Display to 31 October 2018
DISCOVERY WHAT NEW INITIATIVES HAS CEO LEE WOOD DEVELOPED TO KEEP THE COMPANY’S INDUSTRY-LEADING 48% GROWTH RATE?
HONG KONG INSURERS FORGE INSURTECH ALLIES IS SINGAPORE ADEQUATELY INSURED? ASIA’S CYBER INSURANCE DILEMMA ARE YOU AN ECOSYSTEM INSURER?
EY T V R S SU LARGPEORERMS 50SINGANCE FI
T A ES UR RG NG S INS A M L O 50HONGNKCE FIR A UR INS
FROM THE EDITOR Publisher & EDITOR-IN-CHIEF Tim Charlton
In this issue of Insurance Asia, we feature an exclusive interview with the CEO of MetLife Hong Kong, Lee Wood. He discussed their new holistic digital insurance platform called MetLife Discovery which is the first of its kind in Hong Kong. He also revealed how he plans to focus on the firm’s growth and efficiency for the coming year.
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Insurers in Hong Kong are digitalising at last with the help of fintech and insurtech allies despite challenges such as complex legacy systems, company culture, and various tolerances for risk. Now, they face their new challenge which is full integration of technology with the insurance experience. We also looked into Asia’s insurance industry as a whole and how the booming market can buoy the sector’s investment in technology such as blockchain and AI. Moreover, with the increasing incomes of Asian customers, the growth trajectory of the insurance sector continues its way up.
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Aside from these, we also bring you stories on several trends in the insurance industry today such as new industry players, insurance ecosystems, insurtech growth, key technologies in digitalisation, and cyber insurance.
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CEO INTERVIEW MetLife Hong Kong’s Lee Wood unveils a new holistic digital insurance platform
analysis Claims in the digital age: How insurance companies can get started
industry insight Vibrant Asian market to buoy insurance sector’s investment in technology
04 Singapore life insurance
14 Hong Kong insurers play the
26 Global CEO survey: What
digital game by forging fintech
and insurtech allies
28 Breathing life into life insurance
soars, non-life stumbles
05 Are you an ecosystem insurer? 06 Asia still lags in insurtech
we’re seeing in the insurance sector
30 How robotics and cognitive
amidst 169% growth
automation will transform the insurance industry
08 Here are the 5 key technologies
16 Insurtech threatens firms
18 Hong Kong poised for
32 Digital insurance revolution
in Asian insurers’ digitalisation push
10 Asia at risk with cyber
insurtech growth in 2018
Published bi-annually on the second week of the month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 2 INSURANCE SingaporeASIA 069533
For the online versions of the insurance stories, visit the website
At Aetna International we’re making health care better with: • International plan designs, provider networks and programs that help you save • Simpler, seamless and caring member experiences • Complementary technology for access to healthcare anytime, anywhere
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3 INSURANCE ASIA
FIRST planning. “In addition to remarkable growth achieved in 2017, we are also heartened by steady progress being made to ensure that healthcare remains affordable for Singaporeans,” said Patrick Teow, president of LIA Singapore, citing the implementation of recommendations by the Health Insurance Task Force to manage escalating healthcare and healthcare insurance costs. Looking forward, the life insurance industry plans to further enhance professional standards, improve the payout of unclaimed proceeds, and leverage digitalisation to improve service delivery.
Grab drives in to insurance
When Southeast Asian ride-sharing giant Grab launched its Grab Financial platform in March, it also announced a partnership with property and casualty insurer Chubb that offers insurance products to its army of 2.6 million driver-partners. Initially offering accident, hospitalisation, and other critical insurance coverage, Grab plans to further develop insurance products through the use of data technology such as telematics, machine learning, and predictive analytics. “Our insurance partnership is evolving from traditional group personal accident coverage for drivers to more digital options directly offered from the Grab app,” said Paul McNamee, regional president of Chubb Asia Pacific. Digital delivery and customised payments are at the heart of Grab’s insurance foray, so the two companies crafted features like pay-per-ride options, one-click enrollment, and claim payment via the Grab app. These make it easier and affordable for driver-partners to access and process loss of income insurance, personal accident policies, and motor insurance, Grab said. Beyond ride-hailing A 2017 survey showed Grab driverpartners earn 32% more income on a per-hour basis compared to average worker wages across all of Grab’s eight markets, namely Singapore, Malaysia, Indonesia, the Philippines, Vietnam, Thailand, Myanmar, and Cambodia. “Backed by Chubb’s global insurance expertise, we are now able to bring this app-based insurance product for the first time to drivers across Southeast Asia,” said Jason Thompson, managing director, GrabPay Southeast Asia. Grab added the Chubb partnership, along with a joint venture with consumer financing firm Credit Saison, help move the company “beyond traditional ride-hailing, mobile payments and payment services, and make it the leading ondemand transportation and fintech platform in Southeast Asia.” 4 INSURANCE ASIA
Affordable healthcare helped boost life insurance
General insurance struggles Whilst life insurance is thriving in Singapore, general insurance is facing challenges. The country’s general insurance industry saw flat growth and lower underwriting profit in 2017, according to The General Insurance Association of Singapore (GIA). Total gross premiums for general insurance inched up 0.8% yearon- year to $2.94b, slightly higher than the 0.6% annual rise in 2016. Underwriting profit dipped to $81.6m in 2017, which GIA said is a reflection Total weighted of Singapore’s mature economy and new business premiums in the competitive market conditions in the general insurance sector. life insurance “The general insurance industry industry climbed 24% year-onyear experienced another year of minimal growth in 2017,” said GIA president to a record AK Cher. “With these headwinds, $3.12b in 2017. the industry delivered a lacklustre performance.” The general insurance industry is expected to continue navigating headwinds in 2018, but it plans to focus on bolstering automation and embracing digital solutions.
Singapore life insurance soars, non-life stumbles singapore
f insurance professionals in Singapore were looking for new jobs in 2017, many would have seen a surge of openings at life insurance companies as the sector went on a hiring spree to meet robust customer demand. Total weighted new business premiums in the life insurance industry climbed 24% year-on-year to a record $3.12b in 2017, according to The Life Insurance Association (LIA Singapore), prompting the association’s member companies to hire 11% more new employees during the period to more than 7,400 staff. The industry also saw double-digit growth across both single and annual premium products in 2017. Weighted single premiums increased by an annual 43% to $1.11b, led by a 91% jump in uptake of single premium products in the fourth quarter of 2017. LIA Singapore noted that there was a 27% rise in take-up of policies that provide regular payouts during retirement years in 2017 from the previous year, in line with the national focus on retirement
New Business (Individual Life & Health)
Source: Life Insurance Association Singapore
FIRST Seven of the world’s 10 largest companies by market capitalisation are ecosystem players.
Engaging in ecosystems is critical to insurers’ success
Are you an ecosystem insurer?
hen Discovery insurance developed its Vitality programme two decades it ago, it began as an incentive-based wellness programme. But since then it has steadily grown into a global platform with a vast digital ecosystem of services, partners, and rewards that enables it to scale more rapidly than competitors. Analysts reckon digital ecosystems are becoming increasingly critical for life insurers that want to flourish in a world where traditional geographical and sectoral barriers are being broken down by technology and global markets. “Discovery has set the gold standard for insurers in the wellness ecosystem with its Vitality platform,” said Tanguy Catlin, a senior partner in McKinsey’s Boston office. He reckoned the insurer can not only track the health of millions of users through its Vitality platform, but also tap into rich data to generate key insights and build partnerships. When Discovery analysed three years’ worth of platform data, it found that performance tracking reduced health risks by 22%, noted Catlin. The platform also enabled the insurer to penetrate international markets by partnering with AIA across all of Asia, Generali across continental Europe, and in several local markets
such as with Manulife in Canada, Ping An in China, and Sumitomo in Japan, resulting in a 31% annual growth in international markets. Beyond digital “To succeed in ecosystems, insurers will have to take a hard look at their traditional roles and business models and evaluate opportunities to partner with players in other industries,” said Catlin, noting that seven of the world’s 10 largest companies by market capitalisation—Alibaba, Alphabet, Amazon, Apple, Facebook, Microsoft, and Tencent—are ecosystem players. “Through digital ecosystems, companies are betting big on opportunities that have the potential to realign global markets, thus ushering in an era of ‘sectors without borders,’” he added. But becoming an ecosystem player involves so much more than going digital, which acts as a barrier for some insurers that do not have—or are not willing—to invest in this strategy. “Life insurers looking to capitalise on the huge potential of connected wellness need to do much more than simply encourage their customers to hook up to digital devices,” said Jean-Francois Gasc, managing director at Accenture Insurance. “They have to put digital
ecosystems at the heart of their businesses. This requires big changes to how carriers structure their organisations and to how they engage with customers and deliver products.” 94% of carriers Accenture Insurance surveyed globally believe adopting a platform-based business model and engaging in ecosystems with digital partners is critical to their success, said Gasc. Meanwhile, 74% view digital ecosystems as changing how their industry delivers value. The challenge of change Despite recognising the vital potential of digital ecosystems, Gasc reckoned many life insurers have been slow to jump on the opportunities they offer. Insurers face the daunting challenges of implementing substantial strategic and structural changes, and picking suitable partners in a sea of digital ecosystems that have sprung up in connected wellness market in the form of goal-setting and activitytracking mobile apps. But for Gasc, the rewards will be well worth the effort, as ecosystem insurers transform their value proposition and begin achieving substantial scale with relatively lower costs. “Digital platforms enable carriers to reach customers and deliver their offerings far more effectively than in the past. They can embed products and services across a host of interlinked digital environments, said Gasc. “This allows life insurers to take advantage of the ‘multiplier effect’ of such technology. They can scale up connected wellness programs without making investments outside their core businesses.”
