YAS Microfinance
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Introduction
Yas Microfinance is a firm operating in the insurance industry. The insurance industry is made up of businesses that provide risk management services through the use of insurance contracts to its customers (OECD, 2017). For Yas, it has gone the digital way and adopted electronic insurance which is much more convenient and flexible when compared to the traditional insurance. The firm offers insurance such as loss of mobile phones while travelling, mountain climbing and running. The insurance can only be bought when one is boarding a bus or just before mountain climbing. Policy holders can also make use of blockchain in ensuring that the insurance they purchase is more transparent.
Competition and Industry in Digital Micro-Insurance
Digital financial services are increasingly being considered as a method of overcoming the high transaction costs that are impeding the growth and availability of financial services in the first place. In recent years, there has been a growing interest in the impact of digitalisation on microinsurance. This might be through distribution, scalability, collection, or boosting the efficiency of the value chain. Mobile microinsurance (MMI or m-insurance), which is mainly focused on the mobile device, is frequently broader and more inclusive than digital microinsurance. According to industry trends mentioned by Asongu and Nwachukwu (2018), using technology in microinsurance and within the budding mobile insurance micro sector will change the way companies such as YAS are perceived in the long term.
There cannot be enough emphasis placed on the importance of competition in the digital micro-insurance market, as it aids in the reduction of risk and ambiguity. Furthermore, competition promotes effective allocation, of resources, promotes balanced development of a nation, encourages product innovation, increases the possibilities for growth in the economy, improves the efficiency of financial services output, and minimizes credit risk (Ostagar, 2018). Competition in the digital micro-insurance market ought to be conducted in a methodical manner since it has the potential to result in insolvency. In the digital micro-insurance market, competition provides organizations with ongoing incentives to improve the efficiency of their manufacturing and distribution processes, as well as to embrace superior technology as well as innovate. Because of the adverse social welfare implications of monopoly, it is possible to draw conclusions about the advantages of competitive markets. In a monopolistic market, corporations charge higher prices for their products than their competitors, which managers utilize to keep costs at unreasonably high levels (Abel & Marire, 2021). Management then seeks targets other than profit maximization as a means of achieving their goals. Management can employ resources to maintain market dominance when they have a monopoly. When monopoly power is exercised, ineffective executives may be allowed to continue working, resulting in greater cost inefficiency.
Market and consumption Pattern Changes
When compared to other insurance forms, liability insurance tends to be a relatively new form of insurance policy. Nevertheless, the market of liability is expected to increase over the next few years. This is because of the digital transformation that organizations within the industry are willing to adopt. This transformation improves the whole process and thus consumptions patterns are expected to go higher. 70% of consumers in the insurance industry carry out some form of digital research unlike the traditional way before they buy their insurance policies according to a recent survey by PricewaterhouseCoopers (Lecture notes, 2021). The survey also revealed that 26% of the consumers used digital mediums to buy their policies. 68% were willing to use mobile apps that were offered by the insurance companies. Today’s consumers are social and connected when compared to the past. They now have the capacity to switch from one provider to the next and anticipate for instantaneous rewards and feedback.
