Page 53 - The Insurance Times July 2025

Challenges to Implementation InsurTech platforms are experimenting with modular
life covers for short durations.
Despite its appeal, PAYG life insurance faces several hurdles:
1. Regulatory Framework
As smartphone and wearable penetration rises in Tier 2-4
Most life insurance regulations are designed around
long-term, fixed-premium products. PAYG's variable cities, PAYG models could become a game-changer for both
pricing and dynamic durations may need fresh guide- urban youth and rural populations.
lines from regulators like IRDAI to ensure transparency
and consumer protection. Future Outlook: From Insurance to As-
2. Data Privacy and Security surance
Since PAYG relies heavily on personal health and activ- PAYG Life Insurance is not just a product; it's a paradigm
ity data, robust cybersecurity, consent frameworks, and shift. It transforms insurance from a passive financial prod-
data-sharing protocols are vital. Any breach could un-
uct to an active life partner, encouraging well-being, offer-
dermine trust and lead to legal challenges.
ing control, and ensuring affordability.
3. Operational Complexity
Managing thousands of dynamic policies, integrating For insurers, it opens doors to:
with wearables or digital apps, and calculating real-time Better customer retention through engagement-driven
premium adjustments require advanced infrastructure, rewards
cloud-based systems, and AI-driven underwriting.
Reduced claim costs via preventive interventions
4. Consumer Education
Many potential customers may be unfamiliar with the New customer segments like students, gig workers, and
concept. Clear communication is essential to explain small business owners
why premiums fluctuate and how coverage can be op- To realize its potential, insurers must:
timized. Collaborate with digital health ecosystems and FinTech
5. Moral Hazard and Adverse Selection partners
Customers might reduce healthy behaviors once they Invest in AI, cloud platforms, and secure data architec-
receive a lower rate or might underreport their condi- ture
tions. Insurers must rely on continuous data and behav-
ioral analytics to manage these risks. Engage with regulators to frame agile and consumer-
friendly guidelines

Global and Indian Landscape
Conclusion
Globally, startups like Ladder, Fabric, and VitalityLife are
piloting PAYG-inspired products. They combine lifestyle scor- In a fast-changing world, Pay-As-You-Go life insurance offers
ing, flexible terms, and instant policy issuance with gamified the promise of flexibility, affordability, and personalization-
wellness tracking. elements the traditional model often lacks. By aligning cov-
erage with real-life needs and behaviors, it represents the
In India, while no pure-play PAYG life product exists yet, next frontier in making life insurance inclusive, relevant, and
trends are moving in that direction: impactful.
Some insurers are rewarding healthy lifestyle behavior
with premium discounts. Insurers who embrace this disruption early will not only at-
Wellness riders and term plans with return of premiums tract digital-first customers but also build resilient, tech-
based on policyholder behavior are gaining traction. enabled business models ready for the future.

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The Insurance Times July 2025 47