Ecosystem illustration, estimated sales in 2025
Source: IHS World Industry Service; Panorama by McKinsey; McKinsey Analysis
FIRST Japanese P&Cs face fierce price war risk JAPAN
Asia still lags in insurtech amidst 169% growth
Number of insurtech deals by region
When Moody’s gave Japan’s property and casualty (P&C) insurance industry a stable outlook in 2018, it came with a warning: if price competition erodes underwriting margins, it could lead to a negative outlook. The rating agency considers the entry of e-commerce giant Rakuten and other new players with advanced technologies a “threat” to the current profitable auto insurance market, where three major groups account for 87% of the domestic P&C insurance market in terms of net premiums written. The fresh entrant Rakuten could leverage on new technologies such as telematics to develop pay-how-youdrive (PHYD) products targeting its 95 million registered members in an attempt to grab some market share from incumbents. Such a possibility could push large insurers to take preemptive action to protect their market share and trigger a price war. Price competition looms “Although we do not expect significant market disruption in the next 12 to 18 months, a potential risk is that one of the large insurers will introduce PHYD products to the mass market before new entrants take a meaningful market share,” said Moody’s. “If this happens, the other large insurers would likely follow, stoking fierce price competition.” A Rakuten spokesperson said that whilst the company sees a great opportunity in the P&C business in Japan, which led the firm to acquire Asahi Fire & Marine Insurance for $419m from Nomura Holdings and pet insurer MottoGyutto SSI from CAS Capital Fund No. 6, it is not keen on initiating a battle based on price alone. “Whilst this time is a bit early for us to make a statement nor forecast, we believe that we can compete in the business with a great advantage, not in a price-cutting war, utilising our e-commerce expertise and a huge user base,” the Rakuten spokesperson said. 6 INSURANCE ASIA
he insurtech trend continues to penetrate the insurance industry in Asia-Pacific, with investment in insurtech in the region surging by 169% in deal values to $358m in 2017, according to data and analysis by Accenture. Still, the actual share of insurtechs coming from the region remain low, with just over 100 recognised insurtech startups in AsiaPacific, accounting for around only 7% of the global share. Accenture noted that despite the growth in the number of insurtech deals in Asia-Pacific at 27%, behind Europe’s 118% growth in insurtech deals in 2017, the region’s insurtech ecosystem remains relatively small compared to other regions, particularly in North America and Europe, given that majority of the industry’s activities continue to predominantly centre in the financial and commercial districts of Singapore, Hong Kong, and China. Manulife Asia, for instance, has taken the step forward towards integrating technological innovation in their operations by collaborating with fintechs and insurtechs to apply blockchain technology and develop artificial intelligence in its technology
hub in Singapore. “The insurtech industry’s rapid growth reflects investors’ response to consumer appetite for change in an industry sitting on trapped value,” said Roy Jubraj, Accenture’s UK and Ireland insurance strategy and innovation lead. Meanwhile, other emerging markets including Malaysia, Indonesia, Thailand, and Vietnam are trying to catch up—both in policy and industrial interest—with regulatory The actual provisions already in place to allow for share of the development and growth of local insurtechs coming from insurtechs, according to a report by Willis Towers Watson. Asia-Pacific Property and casualty remain the remains low, most popular insurance segment for with just insurtech investments globally in 2017, over 100 accounting for about 42% of global recognised investments, whilst life, health, and insurtech startups from microinsurance have the most impact from digital propositions and insurtech. the region.
Insurers Chubb, FWD appoint new top executives in Asia Chubb named Scott Simpson as the new country president for its general insurance business in Singapore. Simpson will have the overall responsibility for the growth and financial results of Chubb’s operations in Singapore across all lines of business namely Property & Casualty, Accident & Health, and Personal Lines. Prior to this appointment, he was Chubb Australia’s head of state distribution. Meanwhile, FWD appointed Arthur Lee as EVP, new markets & corporate governance, and Southeast Asia chairman. Lee will oversee FWD’s expansion in the region and lead corporate governance across the group, including risk, compliance, audit, and legal functions. He was previously chief executive and member of the board at Tokio Marine Asia, as well as executive officer at Tokio Marine Holdings. Lee was also a member of a number of boards within the group.
7 INSURANCE ASIA
Here are the 5 key technologies in Asian insurers’ digitalisation push
Lines of business applicability
hen China’s Taikang Life Insurance found its sales agents increasingly struggling to recommend the best products to their customers, it embarked on an ambitious data analytics project to provide insight into its 45-million strong clientele. The customer data set comprised 600 attributes from demographics to financial situation and policy information, and resulted in a model that captures customer characteristics. Slowly but surely, the conventional insurance sector is penetrating the digital landscape amidst the rise of insurtech and the expansion of non-traditional players. As insurers step up their digital game, five technologies emerge as major fields of play: cloud computing, the Internet of Things (IoT), big data, artificial intelligence, and blockchain. In Asia-Pacific, insurers are leading in the area of investment and in-memory analytics as well as cloudbased analytics solutions. Oliver Wyman and ZhongAn Insurance noted in a report that the investment in cloud computing, in particular, shows that insurers are prioritising agility to support innovation. Meanwhile, APAC’s insurance sector has almost the same characteristics as the
Latin America sector, revealing how legacy systems in emerging regions are less-siloed. “IT transformations in emerging countries and regions will be smoother compared to more mature regions where legacy systems have become complex enough,” noted Cliff Sheng, partner at Oliver Wyman, citing data from the report. Furthermore, APAC places top priority on customer segmentation analytics, compared to EMEA and North America, which shows the emphasis on maximising growth in emerging markets. Insurers in APAC have also considered the susceptibility of their regions to natural disasters, hence, they have placed a higher emphasis on catastrophe simulation as a means to effectively manage risk over time. Leading technology For most of the insurance sector across the globe, applications based on cloud computing, telematics, and big data have already made great strides in terms of innovation, but applications from big data, AI, and blockchain have yet to really make an impact. For instance, ZhongAn Insurance, the first insurer with 6 billion policies in the cloud, instituted ZhongAn
Source: Oliver Wyman analysis
Technology to export its strong technology capabilities to other insurance companies and other financial services and non-financial services companies. In terms of big data, China leads in the innovation and application, due to the large quantity of big data generated from a large number of ecosystems. “China has a more open attitude towards data sharing and usage, alongside the need for more infrastructure such as credit bureaus,” Sheng said. Meanwhile, 49% of the region’s insurers believe their competitors derive value from big data technology, with 20% thinking that their peers are using big data to roll out innovative propositions. Sheng said that views are more polarised in APAC since on the flip side, the region also has the highest proportion of big data skeptics at 13%, which think “the business case for the technology is still uncertain.”
Insurtech startup Vouch incentivises safe drivers INSURTECH
Singaporean startup Vouch’s “No-Claim Rebate (NCR)” feature lets drivers receive up to 15% cashback on their annual premiums if they do not make a claim at the end of their policies. Vouch founder and chief operating officer Chean Yujun said the company partnered with major insurers NTUC Income, Sompo, and Tokio Marine to basically pay safe drivers for not making a claim. Vouch’s new cashback feature is on top of the insurtech’s No-Claim Discount (NCD). The NCR system works by grouping drivers with similar driving profiles together. Vouch then sets aside 15% of each driver’s policy for the NCR. “During the policy period, if any member makes an owndamage claim, part of this claim is deducted from the rebate pool, and the remainder of the pool is split amongst the members at the end of their respective policy period,” explained Yujun. “If the pool runs out, there is no negative impact to customers, as everyone is still covered by their respective insurance company. If the group stays accident-free, everyone receives 15% cashback on their premium,” he added.
8 INSURANCE ASIA
Vouch also allows drivers to form private “communities” with friends and family or other safe drivers to maximise their cashbacks. “This breakthrough is possible because our insurers have committed to return part of their profits in the event that claims by drivers are low,” he said. Safe driving culture Vouch aims to disrupt the insurance industry by giving safe drivers a choice on how they influence their premiums. Aside from being entirely digital, the insurtech firm rewards drivers who contribute to a safe driving culture in Singapore. Yujun lamented that new car owners are “penalised” into paying high premiums even when they demonstrate safe driving skills. “Whilst car insurance is mandatory, only 15% of drivers make claims annually. That meant that many safe drivers were paying higher premiums in order to cover the risks of less-safe drivers. This came across as unfair and inefficient,” said Yujun. He added that they had positive response from their customers across all levels “because people in the industry are consumers as well.”
Car insurance with cashback
A GUIDE TO MORTALITY AND CRITICAL ILLNESSand COVERAGE IN SINGAPORE A guide to morTality critical illness coverage in singapore ARE YOU ADEQUATELY INSURED? PROTECTION GAP STUDY 2017 WHAT IS MORTALITY PROTECTION?
WHAT IS CRITICAL ILLNESS PROTECTION?
CRITICAL ILLNESS COVERAGE
Mortality protection coverage typically protects against ﬁnancial loss by paying out a death beneﬁt when the insured passes away. It usually also covers Total and Permanent Disability or Terminal Illness.
Critical Illness protection coverage provides you with ﬁnancial protection if you are diagnosed with a major illness, and ensures that you and your family’s needs continue to be met during your recovery period during the assumed CI recovery period of ﬁve years.
VARIATIONS IN CI PLANS Early CI coverage; Speciﬁc CI coverage (eg. Cancer plans); Multiple-Claim coverage
WHAT SHOULD I LOOK OUT FOR WHEN CHOOSING A POLICY? TYPES OF COVERAGE TERM INSURANCE
WHOLE LIFE INSURANCE
TYPES OF COVERAGE INVESTMENT PLAN
RIDER (SUPPLEMENTARY BENEFIT FROM A MORTALITY PLAN)
STANDALONE CI PLAN
ASSESS YOUR NEEDS AND SUITABILITY, CONSIDER THE FOLLOWING: CONDITIONS COVERED; COVERAGE DURATION; EXCLUSIONS (INCL FAMILY & MEDICAL HISTORY); PERSONAL FINANCIAL STANDING
ASSESS YOUR NEEDS AND SUITABILITY, CONSIDER THE FOLLOWING: AGE, COVERAGE DURATION; EXCLUSIONS; NO. OF DEPENDENTS
WHAT’S THE DIFFERENCE?
IS MORTALITY PROTECTION NECESSARY?
