers, too, instantly available from S$2.50 per day for travel to any destination globally. Going forward, the two companies continue to explore leveraging data technology from Grab’s platform, including telematics, machine learning and predictive analytics, to offer insurance solutions personalised to the specific needs of different private-hire vehicle drivers in the region.
The Chubb partnership was announced as part of the launch of Grab Financial, the fintech platform within the Grab ecosystem, which provides, among other things, payment, reward and loyalty services.
“Grab is a very good example of a fast-growing tech company that’s going into other services and verticals,” says Ringsted. “We’re able to put our insurance product straight into the transaction flow for the passenger to say ‘do I want to buy this?’ yes/no and away you go.”
Chubb’s most recent tie-up has been in the Mexican market with another super app, Colombia-headquartered unicorn Rappi. Announced in May 2021, more than 10 million users now have 100 per cent digital access to insurance products and services provided by Chubb. They include mobile phone theft or damage protection, coverage for fraudulent internet purchases and identity theft, as well as home insurance and contents protection. The key takeaway from these and other initiatives is that they’re not simply affinity marketing, where insurance comes with a related product; rather, they are embedded into the user’s experience of that product. And it exploits a key feature of the emerging insurtech ecosystem – the ability to play to ones strengths.
“First and foremost, we’re covering the risk, that”s the differentiating factor for insurers,” says Ringsted. “It takes balance sheet expertise and, because you’re also in a regulated industry, you have to be thoughtful in terms of where and how you offer insurance.”
From the partner and consumer’s perspective, though, it needs to be seamless; it’s comparatively easy to onboard and incorporate payments for an insurance policy into an app, but a truly digital process should also include policy management and claims. As Ringsted says: “At the end of the day, our promise, as insurers, is that we’re going to be there to pay at the moment of need. We have to make that financial transaction back to the customer, and make sure that is as seamless and digitally integrated as the premium payments.”
In that, Chubb is among a minority of legacy insurers to have made the most of API technology. As the Open Insurance Initiative (OII), noted in 2019, having collected a significant amount of data on the adoption and usage of APIs from across industry, only 21 per cent of incumbent insurers were directly providing access to APIs, with insurtech startups unsurprisingly leading the way in providing access to services and products.
At the time, founder of the OII Fouad Husseini commented: “The overall picture is not a pretty one. The focus of this accessibility is on the distribution of simple insurance products with 78 per cent of APIs doing one thing, albeit doing it very well, serving products and concluding a sale completely online. Only 10 per cent of APIs allow for claims-related functionality, which clearly implies that an important element of the service still relies on offline intervention.”
Further research showed that, globally, the largest number of available open APIs were auto insurance related (25 per cent), these providing traditional as well as usage-based insurance and roadside assistance solutions. The second largest segment was made up of travel insurance and parametric flight delay insurance (20 per cent), with life insurance (17 per cent) ranking third. It was also noted that, despite an ever-expanding number of insurtechs, ‘the pain of point-to-point integration is continuing, so is the cost and time expended in receiving regulatory approvals and so has the absence of truly disruptive platforms that can build financial ecosystems of significant scale’.
But that was before the launch of Chubb Studio. When it comes to leveraging APIs at scale, Chubb has few peers, giving it a distinct advantage over newcomers and potentially a decisive role in extending financial services to those who historically have had no or only limited access to them.
“When you go to Southeast Asia, as an example, there’s 400 million people, yet only 100 million have full access to banking services,” says Ringsted. “Embedded finance will open up a new cohort, and bring banking to those people who previously couldn’t access or afford traditional banking. And, as you open up those new pools, they will need insurance products.”
New pools, like that growing cohort of gig economy workers mentioned earlier. They are an obvious potential target for health and life cover, given, as Ringsted says, ‘they have very unique needs that require insurance and we can respond to that’, especially since the digital tools to provide health services have also changed: “Think of telemedicine, and the ability now to access a doctor remotely, quickly, and cheaply, and being able to bundle all of that up with insurance.
“Regulators are still figuring out how to manage embedded finance, but I think the opportunity, in terms of how we provide products and services that allow businesses to increase the size of their pies, is endless.”
This article was published in The Insurtech Magazine #06, Page 38-39
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