How Insurtechs can help close the inclusivity gap and why banks and insurers should care. 

By Marta Fiorentini
Engagement Manager

Freelancers, gig workers, and small businesses with irregular incomes have long been underserved by traditional financial services. While banks have struggled to provide flexible credit and savings products, insurers face a different but related challenge: the inability of conventional underwriting models (which are designed around full-time employment and long-term commitments) to offer suitable coverage to these non-traditional workers. 

Historically, insurance has relied on pooling similar risks within stable, well-defined groups. But flexible or episodic work patterns generate data that’s volatile and often sparse, meaning it’s too unpredictable for traditional actuarial models. 

Technology is helping to address that. Artificial Intelligence (AI), machine learning, and even blockchain are enabling a new wave of risk assessment approaches, capable of underwriting individuals based on real-time or contextual data. As a result, the door is opening to more inclusive, responsive insurance models. 

Driving Inclusion Through Innovation 

At the forefront of this change is Insurtech - a fast-growing sector expected to reach USD 152.9 billion by 2033¹ - growing at a CAGR of 31.5%. The UK leads Europe in Insurtech density, with an estimated ~300 players² in 2023, whilst Asia is accelerating rapidly due to digital growth and large uninsured populations. 

Insurtech's growth centres around flexible, usage-based solutions tailored to non-traditional workers. These include: 

• On-demand insurance 

• Modular or stackable cover 

• Pay-as-you-go or micro-premiums 

 By using advanced AI models, such as Reinforcement Learning, risk profiles can be adjusted in real time based on individual behaviour (e.g., driving patterns via telematics), and premiums can be aligned with actual risk exposure³, reducing over- or underinsurance and making insurance more accessible for previously underserved segments. 

Real-world examples: 

• Tapoly (UK): Offers on-demand cover for freelancers and microbusinesses, including through white-labelled solutions.⁴ 

• Qover (Belgium): Provides embedded insurance for Deliveroo riders, and partners with banks like Revolut and ING through APIs.⁵ 

• HIVE by Income (Singapore): Offers micro-premium insurance to drivers and delivery riders across Southeast Asia.⁶ 

• Cuvva (UK): Provides hourly pay-as-you-go motor insurance for personal and business users.⁷ 

What This Means for Traditional Insurers 

For large insurers, Insurtech's may look like competitors in the consumer space. But in reality - particularly in the commercial segment - they’re better seen as partners or acquisition targets. 

Insurtech companies typically: 

• Focus on customers outside traditional insurer scopes (freelancers, micro-SMEs); or 

• Lack the capital to scale alone (making them ideal for partnership or white labelling); or  

• Offer tech that can modernise traditional insurers’ processes. 

 For incumbents, this represents a path to: 

• Enter new customer segments. 

• Launch new products or business lines. 

• Improve operational efficiency with tech from the Insurtech ecosystem. 

Why Banks Should Pay Attention: The Bancassurance Opportunity 

For banks, particularly those with SME or freelancer client bases, these new insurance models offer an opportunity to expand product portfolios, generate new revenue streams, and deepen customer relationships. 

Commercial bancassurance (the distribution of insurance products through banks) has long existed, but it’s underutilised. In a recent study carried out by KAE, awareness of banks’ commercial insurance offerings among UK small businesses and self-employed individuals was extremely low, and uptake minimal. Yet interest was high, when prompted, with businesses citing: 

• Trust in their bank 

• Convenience of one-stop service 

• Provider consolidation 

Distributing modular, on-demand insurance through bancassurance not only closes the inclusivity gap, but also creates: 

• Cross-sell opportunities 

• New revenue streams 

• Stronger customer stickiness 

But execution matters. Success depends on getting the right offer, partner, and go-to-market strategy. 

Final Thought 

Insurtech isn’t just about disruption, it’s about inclusion. And for banks and insurers willing to adapt, it opens new doors to serve a broader set of customers, stay competitive, and drive long-term growth. 

How KAE can help 

KAE provide insurance, financial services and business technology companies with clear, contextualised and actionable insights about your customers, your competitors, and your markets – helping you identify opportunities for long-term sustainable growth and build the right partnership and GTM strategies to strengthen market positioning. If you want to chat about how we can help you, get in touch.