MEDISHIELD LIFE & INTEGRATED SHIELD PLANS (IPS) VS ELDERSHIELD VS CI PLAN
MORTALITY PROTECTION IS NECESSARY IN FINANCIAL PLANNING AS IT IS USUALLY USED FOR:
MEDISHIELD LIFE & IP S
Expenses incurred upon the insured’s death, e.g funeral expenses
Mortgage loan for family’s home
Securing ﬁnancial future for family and protect their standard of living
Hospitalisation and surgical plans that provide coverage for inpatient, pre- and posthospitalisation expenses
Severe disability insurance scheme providing monthly payout for a period of time for citizens and PRs above 40 with Medisave Accounts
Provide a lump sum payout for all ﬁnancial needs and obligations not covered under hospitalisation plans
PROTECTION PRIORITIES AT DIFFERENT LIFE STAGES YOUNG ADULTS
SOLE BREAD WINNERS FAMILIES
MORTALITY AND CI PROTECTION OF MODERATE PRIORITY
MORTALITY AND CI PROTECTION OF HEIGHTENED PRIORITY WITH INCREASED LIABILITIES AND FAMILY COMMITMENT
MORTALITY AND CI PROTECTION OF CRITICAL PRIORITY TO SAFEGUARD FAMILY FROM UNEXPECTED LOSS OF INCOME
CI COVERAGE IS OF HIGHER PRIORITY DUE TO INCREASED HEALTH ISSUES WITH AGE
Encouraged to start early when one is healthy and when premium is most aﬀordable as premiums increase with age
• Suﬃcient coverage required for aged parents • Sound ﬁnancial planning to support priorities such as home loans or childrens’ education
Ensuring family savings will not be wiped out should an unfortunate event happen to the breadwinner
Having adequate health protection cushions the cost of medical treatment, ensuring quality of life without digging into savings
MORTALITY PROTECTION COVERAGE VS CI PROTECTION COVERAGE: WHICH IS MORE IMPORTANT? BOTH MORTALITY AND CI PROTECTION COVERAGE ARE EQUALLY IMPORTANT AS THEY MEET DIFFERENT SAFETY NEEDS.
Provides ﬁnancial support for the family to sustain their lifestyle without major disruption
Alleviates ﬁnancial distress in the event of major illnesses which can result in loss of income
VS WHAT CAN I DO FOR A START?
Talk to a ﬁnancial consultant to map out your protection gaps and needs
Check your mortality protection gap using the Protection Gap Calculator available at: www.lia.org.sg/pgc
Compare and ﬁnd life insurance products suited to your ﬁnancial objectives at: www.compareFIRST.sg
Source: Life Insurance Singapore FOR FULL REPORT, VISIT: WWW.LIA.ORG.SG April 2018
*“Severe disability” is the inability of an individual to independently perform at least three of the six Activities of Daily Living (ADLs) including washing, dressing, feeding, toileting, walking and transferring, with or without mobility aids (e.g. walking aids, wheelchair). This means that the individual will require the physical assistance of another person for the ADL. Source: Ministry of Health (MOH)
FIRST Anapi: Insurance for digital startups insurtech
Anapi is an insurtech company that provides relevant insurance to the digital services of any business using its smart API platform. Anapi founder and chief executive officer George Kesselman said insurance needs to be designed differently for the digital world. “We partner with leading insurers and deliver tailored protection via our smart API platform,” he said. Launched last November 2017, Kesselman said, Anapi solves a fundamental problem in the insurance industry, in which insurance firms have drifted into a more grey territory of helping themselves to make profits first before helping their customers. He explained that digital startups usually find themselves with no protection because insurance companies do not understand their businesses. “The common painful theme kept coming up. There’s no relevant option to protect ourselves and our customers in digital,” said Kesselman. “Many of the startups had spoken to insurers and felt that insurers either didn’t understand or weren’t interested to help them.” Simplifying insurance At the heart of Anapi’s services is AI technology that simplifies insurance, making it a frictionless experience for startups and users. Kesselman said, “Whilst API is the heart, Sanya is our Reinforcement Learning AI Engine. Sanya is quickly learning about all kinds of things people and businesses are worried about and the best ways to protect them.” Kesselman said 10 digital startups have already expressed interest in being part of Anapi’s insurance pilot. He added that they are optimistic Anapi’s initial round of funding will fuel the firm for the next 18 months. “Five years from now we aim to become the seamless enabler for digital nano-insurance on a global scale,” Kesselman said. “The future of insurance is digital and we are building it.” 10 INSURANCE ASIA
What will happen to Asian firms when they encounter a cyber attack?
Asia at risk with cyber insurance scarcity
rom the stolen personal data of 850 personnel from Singapore’s defense ministry online database portal in 2017 to the 6.4m children’s data stolen from a Hong Kong toy firm in 2015, the number of attacks in the region have been alarmingly growing in number and scope. However, Asia-Pacific’s cyber insurance take-up rate still remains negligible compared to other regions across the globe, with the cyber insurance market heavily skewed to the US at 90% of the total share, Europe at 4%, whilst the rest of the world including Asia is only at 6%. “Asia-Pacific is a perfect cyberstorm”, Marsh and McLennan analysts noted, with the global growth in internet users, greater connectivity amongst 4G mobile devices, and higher mobile network traffic all driven by Asia-Pacific by 69%, 49%, and 47%, respectively. Amidst all this, it has also become the playground of hackers due to the lack of security measures to come with the growth in digitalisation. Weak points The region has yet to enforce several regulations such as disclosure regulation, the lack of which creates the perception that cyber attacks in the region are relatively lower than those in Europe or US. Insurers have seen this as a point of entry to offer risk management solutions for
Asia-Pacific’s cyber insurance take up rate still remains negligible compared to other regions across the globe.
companies that find cybersecurity a tall order to do on their own. In Singapore, the demand for cyber insurance has increased as companies rush to insure their businesses against data breaches. A PwC survey revealed that Singaporeans also lack the ability to identify the culprits behind cyber attacks, a weak point in risk quantification. PwC also reported that in Singapore, more than six in 10 organisations have cyber insurance, 37% and 35% of which have made a claim and collected it, respectively. One of them is insurer AIG which came up with its own product called CyberEdge, offering protection against sensitive data breaches (personal and corporate data), computer hacking, dumpster diving, computer viruses, and employee sabotage or error, amongst others.
Global cyber insurance market
Source: Marsh & McLennan Companies
Our focus at MetLife is to not just digitise for our own efficiency, but to find ways to link up with and leverage all the other digital initiatives to bring a better value proposition to our customers.
Lee Wood CEO MetLife Hong 12 INSURANCE ASIA Kong
MetLife Hong Kong’s Lee Wood unveils a new holistic digital insurance platform He introduces MetLife Discovery, a first-of-its-kind tool that helps customers visualise their insurance needs.
ee Wood is the chief executive officer of MetLife Hong Kong since 2016. A seasoned insurance professional with over 15 years of experience, he is responsible for helping MetLife become the leading customer-focussed insurance company in Hong Kong. In this exclusive interview with Insurance Asia, Lee talks about how the company is adapting to digitalisation, its new initiatives, and the goals he wants to achieve. How is MetLife Hong Kong adapting to the big push towards digitalisation of the financial services industry? Digitalisation has the potential to thoroughly disrupt the insurance industry the way it has for many other industries. And I am excited that MetLife is taking leadership in some very real areas here in Hong Kong. Our focus at MetLife is to not just digitise for our own efficiency—which is, of course, important in order to lower costs—but to find ways to link up with and leverage all the other digital initiatives that are going on in the world to bring a better value proposition to our customers. One of our initiatives is MetLife Discovery, a new digital platform that empowers consumers to discover insurance needs and coverage in a few clicks. We launched MetLife Discovery to ensure that we start relationships with consumers through meaningful conversations built on simplicity, transparency, speed, and efficiency. MetLife Discovery allows anyone to come to our website and quickly and relatively easily understand information about insurance, as well as find out what other people like themselves are considering in terms of insurance coverage. The information given by MetLife Discovery includes the money they should expect to spend and general price indicators for the cost of such coverage. MetLife Discovery is a new and unique digital platform that helps consumers quickly and easily discover and visualise their insurance needs before intelligently allocating resources in a new way. With the ability to capture smarter data, the platform provides coverage mapping. Leveraging government statistics, the platform estimates a consumer’s income range according to their occupation. Consumers can get a holistic view of insurance needs across life, critical illness, hospital & medical benefits, accident protection, and savings—all without disclosing much personal information. The platform also uses an intuitive design that allows people to use any device for access and then “play” around and create a tailor-made insurance package. It is simple, easy to use, and available anywhere at any time. How has MetLife Hong Kong progressed under your leadership? I am very proud of the progress we have made together on several fronts. First, our distribution teams have worked closely with us over the last year through many different
business and market changes and have allowed us to maintain an industry leading 48% year-on-year growth rate of our agency business. We have a tremendously high quality professional agency force, a strong and stable telemarketing team and wonderful independent advisor partners who are all committed to our goal of being a customer-focussed insurer. This commitment and professionalism has allowed us to rapidly expand our sales force over the last few years and is moving us closer to our goal of expanding to 1,600 agents within the next two years. Second, in terms of operational excellence, we are proud of all the great products we have been able to develop and deliver last year. Indeed, we have been a product leader in many categories last year. We are particularly pleased with the digital initiatives we have such as MetLife Discovery. In addition to these customer facing initiatives, we have also modernized our workspace and are optimizing internal operations to enhance our efficiency and deliver better value for money to our customers.
The way to growth will be to continue the work we are doing to deliver the best customercentric solutions and to make all things easier for customers to understand and buy.
