Parametric insurance is highly beneficial for customers since it offers quick payment based on event triggers stated Bahaa Abdul Hussein. Since it is a new form of insurance, marketing plays an important role. We look at the various strategies and best practices that insurance firms can implement to market parametric insurance products.
Marketing of parametric insurance
Unlike traditional insurance, parametric insurance does not focus on losses. The focus instead is on an event that occurs. When a particular event (as mentioned in the policy) occurs, the occurrence is verified by a third party. Immediately after verification, the policy holder gets a payout as per the terms of the insurance policy.
While the concept is attractive, there are issues in increasing adoption of these policies. The primary issue is that people are not aware of parametric insurance. A majority of people know about traditional insurance policies where payout is made based on the loss suffered. The concept of payout based on trigger is new, and it takes time for people to understand.
Marketers have a challenge as well as a great opportunity. Education is the strategy that they need to adopt.
- Marketers must create awareness about parametric insurance. They must educate people on what this insurance is and why it must be adopted.
- It is important to educate customers on how parametric insurance is beneficial compared to traditional insurance. Highlighting the benefits is a key function for marketing.
- Customers can be told how parametric insurance helps in covering losses that traditional insurance does not.
- The enhanced risk coverage of parametric insurance is a key benefit. Customers must understand how this helps them.
- In parametric insurance, payout happens very quickly. This key benefit must be highlighted by marketers.
- The claims process in parametric insurance is very transparent as compared to traditional insurance. The only verification is whether the trigger event occurred. There is no haggling about the claim amount or time wasted for assessment of damages. Customers must be made aware of this key concept.
- Most importantly, the customer is fully in control in parametric insurance. They can customize their policy and use the payout as and how they want.
Conclusion
Parametric insurance is growing and offers many opportunities. Marketers need to be proactive in making people understands its benefits. They must highlight the unique benefits and explain how a policy helps in enhanced risk coverage. Marketing should thus be customer-centric and focus on awareness and education. The blog has been authored by Bahaa Abdul Hussein and has been published by the editorial board of Fintek Diary. For more information, please visit www.fintekdiary.com.
