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Expert discusses Affinity insurance for specific groups via insurer and non-insurer partnerships. It offers efficient, affordable solutions on digital platforms.
Brokers will play key role in the evolving space as the associated risk and the relevant coverages will be changing very fast for example – climate risk.
Authored by Mr. Ajay Prabhu, Managing Director – Affinity, Lockton India: Insurance is the financial safety net that makes sure one is protected in times of need. Within the insurance ambit, Affinity insurance is crafted for a specific group sharing common interests, professional ties and is offered via partnerships between insurers and non-insurance entities.
At the basic level, Affinity insurance is a compact between insurers and non-insurance entities. These could include professional associations, retail outlets, e-commerce platforms, and digital services to offer integrated insurance solutions to end-consumers within the customer’s purchase journey. As the digital economy gathers steam, insurers are leaning on Affinity Insurance to make their offerings efficient, affordable, and relevant.
This could include a professional association offering members discounted liability insurance, or an e-commerce platform offering insurance with buying a product. It is fast becoming the go-to tool for everyone, be it insurers, brokers, or distribution partners and provides the opportunity for sharp, tailored, embedded insurance options backed by customer-centric coverage.
The digital impact
There are more than 800 million active internet users in India, making the country one of the largest digital consumer markets. This shift means changing consumer expectations and an increased demand for convenience and personalisation. Insurers, brokers, and digital platforms want to include affinity insurance solutions complementary to broader consumer behaviour instead of being a mere add-on. As digital solutions change the modern workplace, bringing in new elements such as gig work, remote working options and so on, affinity insurance solutions could be helpful.
India is now the world’s largest country by population and boasts of a working age population of 900 million. Insurance solutions will offer a financial safety blanket and protection against black swan events. As mentioned earlier, the nature of work is also changing, with flexible work hours, remote jobs, and freelancing gigs becoming popular among the younger populace, calling for new microinsurance policies and pay-as-you-go coverage options.
For older employees, the focus remains on retirement and health insurance plans that are on-demand and flexible. The big push in both cases needs to be making the buying process simple, with the ability to position insurance as a good value-added service when one purchases other items, much like a warranty when buying a TV set or mobile phone.
Digital makes things easy
Brokers will play key role in the evolving space as the associated risk and the relevant coverages will be changing very fast for example – climate risk. This further strengthen the collaboration between brokers and others in the ecosystem like insures/surveyors/claim specialist/reinsures. Insurers will need to incorporate affinity insurance solutions at the sale point in an increasingly digital world. Insurance offerings are available at product checkouts, ride-hailing apps, travel bookings, and digital wallets. Documentation and paperwork must be reduced with tools such as instant KYC, digital identity verification, and AI-powered approval processes. We should consider tailored coverage mixed with transparent pricing to build customer trust. It is important to offer insurance as an added value proposition, not simply an add-on.
Technology platforms such as e-commerce platforms with dedicated customer journeys basis the product journeys, fintech apps, mobility services, and telecom , payment banks providers are key distribution channels allowing customers to get coverage when transacting. Tech tools providing data and expertise available with broker specialist can help gain sharp insights by analysing user behaviour to offer customised coverage options based on consumer needs. This helps consumers pick and choose plans that work best for them and not pay for generic plans. It builds trust and improves insurance penetration, resulting in a win-win for the insurer.
Here, it is important to talk about brokers having the specialist and technical know-how bridge the gap between insurers, and customers by breaking down new-age risks such as cyber threats or parametric insurance models distributed via open or dedicated digital platforms. They use their expertise to make complex coverage terms easily understood. They also take the lead in integrating insurance into the wider digital systems, thus helping in sharper distribution, better servicing and claims management. Tech tools can reduce operational costs and make embedded insurance solutions affordable.
The tech push means traditional insurance brokers and distributors need to move away from old-world product design, distribution models and emerge as strategic consultants. They should be able to design customised affinity-based digital insurance solutions, negotiate coverage and pricing structures aligned with customer risk and work on enhancing compliance with IRDAI regulations.
What does the future hold?
As Bob Dylan once sang, “The Times Are a-Changing’, it does appear to be true, especially in insurance. This means that predicting what happens next comes with a degree of uncertainty. Affinity insurance solutions are going beyond the standard solutions to niche and bundled offerings such as cyber insurance for fintech and digital banking users, use-based motor insurance with car rental or ride-hailing apps, and gadget protection plans sold with electronics purchases. Tech tools and broker expertise will continue to improve processes such as underwriting and claims management and aid in better consumer engagement. It will help in fast risk assessments, offer automated policies and aid in fraud detection.
Insurers will look for sharp partnerships with Broking firms especially with technical know-how, e-commerce platforms and insurtech solutions that will expand insurance to many underserved markets, thereby making coverage inclusive and relevant.
No conversation about affinity insurance is complete without mentioning the changes brought about by the young adopters. As mentioned earlier, the Gen Z cohort prefers hyper-relevant, event-driven coverage and micro-insurance products such as mobile device protection, ride accident coverage, and single-event policies like concert ticket insurance. For instance, as India becomes a hub for big concerts, attendees can get instant protection against cancellations, theft, or medical emergencies with a few taps on their phones. Insurers will need to shift from offering size-fit policies to flexible and behaviour-based solutions.
The mix of digitisation and affinity insurance will be a win-win for all those involved. Sharp tech updates and solid strategic partnerships will help drive policyholder-centric solutions that allow the industry tap new growth avenues.
Affinity insurance will redefine how consumers access insurance and make the process seamless, swift and more precise. Whether it is embedded in an e-commerce checkout, a ride-hailing app, or a fintech platform, affinity insurance will use instant KYC, AI-driven underwriting, and tailored to get consumers best coverage at the right moment, without friction.
It is authored by Mr. Ajay Prabhu, Managing Director – Affinity, Lockton India
The views expressed in this article are those of the author and do not represent the stand of this publication.
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