Asia presents growth opportunity for tech-savvy insurers

BI Intelligence

This story was delivered to BI Intelligence "Fintech Briefing" subscribers. To learn more and subscribe, please click here.

A continuing boom in innovation in the insurance industry means legacy players are finding more ways to streamline their distribution models and enhance back-office processes, enabling them to reach additional customers, faster, and more cheaply.

In this environment, legacy players may now be ready to tackle the Asian market, which presents a huge opportunity for tech-savvy insurers, new data from UBS indicates.

Here is why Asia could prove a valuable market for incumbents as they adopt new technologies:

• Asian consumers are still relatively underinsured. Consumers in countries like Indonesia, India, and the Philippines are generally underserved when it comes to insurance. Each of these countries has a premium per capita far below $1,000, compared with about $4,000 in the UK and US, UBS finds. This suggests that policies are currently too expensive to attract the average Asian consumer. As such, incumbents adopting technologies that allow them to cut operational costs and slash policy prices could secure broad new customer segments.
• Asia will soon boast the world's largest middle-class population. By 2030, Asia will represent approximately 64% of the global middle-class population, compared with 40% currently, says UBS, citing the Brookings Institution. Demand for coverage is anecdotally higher among middle-class consumers, who have greater disposable income to spend on complex financial products, and more high-value assets to protect. Significantly, this demographic also tends to be tech-savvy and have high expectations when it comes to convenience and customer service, so by offering insurance digitally, incumbents can capture this growing consumer group.
• Physical insurance distribution models aren't suited to many Asian countries. Because of the scattered layout of island countries like Indonesia, and a generally dense population across most of Asia, traditional branch-based broker distribution networks aren't viable for much of the region. This could present a timely opportunity for insurers shifting to digital to distribute their products in a more convenient and low-cost way across Asian countries.

The easiest way for incumbents to proceed in this market will likely be to collaborate. We have already seen major legacy insurer Aviva strike a partnership with Chinese tech giant Tencent in January, and AXA form a collaboration with Chinese tech behemoth Alibaba in 2016. Both these deals follow a pattern of legacy players leveraging their partners’ superior tech talent and regional presence to broaden their own distribution channels in the market. As such, we are likely to see other major insurers wishing to capitalize on the opportunity Asia presents in a similar way.

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on insurtechs that:

• Explains the structure and current state of the insurance market.
• Highlights areas where insurtechs can help legacy players modernize.
• Describes where insurtechs are competing with incumbents and how their models compare.
• Provides case studies of insurtechs.
• Outlines the legacy response. 
• And much more.

To get the full report, subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

You can also purchase and download the full report from our research store.