Is the insurance industry struggling?
Innovation shakeup hits Singapore’s life insurance industry
Singaporeans now have more convenient choices to purchase direct and online insurance products, but the industry is grappling with increasing healthcare costs and outdated regulation.
hen FWD launched a fully direct and digital approach to life insurance in Singapore, it was a response to the gaping hole it saw in the traditional agency model predominant in the island. Disruption is rising as a strategy amongst insurance players as Singaporeans become more connected and mobile, and become better equipped to purchase insurance products online and directly from providers. Financial technology firms are also cranking out new tools and business models to improve online insurance products, although the government is rolling out regulation to make sure consumers are better protected as the industry continues to post steady growth. The boom in life insurance also comes with worries over escalating health insurance claims. “We see a general trend that in more developed markets, there 28 SINGAPORE BUSINESS REVIEW JANUARY 2017
The insurance industry lags the banking, travel, and retail industries in terms of adapting to the digital world.
is an increasing appetite amongst consumers to purchase directly, and we are therefore reflecting that in Singapore,” says Abhishek Bhatia, CEO at FWD Insurance Singapore. “With the increased connectivity and mobility that Singaporeans have, combined with their growing preference for online commerce, it seemed like a natural decision for us to choose a direct-to-consumer model.” Plans for the digitally connected Bhatia cited a recent FWD research that shows the insurance industry lags the banking, travel, and retail industries in terms of adapting to the digital world, with only 52% of 600 Singaporeans surveyed thinking that insurance is well adapted compared to banking (100%), travel (92%), and retail (77%). “The local insurance market is predominantly made up of players
with traditional agency channel. Whilst this model might have worked for them, we studied local market trends and identified opportunities we felt we could address better,” says Bhatia of their decision to go with a digital and direct-to-consumer approach. “Singapore is one of the most digitally and mobile connected countries in the world, and we know Singaporeans will continue to appreciate the choice of being able to buy what they need online,” he adds. FWD is planning to invest $500m to grow its presence in Singapore over the next five years and introduce other insurance policies that reflect the needs of modern Singapore, which Bhatia says will be defined by a growing middle class that increasingly understands the value of insurance and financial technology (fintech) firms. “Fintech has helped to drive innovation and digital transformation