Subscription Economy Gaining Attention Amid COVID-19... Can Insurance Also Be Subscribed To?

[Asia Economy Reporter Oh Hyung-gil] The UK-based financial conglomerate HSBC UK launched an insurance product called 'Select and Cover' in November 2019. This product allows customers to choose and subscribe to necessary coverage such as travel insurance, mobile phone insurance, and life insurance within a single insurance product.

Within 30 days after coverage begins and 30 days before renewal, customers can freely change their coverage composition without any fees. Additionally, during the change period, one coverage addition and one cancellation are allowed, enabling subscribers to enjoy the services they desire.

Recently, with the spread of the novel coronavirus infection (COVID-19) making 'Un-tact' consumption a daily routine, subscription economy services have rapidly emerged. New business models based on the subscription economy are also appearing in the insurance industry.

The subscription economy has traditionally meant paying a fixed amount over a fixed period to receive desired products, but in recent years it has expanded into various fields such as automobiles, clothing, artworks, and cosmetics.

According to the Korea Insurance Research Institute, the subscription economy concept is shifting from 'regularly purchasing products' to 'using services when I want.'

A key feature is that consumers can easily adjust their subscription status and schedule through membership applications or websites.

Brazilian insurtech startup Kakau sells monthly subscription-based home and apartment insurance products. Consumers can subscribe for their desired period, pause coverage without fees as needed, and receive auxiliary services such as house cleaning, appliance repair, and pet care.

UK insurer Aviva has been offering a monthly subscription-based insurance service since 2018 through its AvivaPlus product, allowing customers to freely change and cancel coverage for auto and home insurance whenever they want.

These subscription insurance services are structurally differentiated from traditional insurance products.

Rather than being recommended a specific insurance product and subscribing once, customers become members of the insurer’s membership program and voluntarily select coverage for various life risks arising from changing circumstances, experiencing the service accordingly.

Moon Hye-jung, a researcher at the Korea Insurance Research Institute, stated, "Building long-term customer relationships is the core of the subscription economy, and for this, it is necessary to utilize accumulated data to recommend coverage suitable for individual consumers’ lifestyles through marketing." She added, "The digitalization and automation of insurance companies will synergize to enhance consumer accessibility, satisfaction, and loyalty, becoming a driving force for the long-term development of the insurance industry."

This content was produced with the assistance of AI translation services.