How Asia is pioneering digital insurance ecosystems

At a Glance

How Asia is pioneering the development of new digital insurance ecosystems, bringing together established providers, with insurers and other new service providers.

4 Minute Read

Daniele Principato

Chief Executive Officer, Asia Pacific, Atos

Turning challenge into opportunity

Across the globe, established insurance providers face the challenge of adapting to a sector that is being transformed by digital innovation, with new entrants that leverage innovative technologies posing an immediate challenge. There is no region this is more pertinent than in Asia where its status as a mobile-first digital economy has meant that Insurtechs and others – including technology firms and online retailers – are being presented with an opportunity to outpace and even supplant established providers.

Consumer led transformation

The extent to which this opportunity exists in Asia reflects the growth of an increasingly young, digitally engaged population that is eager to manage and uses insurance in the same way that they use other financial products. What we are witnessing across Asia is the emergence of a group of consumers who are increasingly comfortable using online insurance platforms, but more importantly are open to looking beyond established service providers and switching between them. . This offers an opportunity for Insurtechs, and other new entrants to this sector, to rapidly expand their customers’ bases.

Embracing the insurance ecosystem

This rapidly transforming landscape means that established insurers must now find a role in a complex ecosystem of service providers. Undertaking this does not mean that insurers need to embrace a ‘one size fits all’ approach. Instead, there are multiple roles which established insurance providers can assume in these ecosystems. This can range from directing ecosystems and guiding their activity, to building networks of partners and collaborators that deliver discreet insurance products. Alternatively, insurers can simply work to support the growth of insurance ecosystems through offering capacity.

Although there are a number of ways in which insurers can leverage these new ecosystems, collaboration will remain key. Through integrating services with ecosystem partners, insurers will be able to shape their roles and value propositions with customers in mind. In some instances, this will see insurers transformed from being exclusively focused around insuring against risk, to working with partners to prevent risks. For example, they can transform from insuring risks to preventing them via more holistic service offerings across a network.

China: The insurance Ecosystem in action

Today, China is pioneering the development of insurance ecosystems, with firms like Ping An and Ant Financial reinventing the industry, supported by businesses such as Tencent that offer rich sources of data through platforms combining payments, social media and contextual messaging (i.e. WeChat).

The insurance sector in China has moved faster through leveraging data in a way that enables insurers to understand their customers in real time, rapidly developing and launching new products and services. It is this innovative use of data which sets Chinese insurers apart, and combined with artificial intelligence (AI) and analytics, enables them to streamline insurance processes.

The innovation witnessed among Chinese insurers is the product of a combination of factors. This includes the sheer size of the market, as well as the growth of the Chinese middle class and a light regulatory touch that has provided room for innovators to experiment with new solutions and partnerships.

In China, the potential of highly automated insurance platforms is being realized, with these enabling insurers to take creative approaches to core insurance processes such as underwriting, pricing and claims handling. For insurers in other regions, this offers a preview of what genuine, collaborative ecosystems can deliver, for providers and consumers alike.

New tools for a new insurance landscape

75%* of business leaders will leverage digital ecosystems by 2025

*IDC Predicts 65% of APAC* GDP will be Digitalized Reaching US$ 1.2 Trillion in Spending by 2022

The emergence of insurance ecosystems is only the beginning. Across Asia we are witnessing the integration of payment and social media into tools that allow targeted marketing of insurance at the same time as providing highly responsive customer engagement tools. For the first time these tools provide insurers with both payment and marketing services. Therefore, those in the tech sector have an opportunity to leverage their scale to deliver insurance products and services without the need to replicate some of the charges and costs associated with traditional insurance providers.

Key Takeaway

Insurers in Asia have demonstrated an eagerness to introduce digital products and services more rapidly than their counterparts in other regions. This has enabled many to develop new innovative products and significantly expand their market share. In the long term, those with access to the growing well of detailed customer data will also be able to identify and leverage opportunities for cross-selling.

The approach adopted by insurers in Asia cannot be replicated wholesale in other regions, however the lessons learnt by insurers in the region, around embracing digital transformation and operating across a diversifying ecosystem of service providers, are ones that the global insurance sector would do well to heed.