2017 Asia Pacific Insurance Outlook – EY Whitepaper
Article Synopsis :
The Asia-Pacific insurance market will remain in transition in 2017. The convergence of growth, rising incomes, advances in digital technology, and the rise of Millennials are reconfiguring the regional playing field, according to EY in its report “2017 Asia-Pacific insurance outlook”.
While there is increasing customer appetite for innovative insurance products and digitally-enabled business models, Asia-Pacific markets are expected to tighten with respect to capital requirements, adopt a common reporting standard, and introduce new regulations on consumer protection and cyber security.
This interplay of economic, regulatory and market shifts will reset strategic imperatives for Asian insurers and agility will be key to success in this fast-evolving market. The report suggests insurers consider the following priorities for 2017:
1. Put the customer at the centre of the strategy:
- Understand customers better by mining customer data using advanced technologies
- Focus on Asian Millennials who comprise 60% of world population
- Study new business models such as D2C while building traditional agency channels, i.e., high-tech AND high-touch approaches
2. Drive performance through digital innovation:
There are three paths, asserts the report, to digital innovation: 1) Reinventing customer interaction, 2) Embracing InsurTech solutions, and 3) Full-scale digital transformation. At the very least insurers should focus on robotics and process automation to generate efficiencies, and extend the use of data analytics across the value chain. Insurers are also advised to test and explore smart technologies (including InsurTech solutions).
3. Reassess future business strategies:
It’s a good time for CxOs to do a reality check on current strategies. Hard decisions around individual market participation are key – do we stay or go? Product mix decisions should also be on the table. Evaluate external risk scenarios (including the political environment in the US), and think about using M&A to achieve your strategic objectives.
4. Prepare for widespread regulatory change:
Develop an action plan for complying with a growing labyrinth of regulations. Also, ensure your internal systems can keep pace with regulatory change. In 2017, insurers will need to develop best-of-class analytical tools for conducting portfolio simulations under alternative scenarios. They will also need to prepare for changing accounting standards, especially in Singapore.
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Digital Insurer's CommentsCompetition will continue to heat up in Asia-Pacific as more countries liberalize foreign investment and encourage new business. For example, in India, the Government has taken steps to liberalize the insurance sector, which has led to a wave of M&A that will continue into the second half of 2017.
Healthy economic growth and rising disposable incomes will continue to boost demand for insurance products in many markets, such as China, India, Hong Kong, Singapore, Malaysia, Indonesia and Thailand. With 2/3 of Asia-Pacific adults carrying smartphones, and e-commerce exploding throughout the region (e.g., 40% YoY in China), we see growing demand for technology-driven solutions pushing insurers to enhance digital capabilities in 2017. InsurTechs will grow in stature, if not in terms of gross premiums written, then certainly digital innovations enabling future premium growth.
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