Insurance tech innovation has allowed legacy insurers to discover more ways to equip themselves to approach the emerging markets in Asia.
As is the case with recent tech-partnerships for Aviva and AXA, if current insurers are willing to embrace and invest in technology, they have a chance to dominate emerging markets.
In 2016, AXA initiated collaboration with e-commerce powerhouse Alibaba. At the beginning of this year, Aviva also partnered with Chinese tech giant Tencent.
These deals will see the insurer harness their partners’ technological expertise and regional footprint to expand their distribution networks within the markets.
Business Insider reported a list of reasons concluding why Asia is an ideal expansion target for insurers – so long as they recognise the importance of innovation and adapt to the market:
- Many consumers are underinsured – Markets such as India, Indonesia, and the Philippines are underserved in terms of insurance. These markets have premium per capita of below US$1000, compared to around US$4000 for the UK and US markets. The average Asian consumer may find it difficult to afford many insurance policies, but technology can allow insurers to minimise costs and make policies more affordable for emerging markets.
- Asia will soon have the world’s highest middle-class population – By 2030, Asia will have around 64 percent of the world’s middle-class population. Middle-class people have higher disposable income and can afford financial products to protect their assets. The population is more exposed to technology and has higher expectations on customer service.
- Geography can work against physical insurance distribution models – Many archipelagic countries for example, Indonesia make traditional branch-based broker distribution networks less viable. As insurers shift to digital distribution models, this can minimise costs in operating in these markets and make it more convenient for clients.
The report said that in order to achieve success in the emerging Asian market, insurers will have to collaborate.
More insurers are expected to follow in the footsteps of AXA and Aviva, capitalising on the growth potential offered by the Asian market.