Legacy-free markets in Asia are becoming InsurTech incubators – Will they transform traditional insurance delivery?
Article Synopsis :
The Asian insurance market is set to bypass traditional insurance distribution models, as they will not be held back by legacy infrastructure.
Legacy free markets are more startup friendly, as they allow new entrants the opportunity to service a market that would otherwise be dominated by existing providers.
The Asian market is increasingly becoming switched on to more responsive and tailored insurance products.
The largest insurtech, China’s Zhong An, is only five years old, yet has almost 250 licensed products, most of which are distributed digitally.
Singapore Life, long established provider, has also been successful in developing tech and both have developed a strong foothold in a market that compared to many others, lacks competition.
The Asian market has around 100 insurtech startups, says WTW, or about 7% of the global tally of 1,500. Funding, meanwhile, makes up only around 15% of global investment in insurtech, and much of which can be attributed to Zhong An’s successful IPO in 2017.
This creates excellent opportunities for insurtech innovators and investors.
The regulatory environment is warming to the development of insurtech. Singapore has developed a sandbox as a proving ground for products before they are launched, while Malaysia, Indonesia, Thailand and Vietnam have all made provision to encourage its development in their own markets.
Consumer behaviour is another factor favouring the Asian market. E-commerce is well established in the region, with China experiencing a 45% compound growth rate since 2011. This e-commerce market is tipped to exceed US$1 trillion by the end of the year.
Despite having considerably lower penetration of smartphone technology – under half, compared with just over two thirds in the US – its e-commerce figure is more than double at 19% (US 8%).
Consumers in these markets are beginning to experience the benefits of insurtech and some may never know the joy of visiting an agent, or completing a claim form.
Asia may well prove to be the global insurtech incubator. Providers that are unburdened by legacy systems and distribution channels can develop technologies that do not rely upon the characteristics – regulatory or cultural – of any specific region.
These will create trust disruptive tech with a business model that can be applied to any region on the planet.
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Digital Insurer's CommentsInsurtech innovation is finding a natural home in the Asian market as a lack of legacy is allowing new entrants to compete alongside established players.
The increasingly sophisticated – or accommodating – regulatory environment is allowing for development in partnership with some regulators.
This is supported by e-commerce being well established in markets, even though smartphone penetration is lagging behind the US.
Despite this, insurtech is already proving successful through this channel and providers who develop portable technologies will have a plug and play solution for the global insurtech market.
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