Healthy growth and climbing income levels will continue to fuel demand for insurance products and greater innovation in Asia-Pacific (APAC), according to EY.
The rise of millennials and advances in digital technology are raising customer expectations for innovative insurance products and digitally-enabled business models. More specifically, the growing demand for technology-driven solutions will push insurers to enhance digital capabilities. They will leverage digital technology to reach new clients, up-sell insurance services to existing ones, and enhance digital interfaces between sales agents and customers.
With nearly two-thirds of the population of APAC now using smartphone, insurtech is expected to grow quickly this year.
Similarly, George Kesselman, a financial services executive and the founder of InsurtechAsia, believes that Asia will be the key pillar in the coming revolution of insurance and most likely the hottest market for insurtech.
“It’s no longer just a pipe dream, as this time all the stars are aligning,” Kesselman wrote in a blog post.
“Take the sheer population size and rapidly emerging tech-savvy middle class, together with low effectiveness of traditional insurance distribution. Combine that with a destabilizing wave of political populism, making its rounds across much of the developed world, and you’ve got most of the ingredients for a region that will take on a leading global role for insurtech.”
Asia’s 4.4 billion people makes it by far the most populous region in the world. By 2030, Brookings Institutions estimates that 64% of the world’s middle class will be in Asia. This, combined with the region’s significantly underinsured population, makes it a very attractive region for insurers.
Already, global insurance companies have begun investing aggressively in Asia. For instance, in 2015, Manulife paid US$1.2 billion to DBS Bank for the rights to distribute its insurance products through bank branches in Singapore, Hong Kong, China and Indonesia. Similarly, AIA Group paid US$800 million to Citibank in Asia and UK insurer Prudential paid US$1.25 billion to Standard Chartered.
Alongside the big players that are investing heavily in the Asian continent, insurtech players have started to emerge in recent years to provide cheaper products and greater convenience by the use of digital channels.
So far, the major push for insurtech has come from China, India and Singapore, while Japan, South Korea and emerging countries such as Vietnam, Cambodia, the Philippines, Indonesia, Malaysia and Burma have so far lagged behind, Kesselman wrote in a separate blog post.
In China, ZhongAn was launch in 2013 by Ping An, Tencent and Alibaba to offer the country’s first complete online insurance company. ZhongAn has more than 400 million customers. The company is planning a listing in mainland China.
Other notable insurtech companies in China include peer-to-peer insurer TongJuBao, and FWD in Hong Kong, Asia’s second-richest family’s insurance venture that has re-positioned itself to become a digital insurer.
In India, PolicyBazaar and CoverFox are two major aggregators. So far, they have raised US$69.6 million and US$12 million in funding, respectively.
In Singapore, players include PolicyPal, an app that lets you manage all your insurance policies in one place, and GoBear, a comparison portal for insurance and banking products. Others, such as MyDoc, are targeting the broader health industry. MyDoc provides an access point to a user’s personal healthcare network consisting of doctors, pharmacies, insurers and lab data. Meanwhile, companies like uHoo are providing an app-based air-quality sensor for the home.
Despite weaker economic development in some regions, the outlook for the insurance sector for the next few years has brightened, thanks to Asia, according to Michael Menhart, Munich Re’s chief economist. “In the medium term, many emerging markets will continue to drive growth in the insurance sector, not only in terms of growth rates but also in terms of absolute growth,” Menhart said.
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