The insurance industry is undergoing a transformation with the emergence of insur-tech, which is the intersection of insurance and technology. Insur-Tech can offer more affordable, accessible, and customized insurance solutions for marginalized communities, especially Black and Brown families, who have historically faced barriers to obtaining adequate coverage. By leveraging the power of technology, insur-tech can help close the racial wealth gap and enable generational wealth transfer for Black and Brown families.
The Benefits of Insur-Tech for Black and Brown Families
One of the main advantages of insur-tech is that it can provide more equitable access to insurance products for Black and Brown families, who have often been excluded or discriminated against by traditional insurers. According to a report by McKinsey & Company, Black Americans are 35% less likely to have life insurance than white Americans, and Hispanic Americans are 31% less likely. This gap in coverage can have significant consequences for the financial stability and legacy of Black and Brown families.
Insur-tech can help bridge this gap by using advanced algorithms, machine learning, and artificial intelligence (AI) to improve underwriting and claims practices, enhance customer service, and offer more personalized and tailored insurance solutions. For example, insur-tech can use alternative data sources, such as social media, credit scores, or behavioral patterns, to assess risk and price policies more fairly and accurately. Insur-tech can also use digital platforms, such as mobile apps or chatbots, to reach more customers, especially those who are underserved or unbanked, and provide them with more convenient and transparent insurance services.
Another benefit of insur-tech is that it can promote fairer pricing practices for Black and Brown families, who have historically paid higher premiums or received lower payouts than white families for the same coverage. According to a study by Consumer Reports, Black drivers pay an average of $1,060 more per year than white drivers for car insurance, even when they have the same driving record and live in the same ZIP code. Similarly, a report by ProPublica found that insurers pay out 52% less for water damage claims in predominantly Black neighborhoods than in predominantly white neighborhoods.
Insur-tech can help address these racial disparities by using data-driven and transparent pricing models that reflect the actual risk and value of each policyholder. Insur-tech can also use blockchain technology to create smart contracts that automatically execute claims payments based on predefined conditions and verifiable data. This can reduce the human bias and error that often plague the traditional insurance industry.
The Role of Insur-Tech in Building Generational Wealth for Black and Brown Families
One of the most powerful ways that insur-tech can help Black and Brown families build generational wealth is by increasing their access to life insurance and annuities products, which are essential tools for wealth transfer and legacy planning. Life insurance can provide a lump sum payment to the beneficiaries of a policyholder upon their death, which can be used to pay off debts, cover funeral expenses, fund education, or invest in assets. Annuities can provide a steady stream of income to the policyholder or their heirs for a specified period of time or for life, which can help supplement retirement income or create a financial cushion.
However, many Black and Brown families lack adequate life insurance and annuities coverage due to various factors, such as lack of awareness, affordability, trust, or access. According to LIMRA, a research organization for the life insurance industry, only 54% of Black households and 47% of Hispanic households have any form of life insurance coverage, compared to 66% of white households. Moreover, only 9% of Black households and 7% of Hispanic households own individual annuities products, compared to 15% of white households.
Insur-tech can help increase the penetration and adoption of life insurance and annuities products among Black and Brown families by offering more affordable, accessible, and customized solutions that meet their specific needs and preferences. For example, insur-tech can use digital platforms to educate customers about the benefits and features of life insurance and annuities products, as well as provide them with online tools to compare prices and options. Insur-tech can also use innovative products, such as micro-insurance or peer-to-peer insurance, to lower the cost and risk of coverage for low-income or high-risk customers.
Additionally, insur-tech can help empower independent agents who serve Black and Brown communities by providing them with technology and support to deliver better customer service and outcomes. For instance, Insurance Elevated , founded by Eric Bosworth , is an insur-tech company that leverages technology and cultural interconnectedness to help independent agents offer customized insurance solutions that lead to sustainable wealth transfer strategies for Black and Brown families.
Insurance Elevated uses a plug-and-play sales system and an advanced CRM insurance solution to generate leads , manage relationships , and close deals . “Some of the barriers to entry for the Black and Brown communities is that they have felt insurance policies were too expensive for them” Eric Bosworth told CultureBanx GameChangers . “We decided to create a lead company that fed our life, health and annuities business while leveraging the strength of social media to grow the company.”
The Future of Insur-Tech for Black and Brown Families
The insur-tech industry is growing rapidly, with global investments reaching $7.1 billion in 2020, according to Willis Towers Watson , a leading global advisory, broking and solutions company. The COVID-19 pandemic has also accelerated the demand and adoption of digital insurance solutions, as more customers seek online and contactless insurance services. As the insur-tech industry evolves, it is important to ensure that it serves the needs and interests of Black and Brown families, who have historically been marginalized and underserved by the traditional insurance industry.
Insur-tech can offer a unique opportunity to close the racial wealth gap and enable generational wealth transfer for Black and Brown families, by providing more affordable, accessible, and customized insurance solutions. By leveraging the power of technology, insur-tech can help Black and Brown families build and protect their wealth, as well as create a lasting legacy for their future generations.
