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Get with the times: Insurers embrace big data, fintech to cut cost, improve services

The Insurance Authority is encouraging local providers to embrace fintech while Allianz, Zurich Insurance, FTLife and FWD have invested heavily in new technology

PUBLISHED : Sunday, 16 July, 2017, 8:00pm
UPDATED : Sunday, 16 July, 2017, 10:59pm

Hong Kong’s newly set up insurance regulator is encouraging insurance companies to develop financial technology, as leading providers embrace the big data revolution to manage risk and lower the cost for their products.

‘We are very keen on promoting fintech in the insurance industry. We are not taking a leading role but we plan to help the industry to use technology to enhance their services and better manage risks,” said Moses Cheng Mo-chi, chairman of the Insurance Authority.

German insurer Allianz is among industry players which are keen on fintech development and using big data to better design products and handle claims.

“The use of big data will benefit not just the insurance companies but also customers as it will drive prices down up to 30 per cent over the following years,” said George Sartorel, regional chief executive of Asia-Pacific for Allianz.

Sartorel said traditionally insurance companies priced their policies on a system that relied on statistical averages which could not reflect an individual’s behaviour.

The usage of big data, which Allianz has adopted in recent years, has changed that.

As an example, Allianz invited drivers to take part in a voluntary monitoring system using GPS tracking for speed, driving routes, frequency and other driving behaviour.

In theory, the data can help determine future policy pricing. Those who drive at high speeds or who frequent accident-prone routes are likely to face higher insurance premiums, Sartorel said.

“There was an old joke that the driver might tell the insurance company that it was his grandmother who used the car. However, with the new technology of big data, we can spot the different behaviour of different drivers who use the same car,” he said.

“The beauty of the usage of big data is that it can allow insurance companies to provide different pricing models to meet with different needs of different customers. Some customers who only drive on weekends could buy motor insurance priced on per kilometre usage,” he said.

He said if drivers know their behaviour is being tracked remotely by insurance companies, they tend to become more carefully and hence reduce accidents on the road.

Zurich Insurance, one of largest general insurers in Hong Kong, is also keen on fintech.

“Our digital app has been available in the market for years for customers to submit claims for car accidents, medical expenses, travel plan interruptions and other circumstances,” said Eric Hui Kam-kwai, chief executive officer of Zurich Insurance (Hong Kong).

“Great companies are keen to innovate. It is important that we re-engineer the customer experience and strengthen internal operations through the initiatives we are now putting into place. Our new online claims portal, eClaim, an expansion of our claims touchpoints, is a result of constantly asking how we could improve for our customers,” Hui said.

FWD Hong Kong, another major Hong Kong life insurer, will invest HK$500 million in the development of proprietary InsurTech solutions in the next five years, more than five times the investment in this area over the past three years, a company spokesman said. The company will invest in three core areas, namely mobile services, internet of things (IoT) and big data analytics.

Life insurer FTLife, which was bought by mainland investment firm JD Group in 2015, also plans to expand further in technology in the next few years, according to regional chief executive Lennard Yong.

Likewise, Allianz also applies big data on some health products such that people who have more heathy life styles would enjoy lower premiums.

Raymond Au, regional head of data science of Allianz, said Asia is moving faster in insurance technology than Europe.

“Asia particularly China is developing big data very quickly,” Au said.

The changing data landscape has led to technology firms such as Tencent and Alibaba, which owns the Post, to enter the insurance sector.

“Traditional insurance companies are facing challenges from technology firms which have expanded into the insurance sector with new technology. This is why Allianz has placed high importance on digitalising our business model across Asia. We have to change ourselves very quickly to meet with the technology changes,” Sartorel said.