The Asia-Pacific region has been in the spotlight in recent years, having been recognised as a major growth engine, not just for insurance, but also for the wider economy. The region is home to around 4.3 billion people, or more than half of the global population, which highlights how important it is for global businesses such as insurance firms.
According to Elysia Chan (pictured above), managing director and insurance practice lead at Accenture, Asia-Pacific is a mix of old and new, which lends to the region’s strength and capabilities.
“The Asia-Pacific region is not a homogenous one – premiums are not evenly distributed across lines and markets,” Chan said. “Greater China, India, and Southeast Asia would be considered “rising stars” with their high insurance growth rates, and relatively low insurance penetration rates. Meanwhile, mature markets like Japan, Korea, and Australia would continue to lend stability to the insurance market in the region, given their relatively established positions.”
Chan said that insurers must step up and seize the opportunities offered by the region’s unique situation.
“One thing is certain, though – there is strong reason for optimism in the region, whether in mature or emerging markets,” Chan said. “Factors such as the growing affluence of the region, as well as the rise of digital banking and payments will provide the access and demand for such services. However, this also calls for elevated offerings for insurers, especially as customers now expect more from their digital interactions.”
In this regard, Chan expects the more mature Asian markets to still lead the way for development, but in doing so, it will help shorten the learning curve for their emerging counterparts. The latter will also have opportunities to leapfrog in innovation and technology, given their large populations of relatively young digital natives.
In a previous interview, Chan highlighted the importance of insurers’ innovation efforts, as these are critical in unlocking value and reaching population segments that have been traditionally underserved. Research has also shown that more innovative companies generally perform better in the stock market.
“Our research indicates that stock price increases often follow the public announcement of an innovation capability and programme,” Chan said. “For example, Ping An Insurance, whose fintech and cloud computing products are used by approximately 4,000 Chinese financial institutions, has invested billions of dollars into technology and R&D to date, and will be increasing this over the next decade.”
To remain more in tune with the market and harness growth opportunities, Asian insurance players need to take note of four trends, Chan said. These are:
1. Increased consumer preference for digital
Consumers have a growing affinity towards digital services, driving many permanent changes within the industry, such as increased sharing of data across all stakeholders, competitive pricing, and higher accessibility to insurance.
2. Changing needs of small commercial businesses
Small and medium enterprises are seeing significant potential for innovation and delivery to better meet consumers’ needs. As these companies align their growth objectives with business investments, insurance carriers can provide the experience and insight to help them develop robust risk management plans so they can focus on growth.
3. The rise of open insurance
Open banking and insurance presents opportunities for banks and insurers to come together to share and consume data and services via application programming interfaces, or APIs, removing information asymmetry. Chan expects these firms to be first movers in redesigning digital experiences that delight the customer, and, in building deep data and AI capabilities to extract maximum mileage from the data, to stand out from the crowd and raise the standard in the industry.
4. New opportunities driven by sustainability
Today, companies need to tap on the new opportunities driven by sustainability. Insurers are expected to be developing digital solutions and improving data availability to enhance ESG policies and reporting. ESG presents an opportunity for the industry to step up and reimagine its products, services, and experiences to customers and distributors whilst, at the same time, building responsible and sustainable businesses that are powered by innovation.