What three goals are you focussed on for the next year? Internally, we really focus on just two key concepts: growth and efficiency. The way to growth will be to first, continue the work we are doing to deliver the best customer-centric solutions—either products or enhanced risk assessment tools that let us provide better offers to customers. Second is to make all things easier for customers to understand and buy—including MetLife Discovery and our new digital application process. We think customers are becoming more insurance savvy and will really appreciate the transparency MetLife Discovery provides, as well as the ease in creating a holistic protection plan. Then we will continue to expand perhaps the most welltrained, digitally-enabled, professional agency salesforces in Hong Kong to 1,600 agents over the next two years. We will also deepen strong relationships with independent advisors through product innovation, including investment-linked products and diabetes offers. Finally, we will empower our strong and stable telemarketing staff to expand their capabilities to leverage digital communications platforms. In terms of efficiency, we will utilise digital technology to both improve services and lower costs. As noted above, we now have a complete digital application process that will enable customers to purchase products and potentially have them issued in a speedy and efficient way. As customer expectations are constantly increasing, so are the demands on our people. I also look to continue to invest in the development of our staff and provide more support to make sure we maintain our team talent. It will ensure we have what we need to deliver the innovation to compete in the future. Disruption is coming. MetLife is actually leading the way. INSURANCE ASIA
Country report: Hong kong
Manulife launched an e-claims solution letting customers make a medical insurance claim anytime anywhere
Hong Kong insurers play the digital game by forging fintech and insurtech allies The challenge now has become full integration of technology with the insurance experience of customers.
hen Manulife launched claimsimple.hk in January, it finally abandoned a decades-long complex legacy system filled with paper claims and branch visits. More than that, it also launched a programme that tracks client fitness and rewards them with huge discounts and promos. Insurers in Hong Kong are finally learning to deal their digital cards right, with some of the cityâ€™s best insurtechs keeping them close company. Early this year, insurers such as MetLife, AIA, Allianz, and Zurich announced some of their insurtech plans after the Hong Kong Insurance Authority rolled out a sandbox for insurers to flexibly partner with tech guys. Guy Mills, chief executive officer, Manulife Hong Kong said that with insurtech, some products such as health insurance as well as mutual funds can actually be sold online. He said that Hong Kong 14 INSURANCE ASIA
consumers have an increased awareness towards health and strong demand for medical insurance and critical illness products, as a result of significant medical inflation, advances in medical technology, and the underserved health market. This provides insurers with open doors to provide sophisticated medical insurance for the entire population. Furthermore, with a rapidly ageing population and a significant retirement income gap, Hong Kong is a hotbed for customers who wish to improve their quality of life during retirement, which provides huge growth opportunities for insurers. Digitalising at last Across the globe, the insurance industry has been one of the laggards in terms of riding the digital wave. Complex legacy systems, company culture, and various tolerances for risk have made it difficult for innovators
The top priority to overcome new challenges is to encourage staff and agents to adapt and modernise, and support insurtech innovations.
to integrate new technology and data into existing business strategies. Lee Wood, chief executive officer, MetLife Hong Kong said that the top priority to overcome these challenges is to encourage staff and agents to adapt and modernise, and support insurtech innovations. Despite being a latecomer, the insurance industry has finally come to grips with the need to evolve with rapidly changing technologies. Consumers of all other sectors have already immersed themselves in the digital space, and if insurers wish to capture this huge digital market, they have to get their foot in as well. â€œThe insurance industry is increasingly leveraging connected technologies to improve customer experience and build deeper relationships with customers. New tools and platforms are driving deeper engagement and enhancing efficiency â€“ for example, connecting
Country report: hong kong insurance plans with digital tools or health apps to encourage better self-disciplined health management,” Wood added. Mark Christal, head of region in Northeast Asia, and chief executive officer, Old Mutual International, Hong Kong, said that digitalisation has definitely helped streamline processes and give customers greater access to their finances amidst their increased expectations. He added that this has become a key part of the value proposition that insurance companies and advisers offer their customers, presenting a greater opportunity for them to develop deeper and longer relationships with customers. Christal said that digitalisation for insurance not only means roboservices, but also complex financial planning for evolving customer demographics. According to him, insurers are seeing more highly mobile individuals with different assets across countries and requiring professional advice on holistic wealth, tax, and legacy planning. The flip side But whilst digitalisation offers several opportunities, it also poses new challenges for insurers. According to Wood, more than five years ago, the industry was focused on simply moving offline engagement online. Nowadays, the challenge has become full integration of technology with the insurance experience to deeply engage with customers and provide what they need. He said that insurers are not only giving consumers one more channel to buy insurance, but providing a new experience that was unavailable to them before. Mills added that the growth of insurtech will have a long-lasting impact on the insurance landscape. Insurance companies must have a way of productively and strategically collaborating with insurtech companies, lest they trail behind again in the digital game. The challenges that insurtechs pose have encouraged more and more insurers in the city to leverage new technology, data, and analytics and to engage with customers digitally. “A key challenge for the sector as a whole is to continue to meet customer
expectations whilst adhering to the regulatory challenges posed. This is perhaps why digital transformation in the financial industry is, relatively speaking, less advanced than other sectors. Having said that, we believe leveraging technology to engage customers is absolutely critical to the future success of the sector,” Christal said. Additionally, increasing regulations around the world have made wealth planning more complex. Christal said that independent financial advice has become more important than ever in providing better customer outcomes. Don’t beat them, join them To play the digital game well, insurers in Hong Kong have learned to make insurtechs their allies in coming up with personalised and accessible insurance solutions. For instance, Manulife launched its ManulifeMOVE programme in Hong Kong, one of the firsts to integrate an innovative health-tracking programme with insurance solution that rewards customers who maintain active lifestyles with discounted premiums. In January 2018, Manulife launched claimsimple.hk, an e-claims solution that lets customers make a medical insurance claim online anytime, anywhere via their mobile device or PC in less than a minute. Meanwhile, Old Mutual International rolled out Wealth Interactive, an online platform to keep track of investment performance no matter where consumers are, whenever they need it. Christal said that it is not only an online servicing platform, but a channel for distributors to provide better service to their customers. “Alongside greater customer access, it allows advisers to leverage technology and tools to manage customers’ portfolios whilst remaining close to them. Wealth Interactive also provides data to support client segmentation, so advisers can ensure a consistent and structured approach to servicing clients,” Christal added. In terms of insurance education, MetLife Hong Kong’s MetLife Discovery allows a quick and easy access to information about insurance
and the specific terms of insurance coverage that a certain demographic is considering. Information includes money that consumers should expect to spend and general price indicators for the cost of such a coverage. Mark Christal
Insurance of the future Wood said that four changes are likely to further transform the insurance market in the future: digital transformation, the importance of a trusted advisor, increasing health consciousness, and transparency and trustworthiness. According to him, insurance will be enormously different in the future, and data analysis will revolutionise how insurers meet their customers’ changing needs. He added that the ability to mine big data for deep insights has radically altered the dynamics of how one becomes “the trusted advisor”. “The regulatory and consumer demand for greater transparency will continue to shape the services the sector offers. The landscape for giving advice internationally is changing and as more advisers are moving towards clear, transparent, customer centric charging models, the need for advisers to demonstrate the value they are adding is becoming increasingly important. Advisers can utilise technology to increase customer engagement and understanding, and to share information efficiently and effectively,” Christal added. At the end of the day, customer centricity is key. Mills said that the demand for a better customer experience will continue to drive technology change in the next few years, with all sorts of information available at their fingertips.
Hong Kong’s share of China’s GDP
Source: WIllis Towers Watson
Survey: insurance firms in singapore individuals in taking charge of their health and financial future will become increasingly important with the rise of the gig economy, as individuals with short-term employment contracts will be more reliant on individual insurance for sustained protection for the long term,” Teow said.
askPRU allows more than 3,600 of Prudential’s financial consultants to assist clients within seconds.
Insurtech threatens firms Quite late to the digital party, insurers find room for startup collaboration.
ver the course of 2017, our Insurance Industry Survey saw a reshuffling in Singapore’s top five companies. AIA Singapore Private Limited held on to the top spot with assets numbered at around $39b up from an estimated $38b in the previous year. Second placer NTUC Income Insurance Cooperative Limited fell to fourth place with a total number of assets rounded off at $7b. Meanwhile, Prudential Assurance Co. Singapore (PTE) Ltd steps up one notch from third place in 2016 to second place, hitting $33b estimated total assets, a little over a 10% increase from an estimated $29b assets in the previous year. The Great Eastern Life Assurance Company moves another notch up too, on the back of a 10% increase in assets from an estimated $29b to an estimated $32b. Manulife retains fifth spot with an estimated total number of assets at $7b. Faced with an increasingly older population and a growing pool of startups, Singapore’s insurance bigwigs are under increasing pressure to compete and step up to the digital challenge. Singaporeans are living to an average age of 82, eight years of which are spent in dire health amidst rising healthcare and 16 INSURANCE ASIA
It is necessary to collaborate with insurtechs for agility and innovation as 2018 is expected to see more cross-industry collaborations and emerging solutions.
caregiving costs. To make matters worse, Singapore’s citizen old-age support ratio is estimated to reach a record-low of 2.4 in 2030, after having dropped to 4.4 in 2017 compared to 4.7 in 2016. To close these gaps, insurance executives have finally decided to ride the innovation bandwagon and transform their demand for roles, now with an emphasis on web and app developers, digital specialists, and data scientists, amongst others. Patrick Teow, chief executive officer, AIA Singapore, said that insurers are faced with a huge amount of big data at their disposal. With the continuing rise of technology and the Internet of Things, Teow said that the future could see insurers being able to collect and analyse this data with such granularity to allow them to monitor the health and risk-taking behaviours of individuals. They can then use this data to the advantage of both parties, and adjust policy coverage and premiums for each individual in a timely manner. “Technology enables better customisation at both the corporate and individual level. This creates an opportunity for insurers to empower individuals and companies to take charge of their own health and financial future. This role of
Collaboration is key Reputed to be a very traditional sector, the insurance industry saw innovation as a key sector theme in 2017. According to Arvind Mathur, chief technology officer, Prudential Life Singapore, insurtech startups have shown that change and innovation are possible in an industry that has largely done the same thing for decades. “They have shown us, that in this industry (and any industry for that matter) that is dramatically being reshaped by technology, the only way to survive and thrive is by re-thinking business models, questioning every limitation, and having innovative, accountable, empowered, and collaborative people working together to invest in the future. We have absorbed those values into our culture at Prudential,” Mathur added. True to its word, Prudential launched the PRU Fintegrate Partnership Programme to offer partnership opportunities with global fintech startups to codevelop solutions for customers. According to Mathur, they are convinced that the programme will result in faster development of solutions to enrich the customer experience. For them, it is necessary to collaborate with insurtechs for agility and innovation as 2018 is expected to see more cross-industry collaborations and emerging solutions that will definitely transform the day-to-day operations of insurers. Moreover, once insurers realise the need to enhance digital capabilities and soon as efficiency gains are seen, the organisation of incumbent firms will likely change as insurers rebuild business processes and adopt new technologies.
