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Inspired by the term "fintech," insurance technology, or insurtech, refers to the application of technology in the insurance industry to drive new products and solutions, improve efficiency of processes and operations, and enhance customer experience and satisfaction. Wearables, connected devices, artificial intelligence, blockchain and data analytics are just some examples of insurtech.
Asia is one of the most underpenetrated insurance markets in the world, as its large populations and geographical dispersions render most traditional distribution models costly and inefficient.
However, insurtech is set to transform the industry and region. Artificial intelligence and digital distribution channels will make insurance policies more affordable and much easier to purchase. Connected devices and advanced data analytics, meanwhile, should result in more accurate risk assessment and pricing and improved customer experience and satisfaction.
Through advances in insurtech and the mainstream adoption of new technologies, CIO estimates the total cost savings for Asia’s insurance industry could be around USD 300bn per year by 2025.
Mobile penetration in Asia Pacific will rise to 75% by 2020 (source: GSMA), an increase of 460m unique subscribers, with India, the Philippines, and Indonesia in the forefront. The mobile channel will become a critical gateway for insurers to raise awareness, educate customers, distribute products and provide services.
Millennials (born between 1982 and 1998) are more comfortable with new technology and more willing to share personal information in exchange for convenience, financial incentives or more personal services (source: Columbia Business School and Aimia).
Like all technology-driven shifts, insurtech will incur costs to employment: CIO believes 1.5 million jobs in Asia’s insurance industry are at risk of being made redundant by new technological applications in the medium term.
On the execution side, the main challenge is the fact that most Asian insurers have legacy and decentralized IT systems that do not support the functionalities required for a fully online, streamlined insurance purchase and servicing platform. It could easily take months to transform legacy systems into cutting-edge IT platforms required by modern insurtech functionalities.
Customers will be the biggest winners of insurtech, benefitting from better services, greater convenience, cheaper premiums and more personalized solutions. Incentive-based products could encourage healthier lifestyles and safer driving, which could yield significant benefit to society as a whole.
The report also features insights from industry veterans and pioneers – they too see insurtech’s rise as inevitable and largely beneficial to both insurers and their customers. Read the report to find out more.
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