Peer-to-peer insuring and smartphone sales encouraged to help modernise HK’s insurance sector
Regulator willing to fast track new insurance licence applications, as ‘insurtech’ continues to play increasingly crucial role
Hong Kong finance and insurance firms are being encouraged by the city’s insurance regulator to use smartphone-based, so called insurtech innovations to carry out quicker customer analysis, which will hopefully mean cheaper premiums for customers.
Already several finance companies, too, have expressed interest in applying to fast track their insurance licence applications in Hong Kong to set up innovative internet-based services, according to Insurance Authority chief executive John Leung Chi-yan.
Leung last month revealed the authority would introduce the fast track system, accelerating the approval processes, which currently takes between 12 and 18 months.
“A number of companies have expressed an interest in applying via this fast tracking process. I can’t give any specific details but I can say the authority is very open minded when it comes to new insurtech ideas, such as peer-to-peer (P2P) selling, a model already in use in Germany,” he said.
The P2P model allows group of friends, for instance, to pool their resources to offer insurance protection among themselves, while they could also team up with traditional insurance firms to cover their risks.
The authority says it will now also accept online insurers which use the internet or smartphones to sell basic life insurance, travel or personal accident coverage directly to customers, he said. They, however, could not use agents in such cases.
“If they use agents, we would need to check on their conduct records and business models and that could add time to the processing of policies, and hence could not use the fast track route,” he said.
Leung also said several traditional insurance firms plan to apply so-called sandbox technology – systems which help mitigate against system failures or software security issues – allowing firms to launch pilot schemes before full-scale product launches.
An example might be to allow agents to use smartphones instead of paper documents to conduct financial analysis on policyholders.
“Web-based financial analysis would still need to use Q&As and other features to allow customers to understand the full details of the policies,” Leung said.
Moses Cheng Mo-chi, chairman of the authority, said such innovative new services will offer better services to customers, as well as lowering premium costs as companies will be less reliant on direct sales via the internet or paying high commissions to agents.
“We would also request insurance companies, however, have sufficient cybersecurity in place to protect customers,” Cheng said.
AIA, Manulife, Zurich Insurance, MetLife and FWD have all announced plans to launch such insurtech systems to improve their services.
A year ago FWD introduced a mobile app to track driver behaviour to allow it to better access motor insurance risk, with better driving skills meaning cash rebates. The app has been well-received, it said, with over 10,000 downloads.