Survey: insurance firms in singapore 2017
AIA SINGAPORE PRIVATE LIMITED
PRUDENTIAL ASSURANCE CO. SINGAPORE (PTE) LTD THE GREAT EASTERN LIFE ASSURANCE COMPANY LIMITED
NTUC INCOME INSURANCE CO-OPERATIVE LIMITED
MANULIFE (SINGAPORE) PTE. LTD.
8 9 10 11
GREAT EASTERN GENERAL INSURANCE LIMITED (formerly known as OVERSEAS ASSURANCE CORPORATION LIMITED) TOKIO MARINE LIFE INSURANCE SINGAPORE LTD HSBC INSURANCE (SINGAPORE) PTE. LIMITED TRANSAMERICA LIFE (BERMUDA) LTD. AXA LIFE INSURANCE SINGAPORE PRIVATE LIMITED
ALLIANZ SE, SINGAPORE BRANCH
MUENCHENER RUECKVERSICHERUNGS GESELLSCHAFT
SWISS LIFE (SINGAPORE) PTE. LTD.
SWISS REINSURANCE COMPANY LIMITED
ASIA CAPITAL REINSURANCE GROUP PTE LTD
FIRST CAPITAL INSURANCE LTD OLD MUTUAL INTERNATIONAL ISLE OF MAN LIMITED SINGAPORE BRANCH IAG RE SINGAPORE PTE LTD
PARTNER REINSURANCE ASIA PTE. LTD.
21 22 23 24 25 26 27 28 29 30 31 32
RED SWITCH PTE LTD (formerly known as AXA Insurance Singapore PTE LTD) EVEREST REINSURANCE COMPANY ZURICH INTERNATIONAL LIFE LIMITED (S'PORE BRANCH) AIG ASIA PACIFIC INSURANCE PTE. LTD. ODYSSEY REINSURANCE COMPANY FRIENDS PROVIDENT INTERNATIONAL LTD (S'PORE BRANCH) INDIA INTERNATIONAL INSURANCE PTE LTD SCOR GLOBAL LIFE SE SINGAPORE BRANCH ALLIANZ GLOBAL CORPORATE & SPECIALTY AG, S BRANCH MSIG INSURANCE (SINGAPORE) PTE. LTD. XL BERMUDA LTD (merged with XL Re Ltd last June 2016) ALLIED WORLD ASSURANCE COMPANY, LTD, S'PORE BRANCH
Classification General/ Life Life Life General/ Life Life General/ Life General/ Life Life Life Life Life General/ Life General/ Life Life General/ Life General/ Life General
Total Assets (2016) (SGD)
2015 Total Assets
$6b $5b $4b $3b
8 9 10 13
$5b $4b $3b $2b
G20 - 2016
General General/ Life
$900m $900m $900m $900m $800m $800m $700m $700m $600m $600m $500m
22 24 23 20 26 25 28 29 30 39 32
$900m $800m $900m $1b $800m $800m $800m $600m $600m $400m $500m
$500m $400m $400m
31 45 34
$500m $300m $400m
1,289,936 1252318 1,251,090
SCOR REINSURANCE ASIA-PACIFIC PTE LTD
34 35 36
TOKIO MARINE INSURANCE SINGAPORE LTD BERKSHIRE HATHAWAY SPECIALTY INSURANCE COMPANY QBE INSURANCE (SINGAPORE) PTE. LTD.
General Life General General Life General Life General General General General General/ Life General General General
CHUBB INSURANCE SINGAPORE LIMITED*
38 39 40 41 42 43
THE TOA REINSURANCE COMPANY LIMITED XL INSURANCE COMPANY PLC, SINGAPORE BRANCH SOMPO INSURANCE SINGAPORE PTE. LTD. LIBERTY INSURANCE PTE LTD SWISS RE INTERNATIONAL SE, SINGAPORE BRANCH CHINA TAIPING INSURANCE (SINGAPORE) PTE. LTD.
General General General General General General
$400m $400m $400m $400m $400m $300m
35 50 33 36 42 40
ETIQA INSURANCE PTE. LTD.*
45 46 47 48
ENDURANCE SPECIALTY INSURANCE LTD, SINGAPORE BRANCH SINGAPORE REINSURANCE CORPORATION LTD UNITED OVERSEAS INSURANCE LTD AXIS SPECIALTY LIMITED (SINGAPORE BRANCH)
General General General General
$300m $300m $300m $300m
47 43 46 41
$300m $300m $300m $300m
AXA CORPORATE SOLUTIONS ASSURANCE SINGAPORE BRANCH
SIRIUS INTERNATIONAL INSURANCE CORPORATION
$400m $200m $500m $400m $300m $300m
2,007,668 1,726,663 1644122
-Data obtained from the monetary authority of singapore *Not part of 2016 rankings
Survey: insurance firms in hong kong
China’s first online insurer ZhongAn held the first major initial public offering (IPO) in Hong Kong in 2017, raising US$1.5b on a market valuation of US$10b.
Hong Kong poised for insurtech growth in 2018 Chatbots, e-claims, and online sales await expectant clients this year.
ith more than 47% increase in gross premiums to $101m Prudential (HK) Life moved up from second place in the previous year to the top spot this year. Prudential switched places with AIA International, which has also experienced an increase of 35% from $71m to $96m gross premiums. China Life and Manulife also went up the rankings from 4th and 6th to 3rd and 5th, respectively. HSBC Life went down one notch from 3rd to 4th. According to Guy Mills, chief executive officer of Manulife Hong Kong, the company’s step up was mainly attributable to higher sales from their bancassurance and broker channels, and a well received investment-linked product in 2016. When Hong Kong’s Insurance Authority launched flagship programmes Sandbox and Fast Track late last year, it opened a huge opportunity for insurers to finally move away from their clunky legacy systems and collaborate with insurtechs in a more open and encouraging environment. These two platforms have allowed stakeholders to be more hopeful of 18 INSURANCE ASIA
2018 is likely to be the year of innovation for the insurance market in Hong Kong.
the future of insurtech in Hong Kong, a city left behind by China’s speed of innovation in the insurance space. EY’s Fintech Adoption Index 2017 revealed that Hong Kong has an average adoption rate at around 32%, compared to the adoption rate in China at 69%, India at 52%, and UK at 42%. In terms of insurtech, which has gained traction a little later than fintech, the numbers could be much lower, thereby leaving plenty of room to develop for Hong Kong. New opportunities “Sandbox provides a safe place for insurers, together with technology firms, to experiment with ‘insurtech’ pilot projects without the need for full compliance with the Insurance Authority’s usual regulatory requirements. This flexibility allows insurers to collect real market data and user feedback. The Insurance Authority could also assist insurers to overcome any regulatory issues before formal market launch,” said Kevin Bowers, partner, Howse Williams Bowers Hong Kong. In fact, the city could be at an advantage when it comes to innovating life insurance. Hong
Kong has one of the longest life expectancies in the world, and the insurance industry must step up in order to cover the risks associated with old age and capture the opportunities that this brings. As insurers recognise the demand for advanced-stage insurance products, they must also wager on their heavily tech-savvy population as well as on the evolving expectations of millennials. Speed is king in this arena, making it the perfect opportunity for insurers to finally make it big in the digital landscape. “2018 is likely to be the year of innovation for the insurance market in Hong Kong. To maximise the benefits of the regulator’s supportive stance, we predict that insurers will blend technology with insurance products, from distributing microinsurance products via chatbots to using Internet of Things devices to collect customer data, thereby monitoring risks more accurately and offering more competitive prices to customers,” said Joyce Chan, partner, Clyde & Co Hong Kong. Pioneering care Tony Chan, associate director for policy and development, Insurance Authority, said that insurtech is still considered a relatively new phenomenon compared to other financial services. Despite this, insurtech is rapidly catching up on the back of strong investor confidence in the sector’s growth potential. “We are excited to see more insurtech start-ups emerging in Hong Kong. An increasing number of insurtech start-ups have approached the Insurance Authority to explore possible applications of their insurtech initiatives. From the discussions with these startups, we find that the potential applications of Insurtech could be wide-ranging, covering almost the full spectrum of the insurance value chain, from product development, underwriting, sales and advisory, policy administration to claims management,” Chan said.
Survey: insurance firms in hong kong 2017
2016 Gross Premium (HK$)
2015 Gross Premium
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Prudential (HK) Life AIA International China Life HSBC Life Manulife (Int'l) BOC LIFE FWD Life AXA China (Bermuda) Hang Seng Insurance Sun Life Hong Kong MassMutual Asia Ageas (formerly FTLife) Transamerica Life (Bermuda) Hong Kong Life MetLife AXA China (HK) Generali * Chubb Life (formerly Ace Life)
$101b $96b $93b $67b $35b $32b $28b $25b $18b $17b $10b $9b $7b $6b $5b $5b $5b $4b
2 1 4 3 6 5 9 7 8 11 12 13 10 15 19 14 17
$68b $71b $48b $61b $27b $38b $17b $25b $18b $10b $8b $6b $13b $4b $3b $5b
Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business Life or Long Term Business General - Direct and Reinsurance Inward Business Life or Long Term Business General - Direct and Reinsurance Inward Business Life or Long Term Business General - Direct and Reinsurance Inward Business General - Direct and Reinsurance Inward Business Life or Long Term Business Life or Long Term Business Life or Long Term Business General - Direct and Reinsurance Inward Business General - Direct and Reinsurance Inward Business Life or Long Term Business General - Direct and Reinsurance Inward Business Life or Long Term Business General - Direct and Reinsurance Inward Business General - Direct and Reinsurance Inward Business General - Direct and Reinsurance Inward Business General - Direct and Reinsurance Inward Business Life or Long Term Business Life or Long Term Business General - Direct and Reinsurance Inward Business General - Direct and Reinsurance Inward Business Life or Long Term Business
$2b $2b $2b
Life or Long Term Business
25 26 27
TPLHK * Dah Sing Life Zurich International
BOC Group Insurance
AIG Insurance HK
Friends Provident Int'l
AIA (HK) Principal
AXA China (HK)
Standard Life Asia
Fubon Life Hong Kong *
CIGNA Worldwide Life
Old Mutual International
Prudential (HK) General
AXA Wealth Mgt (HK)
General - Direct and Reinsurance Inward Business Life or Long Term Business General - Direct and Reinsurance Inward Business Life or Long Term Business General - Direct and Reinsurance Inward Business General - Direct and Reinsurance Inward Business General - Direct and Reinsurance Inward Business Life or Long Term Business Total
G20 - 2016
-Data obtained from HONG KONG INSURANCE AUTHORITY *not part of 2016 rankings
Analysis: claims in the digital age
Satisfaction surveys in claims consistently show that customers desire a fast and intuitive process as well as transparency
Claims in the digital age: How insurance companies can get started Attackers are transforming the competitive landscape and elevating customer expectations, so insurers must integrate digital technologies into their operations, especially in improving the claims journey, to keep pace.
