Ecosystems for innovation
Insurers today need to respond to the growing demand from consumers for new, anywhere/anytime products. But before insurers can create these innovative products, they will need to create new ecosystems of providers and services – some of which may have no connection with the insurance industry as we know it.
This is already being done by two Chinabased insurers. One, Zhong An, is totally digital and online, meaning it operates with neither agents nor branch offices. Instead, Zhong An runs as a platform, complete with an ecosystem for services and products to both consumers and commercial customers. For example, that lets the insurer offer a service via the ridesharing site Grab that provides auto insurance for single car rides. And by working with other ecosystem partners, Zhong An can insure a wide range of activities, including shopping returns, merchant performance bonds, even airline flight delays.
The other company, Ping An, works both online and offline to provide an array of financial services offerings, including insurance, banking, brokerage services and asset management. Ping An provides insurance for healthcare, real estate and cars and operates both FinTech and health-tech businesses. The insurer does this with two elements: An online platform – combining AI, facial recognition, blockchain, the cloud and other technologies – and an ecosystem of partners.
Bold steps to the future
The insurance company of the future will develop new products and mitigate risk based on insights derived from its data. Such insurers will be capable of sensing data from all kinds of environments. They will also process this data along with other types of information, such as commercial and consumer data, as well as historical and current data.
Tomorrow’s insurers will also provide consumers with personalised and dynamic products and services. They will set up environments to collect data from consumers continually too, so they can inform them about new products and improved services.
To move toward that future, insurers need to do more than simply adopt individual technologies. Instead, they should create truly innovative platforms of converged technologies, then augment these with an ecosystem of equally innovative companies. In this way, insurers can create innovative business models that allow them to enter new markets, drive new revenue streams and serve customers’ changing needs.
A new kind of bancassurance?
Banks and insurers are no strangers to working together – after all, bancassurance is a popular and successful avenue for distribution amongst insurers in Asia, making up 30% of total new life insurance business in the region in 2019. Many attribute the success of bancassurance in Asia – the concept has never really taken off in Europe or the US – to the high regard the Asian populace gives banks. Banks are trustworthy and dependable, and the products they sell you are likewise.
But the lines between banking, insurance and technology get even more blurred as we look at the potential that exists in Grab or GoJek, two ride-hailing-turned-super apps that already offer insurance and e-wallets on the same platform. Grab is even vying for a digital banking license in Singapore, in partnership with local telco Singtel.
According to an official statement, Grab and Singtel’s digital bank “will aim to cater to the needs of digital-first consumers, who have come to expect greater convenience and personalisation, and SMEs which cite lack of access to credit as a key pain point”.
Grab Financial Group senior managing director Reuben Lai said, “In the past two years, we have launched and scaled financial services such as e-money, lending and insurance distribution into Southeast Asia’s largest FinTech ecosystem. The natural next step is to build a truly customer-centric digital bank that will deliver a variety of banking and financial services that are accessible, transparent and affordable.”
Another consortium aiming for one of Singapore’s digital banking licenses is led by technology company Razer, which also launched their own e-wallet in 2018. Razer’s consortium includes digital insurer FWD as one of its five partners and could possibly open up avenues for insurers to reach out to youths who are generally underserved by financial services.