Microinsurance to transform the Vietnamese insurance industry

Microinsurance empowers individuals to protect themselves against the risks they face today, whether it's safeguarding their electronics from liquid damage or ensuring affordable coverage for spontaneous travel adventures, writes Tri Nguyen, country manager for Vietnam at Singaporean firm Igloo.

In Vietnam, insurance awareness primarily centers around life insurance, health insurance, and vehicle insurance. While awareness of insurance importance is increasing, the aforementioned traditional insurance products are failing to resonate with many people due to various reasons, including affordability, accessibility, and relevance.

These factors have largely contributed to the low insurance penetration in Vietnam. Currently, Vietnam's ratio of insurance premium revenue to GDP is just more than 3%, lower than the ASEAN average rate of 3.35%, the Asian figure of 5.37%, and the world tally of 6.3%.

This is where microinsurance is changing the game, as insurtechs and insurance companies have introduced personalized products that cater directly to the unique lifestyles and needs of Vietnamese people as they go through various stages of their lives.

As the leading insurtech in the region, Igloo and its partners have been instrumental in facilitating a wide array of microinsurance products that safeguard the unique needs of digital natives and underserved sectors. These products run from personal accident, to electronics protection, transit protection, and especially protecting farmers with our Weather Index Insurance.

While traditional insurance products may come with high premiums and broad coverage, microinsurance products are designed to provide targeted protection against specific risks that are relevant to our daily lives. By offering affordable products that address immediate needs, microinsurance can serve as the gateway to broader insurance protection and may be key to boosting insurance penetration.

Among Igloo's most popular insurance products in Vietnam is the Weather Index Insurance, a pioneering blockchain-based parametric insurance for farmers. The product has drawn interest from partners in Vietnam and across Southeast Asia for its potential to greatly benefit the agricultural sector.

Despite its novelty in a highly traditional sector, the Weather Index Insurance has already been adopted by thousands of farmers since launching in November 2022, and covers 20,000 hectares of coffee and paddy farms.

Igloo believes it’s important for insurers and insurtechs like themselves to continuously develop relevant products and make sense for their customers.

The growth of the microinsurance industry underscores how the approach to insurance awareness is no longer one size fits all. It must evolve alongside our digital-first lifestyles, safeguarding our ever-expanding virtual assets and providing peace of mind in the face of modern risks.

This also means ensuring that the products are where the consumers are - online, thus making sure that the entire buyer’s journey from consideration to purchase and claims must be easy, accessible, and uncomplicated.

The 2023 Insurance Barometer Study found that the younger generation would rather purchase insurance online than go through a financial professional. This indicates that younger generations are increasingly preferring and adopting online channels for purchasing insurance.

This is where the availability of embedded insurance has been able to expand the channels of distribution, providing consumers with a convenient way to discover, evaluate, and purchase products in just a few clicks. Igloo does this through partnerships with major e-commerce platforms like Lazada and Shopee, leading payment platforms such as DANA in Indonesia and GCash in the Philippines, and retail chains like Circle K in Vietnam.

As Igloo continues to play a vital role in making microinsurance accessible to millions across Southeast Asia, the focus remains on prioritizing products that not only raise insurance awareness and adoption, but also embody relevance, innovation, and customer-centricity.