he insurance industry is in the midst of a radical, digitally infused shake-up. Customers are embracing digital channels, and technologies such as the connected car, smart home solutions, and artificial intelligence (AI) have ushered in an era of new products built on data and analytics. Attackers—insurers with pure-play digital business models, such as Lemonade in the United States, Youse in Latin America, or Nexible in Europe—are using digital applications such as chatbots to turn the process of buying a policy or filing a claim into a fast, simple, and satisfying experience. This approach is a far cry from the analog, and often frustrating, processes of traditional insurers. With new attackers on the hunt for customers, incumbents must move quickly to integrate digital technologies into their operations. For the property and casualty (P&C) industry, digitising the claims function holds tremendous potential. To capture the value of digital, P&C claims functions must embark on a transformation to become a customer-centric, digitally enabled organisation that excels in the three foundational areas of claims—customer experience, efficiency, and effectiveness. In our experience, a digital claims function can boost performance on all three KPIs and generate 20 INSURANCE ASIA
Insurers should adopt a customercentric mindset and undertake an end-to-end reassessment of their customer interactions.
significant value. So where to start? A true digital redesign of claims integrates a relentless focus on the customer with a valuedriven approach. Insurers should adopt a customer-centric mindset and undertake an end-to-end reassessment of their customer interactions—starting with the most relevant customer journeys. For maximum impact, claims functions should develop a digital value proposition and an aspirational future state for a digital claims function first and then prioritise into a transformation road map. This article examines the five essential elements needed to digitise and transform claims. Elements of a successful digital claims transformation In our experience, successful digital transformations in claims begin with developing a new value proposition that sets a high-level aspiration and pursuing an endto-end digitisation of the claims customer journey. The development of a truly innovative customer journey can be achieved by integrating with three other areas—AI and digital technologies, the digital integration of the claims ecosystem, and a new digital operating model. Together, these five elements give management the strategy and tools to both transform claims into a digital function and
Analysis: claims in the digital age Digital claims transformations generate impact across all of claims’ foundational key performance indicators
Source: McKinsey & Company
improve performance on all of the three foundational KPIs. New digital value proposition for claims For the digital age, the claims value proposition—that is, the value an insurer can provide to its customers through the claims process—needs to go beyond traditional afterthe-fact claims management. The value proposition sets the aspirational goal of offering excellent omnichannel customer experience supported by intuitive digital processes. Insurers should aim to adopt a faster, analyticsdriven approach to claims handling and fully automate the claims handling processes for clear and simple cases. For example, Lemonade has worked to redefine the customer experience with an innovative, chatbot-based first notice of loss (FNOL) system that creates automated claims payouts within seconds. In addition to working actively with customers to prevent claims, insurers should provide services that add value for and delight customers and draw on customer feedback to continually improve service offerings, usability, and performance. Instilling this upgraded value proposition within the organisation is an often-underestimated element of a digital transformation. Top and middle management in claims should become champions for the new value proposition; otherwise, they risk finding themselves halfway through the digital transformation without the necessary company-wide buy-in to stay the course. End-to-end digitisation of the claims customer journey At the core of the claim function’s digital transformation is a redesign of the claims customer journey. There is no silver bullet interaction that ensures customer satisfaction, but a successful redesign typically involves considering processes from the customer perspective and optimizing back-office processes accordingly to provide simple and fast claims services. Insurers should start with an “everything is possible” mind-set to unleash truly transformative ideas. Satisfaction surveys in claims consistently show that customers desire a fast and intuitive process as well as transparency on where they are in the process and what happens next. Accordingly, the digital redesign of a
Top and middle management in claims should become champions for the new value proposition.
claims journey needs to go much deeper than superficial process improvements. Adeslas, a Spanish company, has worked to complete an end-to-end digitisation of their claims journey, implementing features such as multichannel FNOL, automated claims segmentation, and digital claims status tracking. To determine how digital technologies can unlock value and improve the claims customer journey from start to finish, managers should examine each step of the journey with the following areas in mind and start to develop an aspirational future state for claims that is unconstrained by potential short-term, technological barriers: Product simplification. Customers want simple and fast digital interactions, but complex coverage details that include many specific exceptions can create barriers. Large numbers of legacy products with different coverage details also make it difficult to implement and maintain the technology systems necessary to improve efficiency. A carrier should find ways to simplify products and reduce product generations to ease the development of fully digital customer journeys. Customer and intermediary self-service. Insurers have the opportunity to shift simple, routine transactions from claims handlers to intermediaries, such as agents and brokers, or customers themselves. Examples include an intuitive online tool for FNOL and an online selfscheduling tool for claims adjuster appointments. As with any self-service tool, insurers must precisely define the necessary information, for example, where the customer can find his or her policy number. They must also build in support in case customers need it, such as online-chat with a claims handler or easy-to-find FAQs. Further, seamless handoffs across channels are critical: customers who start their journey online but want to talk to a claims handler or agent halfway through should be able to do so without having to repeat steps or information. This functionality requires that all system interfaces follow an identical structure and logic. Intelligent case management. After FNOL and throughout the process, handlers typically evaluate claims cases manually to decide on appropriate next steps, such as scheduling an adjuster appointment or providing information about direct repair programmes
End to end digitisation of the customer journey
Source: McKinsey & Company
Analysis: claims in the digital age with local repair shops. Supporting the entire journey with automated, intelligent case management is critical to establishing truly end-to-end digital customer journeys. With the help of AI, a digital evaluation automatically identifies the best next step in a specific customer journey, reduces manual touchpoints, and significantly speeds up the claims process. For example, in a simple claim, this technology can allow a customer to schedule an appointment with a repair shop as part of the FNOL. Enriching these journeys with insights from behavioral economics can help customers to follow the the most satisfying and efficient paths in their claims journeys. Frontline and back-office process digitisation. Claims handlers and adjusters manually carry out oftencomplex tasks, leading to significantly divergent results. Digital tools and systems can simplify and standardise manual processes. For example, tablet-based calculation tools for home damages can help claims adjusters estimate the value of losses faster and more accurately and consistently—even if this means that indemnity payments may increase for certain cases. Standardised reports and calculation methods will leave customers with a comprehensive overview of how their claim was calculated. This results in higher customer satisfaction and a leaner process with reduced follow-ups and recalculations or litigation. Back-office automation. Insurers can achieve the greatest efficiency gains by fully automating back-office processes. Customers benefit significantly from faster claims processing—for instance, through automated verification of car repair estimates and invoices as well as automatic reimbursements as soon as the repair invoice has been verified. In addition, digital tools can support and assist the decisions of claims handlers, leading to better outcomes. Communication. Providing customers with the necessary information in digital channels offers customers the sense of control they desire. The quality of communication can raise customer awareness and usage of digital self-service tools throughout their journey. One
Artificial-intelligence modules enable innovative customer journeys
Source: McKinsey & Company
A successful digital transformation radically reinvents the claims customer journey with the help of AI, digital technologies, and the claims ecosystem.
A digital integration of the claims ecosystem helps to maintain customer ownership and streamline customer journeys
Source: McKinsey & Company
22 INSURANCE ASIA
US insurer, for example, implemented a digital casetracking tool and reduced the number of status request calls by more than 50 percent. By examining each of these areas, claims functions can start to rethink the claims customer journey and backoffice processes. This approach should be synthesised into an aspirational future state outlining the digital assets needed to achieve the ideal state. New operating model for the digital age A successful digital transformation radically reinvents the claims customer journey with the help of AI, digital technologies, and the claims ecosystem. To support these efforts, the claims department needs to pursue deep, cross-functional collaboration with other functions such as marketing and IT. Bringing the transformation to life requires new roles, including data scientists, customer journey “owners,” and user experience designers, as well as a digital way of working, which must be instilled in the organisation. As this new approach can represent a substantial change, success depends on deeply integrating a digital way of working into the entire organisation. Successful organisations tap joint cross-functional management teams to lead the effort, develop experts in all digital methods, and provide intensive coaching for all relevant employees. Purely digital industry attackers have raised the bar for performance by showcasing simple and intuitive customer interfaces, making it imperative for incumbent carriers to radically redesign their claims customer journeys. Those insurers that move swiftly and decisively to transform the claims function can equip themselves to deliver against the new, higher customer expectations—whilst increasing efficiency and improving claims handling accuracy in the process. This article was originally published by McKinsey & Company. Copyright (c) 2018 McKinsey & Company. All rights reserved. Reprinted with permission.
