Credit where credit is due — This was inspired by Chubb's "Banks and the Digital Wallet Race: The Embedded Insurance Strategy," Chubb's global survey of banks, fintechs and consumers.
The dream of a one unified cooperative financial system is the reason why "1" or "One" appears in many cooperative endeavors and projects.
1CISP. 1CoopHealth. OneCoopTech. One Cooperative Bank. You get the point. We are in the middle of this 20-year journey today!
Digital wallets are becoming more popular and convenient as a way to store and use money in the online world.
Like CoopPay, the cooperatives' latest innovation, they allow users to make payments, transfer funds, and access other financial services without the need for physical cards or cash.
How do banks leverage their existing customer base and trust to compete in the digital wallet market? Let's see, and let's also see how other parts of a unified (i.e. one) cooperative ecosystem benefit from this.
One possible strategy for banks is to offer embedded insurance products that can protect users from the potential losses and liabilities associated with digital transactions.
Embedded insurance is a form of contextual insurance that is integrated into the user journey of another product or service, such as a digital wallet.
Embedded insurance can provide coverage for specific risks or events that are relevant to the user’s needs and preferences at the point of sale or use.
Some examples of embedded insurance products that can be offered by banks through their digital wallets are:
- Cybersecurity insurance: This can cover the costs of restoring data, identity, and credit in case of a cyberattack or hacking incident that compromises the user’s digital wallet or personal information.
- Purchase protection insurance: This can cover the loss, damage, or theft of goods or services purchased using the digital wallet, as well as disputes or claims arising from defective or fraudulent transactions.
- Travel insurance: This can cover medical expenses, trip cancellation, baggage loss, or other travel-related risks that may occur when using the digital wallet abroad or for booking travel arrangements.
- Life insurance: This can provide a lump sum payment to the user’s beneficiaries in case of death or disability caused by an accident or illness while using the digital wallet.
By offering embedded insurance products, banks can create more value and loyalty for their customers, as well as generate additional revenue streams and cross-selling opportunities.
Embedded insurance can also help banks differentiate themselves from other digital wallet providers and fintech players, who may not have the same level of expertise, trust, and regulatory compliance as banks.
However, embedded insurance also requires banks to adopt a customer-centric and agile approach to product development and delivery.
Banks need to understand their customers’ needs, preferences, and behaviors, as well as the risks and opportunities associated with different types of digital transactions.
Banks also need to partner with insurers who can provide flexible and customized solutions that can be easily integrated into the digital wallet platform and user experience.
Three lessons for 1 Cooperative Insurance System of the Philippines Life and General Insurer (1CISP), the Philippines' leading and most innovative cooperative insurer:
- 1CISP can explore the potential of embedded insurance as a way to reach new customers and markets, especially those who are digitally savvy and prefer online transactions. 1CISP can leverage its cooperative network to offer embedded insurance products that are affordable, accessible, and aligned with the needs and aspirations of its members.
- 1CISP can also use embedded insurance as a way to enhance its existing products and services, such as its microinsurance. 1CISP can integrate these products into its own digital wallet platform or partner with other platforms that cater to its target segments. This can increase the convenience and relevance of its offerings, as well as improve customer retention and satisfaction.
- 1CISP can also learn from the best practices and challenges of banks in offering embedded insurance products. 1CISP can adopt a customer-centric and agile approach to product development and delivery, as well as ensure that its embedded insurance products are compliant with the relevant laws and regulations. 1CISP can also collaborate with fintech players and regulators to create a conducive ecosystem for embedded insurance innovation.
The basis for the formation of insurance cooperatives under Republic Act No. 9520 is Article 105, which states that "existing cooperatives may organize themselves into a cooperative insurance entity [cooperative insurance societies] for the purpose of engaging in the business of insuring life and property of cooperatives and their members."
Cooperative insurance societies shall provide its constituting members different types of insurance coverage consisting of, but not limited to, life insurance with special group coverage, loan protection, retirement plans, endowment with health and accident coverage, fire insurance, motor vehicle coverage, bonding, crop and livestock protection and equipment insurance.
Insurance cooperatives in the Philippines are regulated by both the Cooperative Development Authority and the Insurance Commission.