Why Is Digital Insurance One of the Most Underdeveloped Areas of Fintech in Iraq, and What Opportunities Does It Offer?
At a time when digital payment wallets and money-transfer services are steadily advancing in Iraq, the insurance sector—both digital and traditional—remains one of the least developed and least utilized areas of the financial system, particularly when compared with the country’s population size and the range of risks that insurance could cover.
Why Does Traditional Insurance Have Low Adoption?
The limited adoption of insurance in Iraq is linked to several cultural and economic factors. These include limited awareness of insurance as a risk-management tool rather than an unnecessary additional expense, as well as the complexity of obtaining a traditional insurance policy and filing a claim when damage occurs.
As a result, many people avoid dealing with insurance companies altogether.
How Can Digital Insurance Change This Situation?
Digital insurance can simplify the entire purchasing process through mobile phones, from completing simplified forms to paying a small premium that provides coverage for a specific period or against a specific risk, rather than purchasing a comprehensive and expensive traditional policy.
This flexible model, often referred to as “on-demand insurance,” can appeal to a broad segment of Iraqis who may be reluctant to purchase a full annual traditional insurance policy.
Promising Areas for Digital Insurance in the Iraqi Market
Several areas deserve particular attention, including smartphone and electronic-device insurance, given that these devices have become essential tools for most households; short-term domestic and international travel insurance; and simplified health insurance products for workers in the informal sector who do not benefit from health insurance linked to formal employment.
The Relationship Between Fintech and Existing Insurance Companies
The development of digital insurance does not necessarily mean the emergence of entirely new insurance companies. Instead, it can be achieved through partnerships between licensed traditional insurance companies and technology firms specializing in simplified interfaces and user experiences.
Traditional insurers can benefit from their capital base and regulatory licenses, while technology companies can leverage their ability to reach new customers at a lower marketing cost.
Future Growth Prospects
As general financial awareness increases alongside the growing adoption of digital wallets and mobile banking services, Iraq’s digital insurance sector is expected to experience gradual growth in the coming years.
This growth will be particularly likely if leading companies in the sector succeed in offering simple and affordable products that match the purchasing power of the average Iraqi consumer.