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There is always huge potential for insurance growth in underserved Asia
Vibrant Asian market to buoy insurance sector’s investment in technology The growing economy bodes well for the insurance industry with the rising prominence of blockchain and AI.
he insurance sector in the Asia and Pacific region is expected to maintain its growth momentum as the region continues to experience economic expansion, underpinned by strong economic fundamentals, rising middleincome population, increasing domestic and regional demand and purchasing power, as well as rising interest rates. Research from the Asian Development Bank forecasts economic growth for developing Asia and the Pacific to average 6% over the next couple of years, which bodes well for the insurance sector for people in the region will ideally have higher disposable income—as a result of higher take home pay from increased economic activities—that can be allotted to insurance policies. Boriwat Pinpradab, partner and managing director of Boston Consulting Group in Bangkok, shares this optimism, saying that
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the overall market in Asia remains vibrant, with compound annual growth rate doubling that of Europe and North America. “Life insurance will take the lion’s share of profits in Asia—making up around 75% ($50b) of Asia profit pool,” he said. Dustin Ball, EY insurance transactions leader for AsiaPacific, echoes this sentiment, noting that there is an expectation for the insurance markets across Asia to continue their current growth trajectory, with underlying growth continuing to be driven by rising household incomes. There is also a significant case about growing innovation, particularly in distribution, as insurers continue to invest in digital capabilities. “We are seeing more digitalfriendly regulation and government support, which will be critical in bringing new capabilities to the market,” Ball added. “New
We are seeing more digitalfriendly regulation and government support, which will be critical in bringing new capabilities to the market.
opportunities will also come from advances in telematics, robotics, and Internet of Things, which will create a need for new or enhanced insurance products.” This optimism is also grounded on the fact that most markets in the region remain underserved, with insurance penetration and usage remaining low—opening up a huge space for opportunities and improvement in the region’s insurance sector. For instance, nonlife insurance penetration rates in Asia-Pacific amounted to 1.4% on average in 2013. “Asia is still an underserved region for insurance, hence, there’s always a huge potential for growth,” said Maureen Nova Ledesma, CEO and co-founder of VESL, a Singaporebased insurance protection platform for trade invoices. “In the past year, we’ve seen a lot of consolidation of traditional insurance players in
INdustry INsight developing Asian countries, but this also means strong players prevail.” Sector activities will also be intense and fierce, according to Alan Wilson, regional CEO for MSIG Asia, as the soft market continues to expand, and digital disruption maintain its effects in the insurance sector. “There is definitely opportunity for growth in most markets and especially in markets such as Vietnam, the Philippines, and Indonesia, where insurance penetration is still relatively low as compared to more mature markets in Asia,” he said. Disruptive technology Industry experts and practitioners are saying that technology will play a more central role in the next few years, with the rising prominence of insurtech and artificial intelligence. Ball noted that part of the charm of “disruptive” technology is that it allows a whole firm and a whole industry to find ways to simplify their overall processes and operations. In insurance, for instance, technology has allowed the industry to simplify the process of buying an overall insurance policy, find new and innovative ways to connect with consumers whilst enhancing efficiency across the board. “This includes finding commercial uses for new technologies like blockchain, as well as developing broader ecosystems around their insurance offerings,” he noted. “Further, developments like driverless cars will have insurers rethinking many of their product and system design principles to accommodate the new technology.” Part of the prominence of technology in the insurance sector in the region is the rise in the availability of data and the way firms process and digest this treasure trove of information—apart from the fact that technology making access a lesser challenge than it is years ago. This is also the basis of many of insurtech startups in the market today. Pinpradab noted that this availability of data will greatly assist insurance companies in building relationships with customers. He said that the data provided by such technologies can be used by insurance
companies to not only study the habits and behaviours of their customers, but also change them for the better. For Ledesma, another disruptive nature of technology is that it levels the playing field, especially in an industry like insurance where incumbents usually dictate the progress (or lack thereof) of the whole brood. “Technology plays a big part in challenging and changing the insurance landscape with a particular focus on distribution,” she said. “For example, the sharing economy trend continues to grow and could give rise to more shared policy/ mutual insurance concepts as long as the clients get enough coverage (risk reward of such products) at a competitive price.” Other trends Apart from technology, there are other products that can be expected in the next 12 months for the insurance sector in the region. Ball reckoned that retirement and health insurance policies will likely continue their growth momentum as people in the region continue to enjoy greater longevity and health vitality. “Retirement is also becoming increasingly important as Asian societies age and life expectancy increases,” he said. “There is currently a shortage of retirement savings across the region, and we expect that companies will be finding ways to address this issue.” Ball noted that there is a continuing focus on expanding health insurance offerings and leveraging technology to grow the market whilst, at the same time, improving margins. This includes the use of advanced techniques to identify and reduce fraud, as well as increase efficiency through automation and robotics. Anupam Sahay, partner and head of insurance practice in Asia-Pacific for Oliver Wyman concurred, saying that heightened interest in the health insurance sector is expected as reforms accelerates in large markets like India, China, and Indonesia, alongside greater experimentation with health-tech and insurer-medical provider linkages.
“Healthcare continues to have potential for growth partly based on the increasing ageing demographic in much of Asia, including Singapore and Hong Kong,” said Wilson, adding that China’s One Belt One Road initiative, an infrastructure masterplan, will also usher in a surge of insurance opportunities given that majority of the infrastructure investments under the initiative will most likely be insured. Sahay added that some of the other expected trends for the next 12 months include faster development of core underwriting/pricing capabilities; direct-to-customer propositions; digital partnerships in the general insurance sector; potential uplift in the life sector from rising interest rates and multichannel distribution; and ongoing restructuring of portfolios by certain multinationals. Challenges moving forward Looking ahead, customer engagement will remain a major challenge for many insurers, according to Pinpradab. “Most insurers do not engage their customers more than once a year (if at all). They do not know much about their customer information and the interaction except when there is a claim” he reckoned. Ball, on the other hand, said that despite the industry’s evolution and the rise in interest and investment in technology and innovation, there is still a need to focus on the basics. “Insurance companies need to expand distribution and improve productivity. Across the region, there are still many markets where agent turnover and productivity are impacting results. At the same time, new distribution partnerships and tie-ups require considerable effort to get the desired outcome,” he said. Wilson, meanwhile, emphasised the need for insurance firms and companies to adopt to the digital life. “Companies need to adapt, or risk having their business left behind as the industry evolves,” he noted. “It is always important for us to constantly innovate, and know that we, ourselves, should and can disrupt our own business.” INSURANCE ASIA
woo and ying
Global CEO survey: What we’re seeing in the insurance sector
ne of the key findings of PwC’s 21st Global CEO Survey is that whilst insurance continues to be one of the most disrupted sectors in the global economy and insurance CEOs are extremely concerned about the pace of technology change and cyber threats, surprisingly, they are also optimistic about their organisation’s revenue growth in the next three years. So what is really keeping insurance CEOs up at night? The speed of technological change and cyber threats coupled with the resulting availability of key skills (digital or otherwise) are amongst the concerns that worry insurance CEOs the most. Technological advances are already changing business and operating models. It is undeniable that continually cutting costs to stay operationally lean is no longer sustainable. Instead, insurance companies should embrace the changes brought about by the speed of technological changes and look to innovate the way they do business. The use of predictive analytics and artificial intelligence is no longer new to the industry. We have to move away from just a pure system implementation or enhancement to one where we redefine the job profile and free up people’s time to focus on transforming and harnessing the benefit of automation with human intelligence. Insurance CEOs bullish on industry growth On the other hand, insurance CEOs are confident of the growth in the industry. This optimism can be explained by the fact that the anticipated disruption from new entrants/competitors such as insurtech and digital platform players have still not yet materialised in a big way as initially anticipated a year ago. Instead, tie-ups with the right partners and forming alliances that create synergies to harness the automation capabilities that these insurtech companies and digital platform players could offer is the winning formula. Cyber threats have also opened up opportunities for insurance companies to offer cyber insurance that many CEOs in other sectors are most concerned about. All of the above require a clear strategy and roadmap, and more importantly, effective key stakeholder engagement in order to enable and manage the change. Who are the key stakeholders that Insurance CEOs need to manage in their transformation journey? There are the shareholders, who are constantly looking for higher rates of return, which then drives many of the insurance CEOs to deliver on this expectation whilst possibly ignoring the need to invest in the short to mid-term horizon in order to address the disruption so that the organisation can propel forward in the longer term. 26 INSURANCE ASIA
Woo Shea Leen Insurance Leader PwC Singapore
Penny Ying Insurance Director PwC Singapore
How concerned are Insurance CEOs about the following threats to their organisation’s growth prospects
Source: PwC, 21st Annual Global CEO Survey
Then there are the boards of directors, who are steering the direction of the insurance companies. There are also the CEOs and executive committees whose performances are measured by a set of KPIs that may no longer be aligned with the longer term transformational objectives to change into digitally-enabled, customer-focussed organisations with agile business and operating models. There are also the people within the organisation. How to instill a shift in mindset, especially in the era where close collaboration of humans and machines is shaping how humans interact with the digital capabilities to create the cutting-edge business model. And are insurance CEOs currently too focussed on the customer experience and perhaps neglecting their own people strategy? And of course, the regulators. Many a time, there is a disparity in terms of what the regulators expect of the insurance companies and what the shareholders expect. This disparity at times may hinder the transformation journeys that are embarked upon. Therefore continual engagement with and getting the buy-in of the regulators are important. The key to coming out on top In conclusion, whoever embraces change with proper change management, ties up with the right partners that will result in substantial synergies, and has the right stakeholder engagement will win BIG! The first big success story is what everyone is gunning for. But to do this, there are three key steps. Firstly there needs to be a mindset shift of all key stakeholders which could involve changing KPIs. Secondly, identifying and working with the right partners to move forward. Lastly, equipping all within the organisation with the appropriate skills and tools.
