Bite-sized cover helps close the life insurance gap

In short

• A new cohort of workers that doesn’t fit the traditional employment profile has widened the insurance gap.
• Some insurers have developed a solution: module-based, embedded insurance.
• As well as providing protection for employees, embedded insurance offers employers an opportunity to differentiate themselves with meaningful benefits.

Australia has a serious problem with under-insurance. The Council of Australian Life Insurers reports that around one million Australians lack adequate cover for death or total and permanent disability, while approximately 3.4 million Australians fall short in terms of income protection.

The insurance itself is one contributory factor. Traditional cover is a poor fit for many employees such as gig workers, contractors, younger people, low-income earners and self-employed professionals.

Some insurers have recognised this and are now responding with innovative, embedded solutions.

“We worked with our partner Cover Genius to help close the under-insurance gap,” says Alexis Denby, TAL general manager of Consumer and Growth. “Now, with backd by TAL, we can offer simple and accessible coverage to those who might be excluded from traditional options.”

backd by TAL is a digital-first life and income protection product that’s embedded into employer payroll and HR systems.

Workers can opt in with no medical underwriting and, as cover is offered in bite-sized modules, it can also be more affordable.

“Embedding life and income insurance into platforms workers regularly use is a logical next step for the industry, especially for younger demographics who are accustomed to making purchases online and are familiar with the idea of embedded protection,” says Angus McDonald, CEO and co-founder of Cover Genius.

“While initially backd by TAL will be an employee benefit provided by the employer, continuation of cover is something we are exploring as its next phase.”

Meeting the need in the Philippines

AXA is on a similar mission to make insurance, including life insurance and income protection, inclusive and accessible.

“Through AXA EssentiALL, our global inclusive insurance unit, we design affordable, practical solutions for individuals who are often left without protection,” says Ayman Kandil, CEO of AXA Philippines.

“Here, we have partnered with the Grab and MOVE IT ride-hailing and motorcycle taxi platforms to provide embedded insurance for drivers and delivery partners.”

Kandil adds that the microinsurance broker Philinsure, now part of global firm Gallagher, made this possible by providing regulatory compliance and microinsurance expertise, which bridges the gap between insurer and gig platforms.

“This is one of the first initiatives of its kind in the country,” he says. “We see it as a model for extending protection to other under-served groups such as freelancers, service workers and informal entrepreneurs.”

Differentiation for employers

Along with security for employees, embedded insurance offers employers an opportunity to differentiate themselves in the market. “In today’s environment, many workers value security and wellbeing as much as salary,” says Kandil.

“Employee benefits not only strengthen welfare but also help employers to attract talent, boost productivity and futureproof their teams.”

Many employers now recognise the value of providing meaningful benefits for their employees.

“With backd by TAL, they have much more affordable and accessible ways to provide workers in all kinds of situations with something they’ll appreciate, a level of protection that might otherwise be unavailable to them,” says Denby.

This type of cover need not be limited to part-time workers, contractors and casual employees, either. “The principle of embedded, seamless protection can benefit all types of workers, including those in traditional corporate roles,” says McDonald.

The cover can also work in organisations of all sizes. “Whether they’re large enterprises or SMEs, employers can adopt group life, accident and health coverage that is modular, scalable, affordable and designed to grow with their business,” says Kandil.

Opportunities for insurers

Both TAL and AXA see embedded protection as a good introduction to more extensive insurance cover. “backd by TAL was designed to be a simple, affordable and accessible employee benefit for as many people as possible, not to solve complex protection needs,” says Denby.

“We’re hoping that, in the future, we can stay partnered with our customers as their needs evolve to help them maintain the right levels of cover.”

Brokers and insurers could play a key role in reducing under-insurance as distribution partners for innovative insurance solutions. “backd by TAL perfectly complements the life insurance employee benefit propositions that already exist in the market,” says Denby.

“We really encourage ANZIIF members to think about the potential clients who need cover traditional products can’t provide.”

Kandil advises insurers venturing into insurance for contractors and gig workers to prioritise affordability and flexibility. “It’s vital that premiums align with the variable earnings,” he says.

“Financial literacy and trust must be intrinsic to the partnership and, as many in this segment may have limited prior experience with insurance, clear and jargon-free communication is essential.”

Partnerships must also comply with evolving rules around digital distribution and financial inclusion. “This is not a task that insurers can tackle alone,” he says. “It requires meaningful partnerships with employers, platforms and even public institutions.”

In the Philippines, these initiatives also align with larger discussions on how more workers can be integrated into national social protection systems.

“Private companies and policymakers must recognise that ensuring the long-term welfare of all workers is not just an economic necessity but a moral and social responsibility,” says Kandil.

“While challenges remain, innovative insurance solutions, improved accessibility and stronger collaboration amongst all stakeholders are laying the foundation for a more secure and sustainable future for workers.”