Insurtech: what they are and how they work – El Sol de México

Insurers that operate as fintechs, insurtechs, are concentrating on the millennial generation. These companies use social networks to reach that segment of the population and show them the benefits of life, health, travel, auto or other types of insurance.

Álvaro Madrigal, CEO and co-founder of Mi Compa, a Mexican insurtech, commented that “they have developed business models and products that serve markets that traditional insurers had not reached.”

According to the 2021 National Survey of Financial Inclusion, prepared by Inegi, only 21 percent of Mexicans have some type of insurance.

Of the 17.6 million who do have this protection, 7.3 million are women and 10.3 million men.

The low percentage of insurance in Mexico is largely due to the fact that insurance is not very affordable and most people are unaware of terms such as policies, yields or interest rates, said Ramón Martínez, a professor at the Banking and Commercial School.

“Insurance is known as forecasting instruments, but in our country there is no culture of forecasting. Insurance is generally seen as an expense rather than an investment,” added the academic.

The manager of the fintech Mi Compa, a company based in León, Guanajuato and focused on the automobile insurance segment, explained that in his case they seek to streamline the quote and paperwork processes.

“The entire quoting and contracting process occurs on social networks, and is automatically connected to our central system, where the information is transmitted to the insurers, streamlining the communication processes with the client at all times,” he said.

Regarding costs, Álvaro Madrigal mentioned that the average insurance in Mexico last year exceeded eight thousand pesos, that is, about 666 pesos per month.

In the case of Mi Compa, he did not specify the average cost, but he pointed out that its cheapest product is 149 pesos per month.

GO SAFE

In Latin America, insurtechs operate under two models. On the one hand are those that create, distribute and offer their own products on digital platforms. Others, instead, offer and compare products from traditional insurers.

In Mexico, these types of digital distributors of financial products are regulated by the National Insurance and Bonds Commission (CNSF), since they work with insurers to offer their products.

Mi Compa offers its clients the acquisition of insurance through a chatbot that quotes, sells, collects, issues policies and follows up on each request.

In the event that a problem arises with services such as Mi Compa, users can go to the National Commission for the Protection and Defense of Users of Financial Services (Condusef), the body in charge of defending against possible bad services, or disagreement with the products.

This institution recommends to those interested that before acquiring a service through these platforms, they make sure that the company has a good reputation, that the insurance conditions are public and clear, and that it also has accessible support and support mechanisms. ,

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The professor of the Banking and Commercial School always suggested paying attention to small clauses. “You have to be very careful because when a person is faced with an accident situation and these insurances do not meet the coverage expected by the client, they lose credibility.”

He added that the interested party must ensure that the insurtech can cover a claim and verify that the company has the experience and resources to meet its obligations.