Insurance Sales Spike In Latin America Post-COVID

Insurance Sales Spike In Latin America Post-COVID

June 18, 2021 at 09:00AM

Purchasing insurance may be a given in the U.S., but that hasn’t always been the case in Latin America. However, that is quickly changing as LatAm is becoming a high-growth market for insurance, especially given the unprecedented disruption of day-to-day life brought on by the pandemic.

Those habits are changing, according to Julio Castellón, senior vice president and regional head of LatAm partnerships for Cover Genius, the embedded insurance company that protects the global customers of the world’s largest digital firms, including giants Booking Holdings, Intuit, eBay, Despegar in LatAm and Shopee in Southeast Asia. Doors that were once closed are opening up, marking a huge InsurTech opportunity in a vast region consisting of 33 countries, 650 million people speaking multiple languages and a mix of regulations.

In speaking with PYMNTS, Castellón noted that the pandemic has primed the path and created opportunities to expand into the region, which until now had been difficult to develop at scale.

“The Latin American region is now the fastest growing in the world in terms of eCommerce development,” he said, noting that embedded insurance products that bundle convenience, trust and offers have a good chance of succeeding with customers. “What we have now is all of the ingredients available to us to be able to raise the number of people that are insured in the region, which is quite low.”

Convenience, Context, Customizability

What technology adds to the insurance process is cohesion, Castellón said. Adding insurance isn’t a standard part of doing business in LatAm because it is an extraneous part of the purchase journey — a second step in the process that consumers usually don’t bother to follow through with.

Embedded insurance, enabled by Cover Genius’ XCover platform, creates an easier on-ramp that bundles insurance and warranties into the point of sale or sign-up for the world’s largest digital companies, Castellón said, making it easy for a consumer to purchase a product and relevant insurance at the same time.

But relevance is more than showing up at the right time; it also involves showing up with the right offer. As a result, customization is becoming increasingly important in InsurTech and eCommerce.

“Context is basically the foundation,” he said. “Convenience is what customers mostly appreciate because they want to do something that is easy for them. And then if you have a tailor-made offer for them, you have basically all you need. And if you provide a very good user experience that is seamless across markets, especially for the eCommerce player, you have all the ingredients to succeed.”

This backs up research from the PYMNTS’ and Cover Genius’ embedded insurance report, Embedded Insurance: Leveraging Transaction Data To Expand Coverage In A Digital-First Market, which examines the propensity for consumers to receive insurance offers from banks and FinTechs based on transactional data. The findings indicate this is a new frontier in embedded insurance, with 70 percent of digital bank customers and 44 percent of traditional bank customers highly interested in getting insurance offers from their banks based on their transaction data. Meanwhile, millennials and FinTech users are taking out more insurance and want it in non-traditional ways that are more convenient for them.

Navigating An Unpredictable Future

While the pandemic was an undeniable horror for businesses worldwide, it was a good time to be in the InsurTech business, as Cover Genius saw a 400 percent to 600 percent increase in interest for protection products across verticals for purchases large and small.

Castellón said Cover Genius certainly hopes to see the record-breaking growth carry on for as long as possible. In Mexico, the travel industry is on the move again and reportedly at pre-pandemic levels, while Brazil and Argentina are still under lockdowns in some places. The market remains a very turbulent place.

But it’s still a market with a lot of powerful potential, and where growth is almost assured — although the rate of that growth remains unknown.

“It remains to be seen whether attachment levels will persist, but we believe that customers in LatAm during Q2 of 2021 will continue to show a very strong disposition to purchasing insurance,” Castellón said.

The digital bell has been rung and heard across the region, and unringing that bell is not an option. The future for digital goods and services will lie in growth, he said. The players who do the most effective job of catching it and channeling it into additional business will be the ones who offer their customers peace of mind in the digital-centric, post-pandemic world.