Asia's insurance industry is ripe for digital disruption as today's insurance customer is more empowered, more social and has higher expectations of his/her providers. However, insurers here are not taking the lead to unleash the optimal level of disruption that will drive growth and deliver value.
An Accenture survey has found that up to a third of an insurer's profitability is at risk from digital as insurance customers in ASEAN are becoming more digitally savvy and are increasingly seeking choices to buy insurance online.
Life insurers, who have traditional business models built around agency and bancassurance, face the largest threat from the new age digital entrants adopting multiple digital enabled business models (from using Crowdsourcing and P2P Insurance to Mass Customisation and Personal Informatics).
This is particularly critical as the life insurance value pool is the largest insurance value pool in Singapore, Malaysia and Indonesia — valued at S$33 billion in 2014, comprising 64 percent of the insurance market — and is growing at 9.4 percent per annum.
Asia's insurers have to increasingly explore ways to improve their digital offerings for customers so that insurance plans can be accessed conveniently on any device.
Moving forward, insurance companies must recognise that in order to successfully offer a broader range of innovative products and services and create a differentiated customer experience, they will need to partner with non-traditional players.
Such players include makers of wearable devices that track healthy behaviour and connected-home or auto devices, which could help insurers create new models which provide outcome-based services for their customers. Insurers, for example, have started to provide new policy holders with a free fitness tracker band to track their health progress and reward healthy living with a reduction in life insurance premiums or other incentives.
This global survey also highlighted the emerging developments in technology that will have the most impact on the insurance industry in the next three to five years.
Wearables will be one of the key game-changers. The survey found that over 30 percent of insurance executives are currently using wearables to engage customers, employees or partners and the percentage will continue on an upward spiral.
But the insurance industry is not designing wearables — they are pairing up with other industry players. And it is not limited to health trackers.
Through application programming interfaces (APIs), cutting-edge insurance companies can open up their data and platforms for other companies to develop applications, hence creating value for all participants.
Property and casualty insurers could team up with a variety of partners, ranging from appliance makers and home security providers to gas, electric, and telecommunications utilities, to unlock the value inherent in the "connected home." The use of "connected home" base applications is especially important for industrial and public service sectors, such as retail and industry.
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