Is your company really using technology to deliver more?

It’s hard to deny the transformation that the digital revolution has thrust on us and on our habits. Despite this, the insurance sector has seemed immune from change, steadfast in its belief that the business approach traditionally used in the sector – insurer-to-broker-to-client, using a one-size-fits-all policy – would continue to be the main approach used by the industry in the future.

That is, until now.

Insurtech is an all-encompassing term for the marriage of insurance and technology to achieve improvements, savings and efficiencies in the sector. In 2016, global investment in insurtech startups reached USD 1.8bn – part of a broader fintech (finance/technology) sector now estimated to be worth over USD 15bn globally. While Forbes states over three-quarters of insurtech investment to date has been in the US and Europe, the Asian market is now firmly in investors’ sights, on the back of some major startups in China.

Still, not everyone is prepared for the change.

A recent PWC survey of 544 insurers (19% of which came from Asia) revealed some disparity between what insurance executives believed and their actions in practice. Around 74% of responders agreed that insurtech would disrupt their business over the next five years, with 9 out of 10 expecting at least part of their business to be at risk. Yet only 43% had insurtech at the heart of their strategy.

A recent PWC survey of 544 insurers
(19% of which came from Asia) revealed some
disparity between what insurance executives
believed and their actions in practice.

So why do many leaders in the industry think that the insurtech revolution is so important (even if not everyone is acting on it)? And with that in mind, how can we move to ensure it forms a central part of any strategy, particularly around areas such as data collection and customer service?

Let’s take a look.

1. Data collection: Nowadays data is everywhere and can be collected from anywhere. Southeast Asia is rapidly becoming an ultra-connected digital wonderland. We rely on the internet for many things in life, from research and shopping to accessing media and tracking our health. And we carry it with us wherever we go. The region already has 250 million smartphone users, and a 2016 report by Bain & Company estimated that 100 million people in Singapore, Thailand, Malaysia, Indonesia, the Philippines and Vietnam had made a purchase online.

The Association of British Insurers states that around 90% of all the data in the world today has been created in just the past two years. The insurance industry cannot afford to miss out on the opportunities that this data explosion represents. It gives both a better understanding of consumers’ behaviour, and improves our knowledge of the likelihood of financial loss – or risk – associated with that behaviour. 

2. Customer satisfaction: A 2014 consumer satisfaction report by Ernst and Young estimated that one quarter of people surveyed in Malaysia and Indonesia had limited trust in the insurance industry. This was below the level of both banks and pharmaceutical companies. The survey also uncovered a huge gap between what consumers want and the service they actually receive. In Asia-Pacific, over one-third of people who responded had cancelled a policy because they were unhappy with the service, while more than half had done so because they didn’t like the benefits or coverage they received from the policy. And 44% of respondents were not satisfied with the level of communication provided by their insurers.

Overall, consumers desired more frequent, meaningful and personalised contact.

This may come as no surprise to those of us who have purchased insurance at some point in our lives. But, through technology, there may be solutions that really can give consumers what they want.

3. Customer evolution: Alongside the above findings, new types of consumers have arrived on the scene. People born between 1977 and 1995 are both tech-savvy and – often – under-insured because of a tendency to delay life decisions such as purchasing a car or starting a family. More than any other generation, this group demands information and purchases to be available online – they are more likely to shop around and expect products to be individualised. A one-size-fits-all offering does not cut it with them.

People born between 1977 and 1995 are both
tech-savvy and – often – under-insured
because of a tendency to delay life decisions
such as purchasing a car or starting a family.

Ernst and Young estimate that 60% of the above-mentioned age group are located in Asia-Pacific, while the region’s middle class is also growing rapidly. A study by Nielsen estimated that by 2012 the number of middle class people in the region already numbered 190 million, and that by 2020 it would have more than doubled, to 400 million. This means more disposable income, more purchases and more need to insure them. 

Future trends

So what trends are emerging in our region? As we have established, only 43% of insurers have insurtech at the heart of their strategy, but that’s not to say some great work isn’t being done in Southeast Asia. In fact, it’s often smaller players with technical know-how and the innovative freedom to design great new products that are able to out-manoeuvre their larger rivals to better meet customer needs.

Let’s look at a few examples of tech being used in our region with great results – thanks to smaller, startup businesses. 

1. Using data to improve products and user experience: The explosion in the number of people using devices and accessing the internet is generating a wealth of information that can be collected and mined for important insights into the way consumers behave. Small details make big differences. And the data is not just coming from phones and laptops. It may be a smart lock that detects how often it’s opened, or a car that records routes and speeds. And there are companies like Digital Fingerprint, turning social data into insurance data; or the Singapore-based Shift Technology which is fighting insurance fraud using artificial intelligence.

Capturing more data also enables better behavioural analytics. Knowing why a customer did something creates opportunities to tailor the user experience. For an insurer this could mean using ‘chat bots’ to automatically recommend products or answer basic questions. Online tracking can be used to recognise and personalise the customer’s journey to help reduce repetition and hassle if they later contact a call centre.

2. Reducing costs and time: If consumers are going to let insurers gather so much information about them, they want to see benefits in return. Energy suppliers charge for the precise amount of gas or electricity we use, so why shouldn’t insurance companies do the same? In Malaysia, Katsana is bringing affordable GPS tracking technology, sometimes known as telematics, to the mass market, aiming to reduce both insurance premiums and car theft. In the US, meanwhile, the startup MetroMile is now offering pay-per-mile insurance, targeting people who drive only a limited number of miles each year.

For the health conscious, insurers are also jumping on the back of fitness trackers. Fitsense and Sureify, both based in Singapore, track physical activity on the assumption that more active people are generally healthier, and so represent less risk for health or life insurance – which translates to lower premiums.

And what the user really wants is for things to be easy to understand – and purchase. In Singapore, online insurer Budget Direct promises just that by cutting out the middleman to offer premiums direct, alongside savings of 15% to 20%.

In Singapore, online insurer Budget Direct
promises just that by cutting out the
middleman to offer premiums direct,
alongside savings of 15% to 20%.

Across Europe and the US, aggregators – price and premium comparison sites – are commonplace and popular. They reduce the need to approach brokers, or to do time-consuming independent research. Until recently, however, they were relatively scarce in Southeast Asia. The first – CompareXpress – was launched in Singapore in 2010, while NowCompare now serves Thailand, Hong Kong and China. In Malaysia, meanwhile, online startup U for Life cuts out the middle-man and allows consumers to purchase life insurance instantly online. 

3. Encouraging collaboration: As insurance companies begin to acknowledge the role insurtech startups are playing, they are opening up ways to attract talent into the sector. Allianz Asia is one example. Towards the end of 2016 the company announced the launch of its Digital Arena innovation platform, which aims to encourage startups and entrepreneurs to share and pitch ideas in the hope of securing investment and form long-term partnerships. At the heart of this platform is a website where participants can be recruited to test out new ideas.

This is an example of how insurtech startups are rapidly reinventing how insurance is experienced across Asia. It’s an exciting time but a challenging one. There‘s a real risk that if established insurers don’t keep up with technology it will leave them behind.

So if you’re among the 57% of insurers globally that have not yet found room for insurtech at the heart of your business strategy, it’s time to think again.


Inova care logo

Inova care is an industry leading consulting and health care administration company specializing in managed care, clinical pathways and cost containment solutions for corporations and insurance companies.


Subscribe to our Newsletter