Periods of high inflation challenge the financial security of people and businesses. Regionally, inflation in Southeast Asia has seen a small increase from December 2022 to January 2023. Meanwhile, the Philippines’ 8.6% inflation rate currently stands as the highest in Southeast Asia for February 2023. From a macro perspective, this weakens the growth of the nation’s economy.
From a micro perspective, Juan de la Cruz, who is living paycheck-to-paycheck, is battling higher prices for his basic living expenses. On top of that, he also needs to keep up with the increasing interest rates for his loans. These mounting circumstances eventually upset his spending appetite for other needs like insurance premiums, if he can even avail of such. With no relief in sight for the consumers and the insurers alike, the latter is challenged to bring down their costs, if not modify their pricing strategies to reach more Juan de la Cruzes.
“Whether it was about their health, incomes, or properties, Filipinos have battled with different uncertainties in the last three years. This reality has further highlighted the need for insurers to take added measures to bring insurance closer to the average Filipino. This has been the industry’s mission since the beginning. As we join this thrust, we have made it a point to align with partners within and outside the industry who share our vision—to empower more Filipinos to achieve financial security, especially amid inflation, through digital solutions and technology,” said Noel Tordesillas, Head of E-Channel in Etiqa Philippines.
Insure now, pay later
One payment option that has taken root among consumers recently is the Buy Now, Pay Later (BNPL) scheme. Now, consumers seeking to spread out the cost of big-ticket purchases can get their immediate needs and defer their payments to a later time without any interest. This business model is expected to grow globally by 14 percent yearly to $44 billion in 2027 from merely $18 billion in 2020.
Making this payment option possible for the first time in the insurance space is insurtech advocate Etiqa Philippines. Through a strategic partnership with UBX, the leading open finance platform, Etiqa now provides an accessible payment alternative to consumers through the “Insure now, Pay later” scheme.
In keeping with the company’s commitment to utilizing technology to promote a more seamless customer experience, the new scheme will leverage UBX’s fintech verticals: BUx’s end-to-end payment solutions platform and Splix’s transact-now-pay-later platform.
Guided by the same BNPL scheme, Etiqa policyholders can now take advantage of a more flexible payment option by settling their premiums on an installment basis. With or without credit cards, Etiqa members can now break their dues into smaller sums. Making payments even more convenient are the 60,000 payment channels of BUx that allow Etiqa’s customers to pay their premiums via online banking, e-wallets, or over-the-counter.
Insurance for more Filipinos
“While payment and collections are the primary thrust of this partnership, through UBX we can bridge technologies from different industries –fintech to insurtech –for the benefit of the public. Not only that, we were also able to provide a less intimidating payment plan and an additional smooth and touchless payment platform for consumers. We are positive that this process would further ease the long-standing misconception about insurance as an irrelevant, inaccessible, and expensive,” highlighted Tordesillas.
The reality is that Filipino consumers will wake up to the risks and effects of rampant inflation in the next few months or even years.
But, with the help of Insure Now, Pay Later, consumers are given access to an added insurance service that can be tailor-made for their current financial capacity. This new feature becomes especially beneficial for financially vulnerable individuals and households who have limited income and are intimidated by the prospect of including insurance premiums in their increasing living expenses. Now, even with minimal payments, the empowered Juan de la Cruz can shield himself from unwanted financial situations, recover from unforeseen incidents, and secure his future.