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Richard Lord meets the Asia-based players leading the fintech revolution in the traditionally slow-moving insurance industry.

Insurance has never been the fastest-moving sector of the financial services industry, so the fact that it’s relatively late to the fintech party should come as no surprise. But it’s catching up fast, with a raft of insurtech companies trying to improve the industry’s efficiency, and others threatening to disrupt every link along the insurance value chain, from products to distribution to claims. And, starting with mainland China’s pioneering ZhongAn Insurance but now extending across the continent, an increasing number of them come from Asia, a region where regulators generally take a favourable view of insurtech innovation.

The traditional insurance industry has often not been one that invests heavily in R&D or embraces change. Partly that’s because it has a fairly unusual business model, with intermediaries, in the form of brokers and agents, maintaining the principal customer relationships. It has also historically suffered from relatively low levels of customer satisfaction.

“This is really the last major part of the financial industry that hasn’t undergone digitisation,” says Alvin Kwock, Gen.T honoree and co-founder and CEO of Hong Kong digital insurer OneDegree. “Insurance is very risk-averse. And the industry has been extremely profitable until the last year or two.”

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Adds Walter de Oude, deputy chairman of digital insurer Aviva Singlife: “Human beings want to have a great experience of their financial services. Whenever they feel they’re not, there’s an opportunity to innovate.”

That innovation is happening to every link of the insurance value chain, from products to pricing to claims. Some companies are trying to make the existing market more efficient—this, after all, is an industry that still mostly relies on paper, in 2021—from marketplaces and price comparison engines to those streamlining the claims process. But others, so-called full-stack insurtechs, who are insurers as well as technology companies, compete with the traditional insurance industry head on.

One such is Singlife, which in 2020 also bought traditional insurer Aviva Singapore, in a US$2.4billion deal to scoop up the established company, with its products and advisory capabilities—as well, of course, as its 1.5 million customers.

“Insurance companies didn’t ever make the effort to form relationships with their customers,” says De Oude. “We took the view that to have great relationships with customers, we needed to engage with them. We find digital ways to engage, by extending insurance to bank-like services,” including savings accounts and Visa cards.

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Markets in Asia vary wildly between established ones with high insurance penetration like Singapore and Hong Kong, where insurtech’s proposition is improving the efficiency and consumer-friendliness of the traditional industry; and historically highly underserved ones such as mainland China, India and Indonesia, where it’s about creating a new market, effectively leapfrogging the previous generation of insurance products in a similar way to what’s happened with, for example, mainland China’s banking industry. In those big, developing markets, historically insurance penetration rates have been incredibly low, partly because it just wasn’t economic for insurers to service the majority of people. Ever wider access to the internet, particularly mobile, has changed that.

Claims, in particular, could be revolutionised, with AI promising to settle them reliably in seconds—based on photos of a car accident, for example—both slicing costs and potentially dramatically increasing customer satisfaction.

“Claims is one of the key areas for a lot of the new insurtechs,” says George Kesselman, president of the Insurtech Asia Association. “With [US insurtech leader] Lemonade’s home insurance, people rave about it; it takes 30 seconds to approve, and people are used to consumer transactions taking 30 seconds.”

OneDegree’s Kwock adds: “Claims is the time when people feel the pain points. Insurance claims are typically settled in two to four weeks. Honestly, this is crazy. Technology can do it in a few seconds. It really spells out the inefficiency of the traditional industry.”

Products, similarly, are changing to meet customer demand. Fred Ngan, Gen.T honoree and co-founder and co-CEO of Hong Kong digital insurer Bowtie, says that in a market like Hong Kong, with about 100,000 insurance agents for a population of 7.5 million, life insurance products nearly always come with a saving component, because that’s where those agents make their commission. “Life and medical insurance are very basic products and very affordable, but in Hong Kong, a lot of people think insurance is very expensive and very complex. The simple products that the market needs are not always being sold.”

Nonetheless, new insurance companies face a tough challenge when it comes to building a brand and establishing consumer credibility from scratch. “Insurance is about trust,” says Ngan. “The traditional way to advertise insurance is with a lot of billboards, but people who come to Bowtie will look at online reviews and whether their friends are using it. They take a long time to decide.”

As well as building their own brands, another key way for these companies to grow is through partnerships, which Kesselman says will mean insurance becoming available in a wider range of contexts. “For example, [Southeast Asian transport-delivery-payment mega-app] Grab’s insurance vertical has been hugely successful: they have a huge captive market. That’s what we’ll see more and more, and it’s potentially something that’s quite transformative: insurance becoming embedded in a lot of places it wasn’t before.”

The traditional insurance industry has historically been resistant to change, especially where it disrupts its business model, but this is changing. Kwock says his company has increasingly been embraced by the financial services industry in general.

“Over time, a lot of the big guys have become willing to take our products. Our mortgage plan is accepted by the top five banks in Hong Kong.” He says he has been approached about potential partnerships by five of the city’s top 10 insurance companies, as well as by companies from eight other markets who are interested in licensing its technology and, in some cases, products.

As Kesselman puts it: “The industry’s attitude has gone from being scared to being prepared to work together. There’s a lot more appetite for the change that’s about to happen.”

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