Digital insurance partnership targets underinsured young workers

TAL and Cover Genius have announced a partnership aimed at providing simple, affordable, digital-only life and income protection insurance to workers across various employment types in Australia.

Research indicates that one million Australians are underinsured for death and total and permanent disability, while 3.4 million lack sufficient income protection, with a disproportionate impact on younger Australians. Many of these individuals work as contractors, part-time, casual, or in the gig economy, facing limited access to insurance coverage.

The new initiative, branded as backd by TAL, combines TAL's life insurance expertise with Cover Genius' digital distribution technology, targeting segments of the workforce with historically limited access to insurance due to their work arrangements. This approach leverages Cover Genius' experience embedding insurance across various industries including ticketing, logistics, and travel, where it currently serves over 41 million customers in more than 60 countries.

Digital distribution

Embedded technology in insurance is poised to transform the way many Australians purchase financial protection. Data from Cover Genius indicates that younger consumers, particularly those aged 25 to 44, are more likely to opt for bite-sized, digital insurance solutions compared to older age groups, with a preference for purchasing through trusted online platforms.

The embedded model allows companies outside the traditional insurance sector to offer personalised insurance products directly to their customers, integrated seamlessly at the point of transaction. A recent forecast by PWC suggests that by 2033, embedded insurance could account for AUD $35 billion, representing 18% of the total Australian insurance market, which is worth AUD $201 billion in gross written premiums.

Accessibility through payroll

Through this partnership, employers can provide life, income, and illness protection to their employees via digital payroll and HR platforms. The process will involve online registration, require no underwriting, and include 100% digital claims processing. 

TAL Group CEO and Managing Director, Fiona Macgregor, said, "At the core of our Cover Genius partnership is ensuring more Australians who want and need insurance can get it. To do this, cover should be tailored to their needs, and be easy to access, understand and keep. Life insurance is much more than death benefits. Last year, 74% of the 54,000 claims we paid supported the recovery of people with an illness or injury that prevented them from working. With backd, more Australians will get support critical to their recovery, addressing an important community need." 

Angus McDonald, CEO and Co-Founder at Cover Genius, described the offering as a way to remove traditional barriers to life insurance for a broader segment of the workforce.

"Many people do not have life insurance either because they feel they cannot afford it, have not been offered it or think the process will be too complex. backd overcomes these issues, by giving employers a simple way to offer their employees easily accessible protection that suits their income and financial needs by simply embedding it into their existing HR or payroll platform."

The coverage available through backd includes tailored options paying between AUD $100 and AUD $300 per day for income protection, and up to AUD $150,000 for life insurance. The offering specifically focuses on filling gaps for individuals who are not currently eligible for other insurance types. Over time, plans are in place to expand direct-to-consumer access through partnerships with organisations in sectors such as health and banking.

Responding to a documented gap

Data from the Financial Services Council Underinsurance Report and recent Australian Bureau of Statistics research confirm significant underinsurance among casual, contractor, and labour hire workers, many of whom lack employer-sponsored leave entitlements or affordable superannuation insurance options. Younger workers, in particular, are less likely to hold adequate cover for death and disability.

Mr McDonald described the evolving approach: "With backd, we're providing the right cover, via the right channel, at the right price. Solutions such as bite-sized Life and Income Protection can also serve as a way to engage younger Australians who may not yet have seriously considered their needs but have come to appreciate the ease and value of purchasing embedded protection online for other things, such as travel and music events. Making protection easy to understand, financially accessible and simple to access online through employers and other trusted partners is a logical next step in levelling the life insurance playing field."