News & Views

Can I interest you in some insurance?

[Currents in Financial Services Thought Leadership #1]

That question is likely to elicit the response, “no thanks”, and perhaps also bring to mind the image of a door closing on a briefcase-wielding gentleman in an ill-fitting suit. Actually, though, if you’re not interested in what’s happening in insurance then you’re unlikely to be up to speed with crucial trends informing the best financial-services thought leadership around nowadays.

Thinking about it, insurance has always had a bit of an image problem despite the risk-sharing wizardry of what it accomplishes (and notwithstanding some of Hollywood’s best efforts). Actuaries performed big data analysis long before consultants came up with the phrase and told everyone they need to be doing it.

Now, insurtech innovators are pioneering the application of disruptive technologies like artificial intelligence, the Internet of Things, blockchain, quantum computing and others, while also grappling with some of the most crucial concerns underlying these technologies, from data security to the ethics of AI profiling and decision-making to the ever-growing demand for greater product personalisation. These topics cut across all sectors; moreover, all the biggest trends set to impact our lives and businesses in the coming years, from self-driving vehicles to population ageing to climate change, have a crucial insurance component.

Where Asia leads – and lags

Asia is simultaneously at the cutting edge and behind the curve when it comes to these trends. One of the world’s biggest online-only insurers, Zhong An, was among the first to use AI to price risk more finely and distribute differentiated products on the internet. Launched in China in 2013, the company serviced over 150m clients in its first year of operation; its IPO in 2017 arguably introduced insurtech to global investors as an asset to watch. Across the region, there is no shortage of insurtech talent (and capital).

At the same time, though, APAC is among the world’s most underpenetrated insurance markets, holding just 13% of global premiums, according to UBS, despite having around half the world’s population. Innovation is stymied to some degree by the preponderance of old-fashioned distribution channels: life policies are still often sold through banks, for instance, with distributors and underwriters facing little incentive to offer bespoke pricing or coverage. No one ever got excited about bancassurance.

And, if you care to click on any of the barrage of links included above, you’ll be lucky to hit on anything directly from an insurer. Thought leadership produced by the giants in the sector is often pretty dry, with many of the biggest (in APAC, at least) basing campaigns around topics such as the problems of financing ever-longer retirements, or trends in employer-funded healthcare coverage.

These are important, to be sure, but part of the image problem insurers face is that the most inspirational thought leadership about their sector is being done either by consultants looking to help them realise the potential of new tech, or analysts seeking to educate investors. (Since nothing beats a good case study, they are also in effect doing a lot of the upstart insurtech firms’ marketing for them.)

This actually gives forward-looking insurance companies the opportunity to start owning more of the dialogue about the future of their sector in Asia. They can emphasise both the potential of revolutionary technology to meet their customers’ changing needs, and the importance of managing the risks around the megatrends shaping people’s lives in the region. With thought leadership like that, no one should ever think of insurance as boring again.

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