Insurance CEOs are confident of the industry’s growth
naujoks and singh Breathing life into life insurance
ife insurance companies are under pressure. Their traditional business model is stagnating. Since 2014, premiums for U.S. life insurers have fallen at an average annual rate of 4%, the industry’s return on equity has been flat, and persistently low interest rates continue to depress returns. Insurers have been slow to adjust to these new realities. Despite their efforts to trim expenses, many are still suffering from bloated costs. Agent commissions and distribution costs, which account for about 60% of a typical insurer’s overall operating costs, have ratcheted up at an average rate of 5% since 2010. The productivity of agents, who handle more than 90% of all policy sales, has slumped. To make matters worse, life insurers aren’t pleasing their customers. The average Net Promoter Score® for U.S. life insurers is 4.5%, according to Bain & Company’s survey of insurance customers in 20 countries. One way insurers are trying to address these problems is by expanding their use of digital channels and data analytics. But they are late to the party. Life insurers are saddled with cumbersome and costly processes and legacy systems, and they have long underinvested in IT. In 2016, insurers spent 3.2% of their annual revenue on IT, less than half the 6.8% spent by banks. Leading insurers have begun to realise that digital is only a piece of the solution. To meet the challenges of the marketplace they need nothing less than a total transformation of the way they do business. Life insurance is rooted in actuarial science. All insurers have to calculate and manage risk; that’s an essential part of what they do. But this risk-containment ethos can permeate the entire company, resulting in slow-moving, overly cautious and internally focussed organisations. Insurance executives surveyed by Bain give their companies relatively low grades for creating and sustaining an environment that sets high expectations. The transformation journey Many companies begin the transformation journey by laying out a bold vision, often setting a goal to cut costs by as much as 25% within three years. They use those savings to invest in technologies and talent that will enhance the customer experience, lift productivity and improve profit margins. They take a hard look at customer transactions that require multiple handoffs from department to department, including some that may still feature handwritten and printed forms that are transported from place to place in manila folders. One leading life insurer that set out to transform itself started by candidly assessing its challenges: slowing top-line growth, stagnant productivity and a major technology deficit. The company laid down a marker: It aimed to increase earnings by about 40% in five years. To reach that objective, it would have to cut operating costs by 20%. Achieving these ambitious goals would require something more than business as usual, something more radical and long-lasting than the incremental approaches that emanated from the standard annual 28 INSURANCE ASIA
harshveer singh Partner Bain & Company
henrik naujoks Partner Bain & Company
Primary life insurers’ Net Promoter Scores® relative to loyalty laggard (indexed to zero), 2017
Source: Bain/Research Now NPS survey, 2017
budgeting process. The company shifted from a model that was organised around functions, such as underwriting, marketing and sales, to a structure based on business units that focussed on major customer segments. It moved the IT development staff from the corporate level into the business units—fostering much closer collaboration on technology. The company conducted a broad review of its talent pool and raised productivity expectations. By the end of the process, close to 40% of the positions in the company were filled with new talent— both internally and externally sourced. The company attacked its marketing and distribution system, which over the years had become complex and inefficient, with overlapping sales organisations supporting multiple brands and channels. The company discovered it wasn’t spending wisely on its agents. It had invested large sums in recruiting, training and supporting agents, including flying them to sales conferences in exotic locales. But it turns out that what the agents wanted more than regular visits from sales managers and trips to Hawaii were tools that would help them become more productive in a digital world. By consolidating and scaling back on sales management expenditures, the company cut the gross operating costs in distribution by 35%. It invested a significant portion of these savings in an upgraded customer relationship management system and other digital tools. The strategic business units, focussed on customer segments, are now able to more quickly develop and launch new products. For example, the company recently introduced an innovative savings programme geared to millennials. The company has also seen a change in its culture. Decisions are made faster thanks to new ways of working that reduce spin and confusion. Whilst there are many items still on the agenda, the company has shown that life insurers facing significant external and internal challenges can transform themselves into efficient, performance-driven enterprises resolutely focussed on improving the customer experience.
JUTA AND MAHIEDDINE How robotics and cognitive automation will transform the insurance industry
RAJ JUTA Insurance Sector Leader Deloitte Southeast Asia
YACIN MAHIEDDINE Insurance Sector Leader Deloitte Southeast Asia
he use of robots to drive tangible business benefits is very much a reality today. According to Transparency Market Research, the global IT-enabled robotic process automation (RPA) market is expected to reach $5 billion by 2020. RPA is just the beginning; cognitive capabilities that enable machines to perform tasks reserved for human intelligence are now being leveraged with robotics. Robotics and cognitive automation (R&CA) is expected to foster greater collaboration between humans and machine by both automating repetitive tasks and enhancing the quality of jobs. Automation in the insurance sector RPA technology is seeing widespread adoption across industries and insurers in Asia are making strides to automate their business. Successful RPA adoption in the insurance sector can transform the actuarial, risk, and finance functions. Asian insurers including Mitsui Sumitomo, Tokio Marine, Sompo Insurance, and Ping An are harnessing R&CA to reduce administrative tasks such as responding to inquiries, processing insurance applications, as well as supporting and streamlining claims processing and the underwriting process. NTUC Income in Singapore announced in 2017 that it plans to roll-out RC&A technology to improve its pre- and posthospitalisation claims process. The benefits of R&CA go far beyond just efficiency gains and its potential across the insurance value chain is significant. It can also support the adoption of innovative value proposition to simplify the customer journey and enhance distribution efficiency. It is important that insurers understand the long-term business implications of R&CA beyond robotics alone. Insurance companies will need to reconfigure its operating model and adopt a more customer-centric approach in order to capitalise on the opportunities unlocked through cognitive automation. Impacts to the insurance operating model As insurers automate volume-heavy transactions and reporting processes previously done by humans, companies will need to re-deploy Full Time Equivalents (FTEs) into more complex, judgement-intensive roles. Recruitment and training engines will also have to be upgraded to hire and train skilled FTEs with competencies to handle complex decision-making roles. It is important to note that technology will not replace talent as a sustainable competitive advantage. Instead, organisations will need to strike a balance between transitioning to R&CA, making required FTE adjustments and upgrading the skills of existing workforce. Insurers should also prepare themselves for the imminent transformation by reconfiguring their IT systems. The transformation will be an extension of the journey that has begun in areas such as RPA and advanced analytics enablement, most likely including: (1) Modular sourcing: The R&CA technology industry is now engaged in a start-up-like phase, in which nimble 30 INSURANCE ASIA
Time for insurers to explore R&CA capabilities
positioned to disrupt the incumbents; (2) Integrated systems: R&CA technology has the inherent capability to iteratively self-learn and generate insights through access to data from multiple sources; and (3) Transparency and control: Cognitive technologies and systems will undoubtedly partner with humans in the near future. The technological landscape is evolving quickly, and the implication for insurers is the need to identify and source relevant capabilities to allow for better task design and an appropriate division of labour between humans and machines. Staying focussed on customer centricity in an R&CA world Insurers serve a diverse demographic of clients and customer interaction preferences are changing. Customer expectations for convenience through consistent information and service levels across multiple channels is likely to drive insurers to mirror non-insurance industry experiences, such as online retail and banking. Insurers have already started to employ advanced analytics to gain deeper customer insights. However, the volume, unstructured nature, and velocity of data being generated are beyond the realm of traditional analytic processes. The benefit of cognitive technologies in insurance is that it can solve problems that traditional analytics cannot readily address. R&CA will help empower insurers with the ability to provide improved customer experiences and more personalised offerings. The time is now Insurers who fail to embrace the cognitive journey will likely cede important strategic advantage to competitors and new market entrants already riding the wave. Conversely, organisations that try to do too much too soon in pursuit of first mover advantage in the R&CA space may also be at risk. The key is running a manageable set of pilot programmes to test R&CA capabilities. This enables the insurer to align business outcomes with the expectations and facilitate a smoother implementation downstream. These are very interesting times for the insurance industry.
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george kesselman Digital insurance revolution
ow long did it take to sell 240,000 insurance policies online in 2017? Most insurance leaders across Asia guess “at least a few weeks.” The reality is that, in the age of digital, it only took a second. The record was set on Alibaba Tmall.com website on 11 November 2017 by Zhong An, Chinese digital-first insurer and the most successful global insurtech so far. The pace of Zhong An growth has given the much-needed wake-up call for the insurance industry. Opening act of insurtech Insurtech had emerged in 2012, and over the last six years, the insurance industry has started to embrace it openly. Whilst there’s been a lot of excitement about insurtech, most of the digital efforts so far have been largely incremental—insurance products are becoming slightly cheaper, their distribution becoming a little bit more digitally enabled, and the back-office becoming marginally more efficient. The “opening act” focussed on the low hanging opportunities that kickstarted the insurtech wave globally. Now as impactful opportunities susceptible to incremental tech solutions quickly dry up, many insurance managers are concluding that insurtech might have run its course and, going forward, it will be back to business as usual for insurance. They will be in for a surprise! The perfect analogy for the current stage of the insurance industry is a record label in the age before digital music. Record labels erroneously believed they were in the business of CDs, which drove them to focus on pushing pre-packaged products with a single feature that consumers wanted, delivered to customers via expensive and inefficient distribution music store networks. The valuable lesson being that the full force of disruption did not come when records started selling CDs online but when Napster hacked through the oligopoly of record labels and force-unbundled their products. Whilst Napster ultimately didn’t survive, it disrupted the status quo by pushing record labels to finally unbundle their products and make them available to digital-music distribution platforms such as iTunes and Spotify. The latest trends coming out of China are pointing to an early shift in insurance fundamentals. So the current slow down in InsurTech is not an end, but the beginning of the ecosystem transition towards the upcoming “Spotify moment” for the insurance industry. Main act of insurtech The “Spotify moment” happens when a discretionary spending item, like music, gets transformed from an occasional luxury into a utility that millions of customers rely on as their trusted daily tool. The key trigger for a “Spotify moment” is a combination of frictionless customer experience, mass-customisation that closely matches consumer’s needs, perceived value for money, and access to wide variety of choices. The “Spotify moment” will see insurance products simplified
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George kesselman President InsureTech Asia Zhong An Insurance’s policy sales on Tmall.com
Source: InsurTech Asia
down to their core coverages and then embedded frictionlessly into digital ecosystem. This moment is now fast approaching, and it will bring with it the “main act” of insurtech. In the main act, insurance will move closer to becoming a risk transfer utility and a seamless part of consumers’ day to day digital service consumption. Digital businesses will start to dynamically pick the coverages that are relevant to the specific “worry profile” of their users and allow users to add those alongside their core services. Insurers have a narrowing window of opportunity to prepare or risk being sidelined into niche segments. Key strategic activities should include the following. First is Product Sprints. Cross-functional teams will need to start executing rapid product unbundling and creation of digital-oriented stand-alone digital coverages. Currently, it takes insurers on average 6-12 months to launch a new consumer insurance product. In the future product design will need to happen in “5-day Sprints” and become iterative, to identify best product-market fits within digital ecosystem. Second is Opportunity Management. Evaluating digital opportunities by the same metrics as legacy business is a sure way to destroy any sign of innovation. Digital requires a strategic “VC” approach to opportunity selection and management. Placing many strategic bets will let organisation learn and iterate quickly from both mistakes and successes. Dedicating investment pool and digital P&L will keep accountability and ownership clear. Lastly, providing the best support for digital opportunities will maximise the probability of success. After all, would you rather lose your best resources to your self-disrupting digital team or Amazon? And third is Startup Collaboration. Working with startups and approaching them as high potential partners, will give the organisation the right cultural compass and position it well for dynamic digital insurance ecosystem. Future of insurance is digital; resistance is futile!