‘Let’s collaborate, not compete’ say Asia’s new generation of insurers
‘Insurtech’ being tipped as the saviour of the insurance industry and could be saving larger Asian sector US$300 billion a year by 2025, according to UBS
Experts from the growing insurance technology (insurtech) sector have gathered in Hong Kong to discuss its future, and their overarching message is for unity between the new generation of players and traditional firms.
Insurtech is still largely at the early stages of development in Asia, making up just 7 per cent of total global start-ups, according to latest figures by investment bank Willis Towers Watson.
In recent months many commentators have been debating whether the growing population of digitally-based innovators, who focus on efficiencies and cost-savings, could displace the traditionals.
According to a UBS report released in September last year, Asia accounted for just 13 per cent of insurance premiums, despite holding 43 per cent of the world’s population in 2016, making it one of one of the world’s most-underpenetrated insurance markets.
And with mobile penetration in Asia-Pacific expected to soar by 75 per cent between 2016 and 2020, insurtech is being tipped as the saviour of the insurance industry which could be saving larger Asian sector US$300 billion a year by 2025, according to the UBS report.
But rather than the two camps competing head-to-head, Balaji Prebhakaran, head of propositions and digital products in Asia-Pacific for global giant Allianz, told a panel discussion at the FT Live Asia Insurance Summit on Thursday in Hong Kong they should be focusing on “collaboration, not disruption”.
“The whole concept of us versus them is very immature,” he said. “It takes the focus away from what we can do together. For us it is clear we want to collaborate and work with the insurtechs and start-ups to serve the underserved sectors of the market.”
The international financial services provider launched the incubator “AllianzX” nearly a year ago to invest in digital start-ups strategically relevant to its business.
George Kesselman, founder and president of Insurtech Asia Association, warned that if the more established players do not adopt such new technologies, however, the fortunes of this traditionally cautious industry could shift quickly.
“Collaboration should be a core concept,” said Kesselman. “The problem is, if start-ups get frustrated and want to solve a problem, they will do it with or without the insurance companies. That’s where there could be issues.”
That sentiment is echoed by Adrian Chng, chief executive officer of GoBear, a Hong Kong-based financial services aggregator, which claims to help 35 million users compare insurance plans and financial products across seven countries in Southeast Asia.
“Absolutely, we are trying to change the industry – but we would like to do it with partners,” he said. “The risk for insurers is that if they don’t work with people like us to get the data, many will turn to other people, such as reinsurers.”
If the insurtech sector is to achieve its full potential in the region, added the association’s Kesselman, there must be more investment capital available, too.
“For validated concepts, we see no shortage of VCs coming in. But when somebody has an idea and needs the capital to develop it, there can be a real shortfall as investors don’t understand the insurance industry and the risks during this period.
“A lot [of VCs] instead invest where they are more comfortable, such as in e-commerce – and that’s putting a drag on the early stage trajectory of insurtech start-ups.”