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The incumbent vs the disruptor: How much has changed?

Source: AIR | Sep 2017

Singapore InsurTech Life & Health Wealth Management Agents/Advisors

With the entrance of InsurTech startups in Singapore, has the way insurance is transacted been altered significantly? What does disruption bring for the traditional advisory model and will the industry see InsurTechs replace face-to-face selling? PolicyPal founder Ms Val Yap and local advisory Infinity Wealth Management Senior Financial Services Director, Mr Poh Choon Kia share their views in this exclusive dialogue.
By Dawn Sit
  1. What is/are the biggest challenge(s) you currently face in the traditional FA and InsurTech startup business respectively?
Mr Poh Choon Kia: I think the main challenge for the traditional FA model is the lack of work efficiency. The lack of a consolidated submission tool for all the respective product providers means that a comprehensive professional adviser will have to replicate the same client information for submission to different companies. The requirement to have more disclosures in a heavily regulated industry also means the amount of repeated paperwork increases.
Ms Val Yap: InsurTech startups have to work with insurance companies, which require relatively long sales processes. But as startups depend a lot on speed for survival, the implementation processes might sometimes be longer due to many stakeholders involved – therein lies our challenge. 
  1. How do you view the current state of disruption/InsurTech development in the insurance industry? How far do you see InsurTech startups encroaching on the traditional sales advisory model?
Mr Poh: Based on the current offerings in the market, the disruption is nominal. Most of the current InsurTech platforms come with little or no cost savings at all. Even those with savings, the fact remains that good financial planning comes from experience and advice from practitioners.
   Hence, in order to enjoy some savings via online options, one must be willing to spend the time and effort to self-teach and self-service, and this may not be as easy as it seems. Having said that, simpler products like travel and motor insurance have seen traction.
   I believe there will always remain a class of consumers that prefers to leave it to the professionals than to do everything themselves.
Ms Yap: To be honest, InsurTech development is still in its infancy, where there're many players working to educate the market on new business models and products. But I think that startups have been ceaselessly exploring ways on how they can work with the traditional sales channel as the market needs time for technology adoption. 
Mr PohWhen it comes to full financial planning and more sophisticated requirements, it is hard to see how InsurTech can replace the traditional model, given that the ability to fully comprehend what coverage one really needs is not something that can be readily impressed upon. Because insurance is not a consumer good, such that most consumers will wake up in the morning and say that they are going to go insurance shopping today! So again, when it comes to holistic advisory, there is still much for InsurTech platforms to catch up to.
  1. How do you envision the financial advisory climate of the near future? What will be a win-win formula for both InsurTech and the traditional advisory? More importantly, how can you convince both the older and new-age consumer demographics of the benefits of each?
Mr Poh: I believe we will first see a wave of new InsurTech startups focusing on the online mode of placing insurance business. Traditional players will try to digitise the whole advisory process to make it more effective for the traditional model to function.
   We should also see a progressive shift of consumer patterns, in terms of placement of their insurance needs – with more taking on DIY InsurTech platforms for simple insurance and seeking out professionals for the more sophisticated detailed planning.
Ms Yap: Although disruption is still nascent, achieving a win-win for both models will require close collaboration. InsurTechs should work towards enabling traditional advisory to improve productivity and tools, to help the latter serve their clients better. Having said that, I think traditional advisers are now pushed to increase both their transparency and service levels to their customers. Disruptive entrants like us have in a way helped to increase the standard of insurance education among the public and this is also beneficial to insurers.
   I believe the mature consumer demographic would benefit from solutions like ours. As PolicyPal allows users to understand, track existing insurance covers and alert them in the event of renewal needs, this provides welcome assistance in the management of complex policies, as well as in reaching out more easily to their consultants and insurers. Meanwhile, the advantage for new-age consumers would be the easy access to new products created by PolicyPal for their ever-changing needs.
Mr Poh: If both traditional and InsurTech models can come to terms and understand their own limitations and merge the merits of the two to form a hybrid – that would bear the best result for consumers.
   InsurTechs can focus on the simple insurance model and provide a working referral arrangement with the traditional model for more complex planning – this would allow a client to enjoy the efficiency of processing simpler insurance and holistic advice for more sophisticated cover.
   I believe both models will appeal to the different demographics and can coexist without the need to abolish one for the other. Hence, consumers will still have an option to go for whichever model that they prefer.
  1. Having raised seed funding and primed for a trial with NTUC Income and Etiqa, what’s next on the cards for PolicyPal?
Ms Yap: We recently became the first InsurTech startup to graduate from MAS’ FinTech sandbox and are now registered as a direct insurance broker and exempt financial adviser under our subsidiary, BaoXianBaoBao. Locally, we’re also working with NTUC Income, Etiqa, AXA and Aviva, while onboarding global insurers for partnerships to co-create new products for consumers, and to tap into the under-served market. We are also in discussions with some global players outside of Singapore for partnership opportunities to help increase insurance penetration. 
  1. How is IWM preparing its advisers in anticipation challenges from disruption? 
Mr Poh: The key to surviving well in an InsurTech environment rests heavily on the proficiency and the competency of the advisers. If consumers cannot see the difference between getting advice via an InsurTech platform and via an adviser – then that adviser is not competent and not adding enough value to cope with the new era.
   With that in mind, we invest heavily to train and raise the competencies of all our advisers. This is done via an all-rounded approach encompassing areas such as lifelong training, access to specialist expertise and advice; and enhancing in-house infrastructure, including developing proprietary software.
   We are also always seeking to improve our end-clients’ experience from the core basic of providing quality advice, to enhanced levels of sophistication in catering to planning needs readily.
  1. Will IWM be investing in InsurTech of its own? What opportunities will it look out for?
Mr Poh: Yes, we acknowledge the changing market environment and we have started developing our own systems two years back. As we started via an adviser face-to-face centric model, our investments and developments are focused on bringing the traditional model to a new level, merging the efficiencies of technology with the dynamic thinking and empathic ability of a human consultant.
   We also have an in-house proprietary “developed by consultants made for consultants” i-nitiateTM system to increase the efficiency of our people in terms of staying in touch with end-clients. We will move on to invest in systems to enhance end-user experience and facilitate easy sharing of knowledge internally.
  1. How can the MAS and regulations further help you in your respective operating models?
Ms Yap: PolicyPal is fortunate to have been the first startup to enter the MAS FinTech sandbox, being allowed to test our innovation in a restricted environment, and to work with insurers and the public.
   With this, we as a young startup will be able to scale from there. I think the government has been extremely supportive to startups in Singapore; the MAS has been open to our questions and has provided good guidance on the appropriate approach for our business model. With this case study, we have been able to scale to other markets within their respective sandbox or through strategic partnerships with some global insurers. 
Mr Poh: Our regulators have been doing a good job in terms of providing the assurance and confidence needed for consumers to deal with regulated financial products in Singapore. I believe MAS will continue to place emphasis on the needs-based advisory process and the stringent compliance requirements, when it comes to purchase of regulated financial products like insurance.
   Hence, by continuing this principle, this will ensure that consumers will not end up purchasing the wrong product from either model and the distribution of more complex products will likely have to be continued via a professional face-to-face model. That will allow both models to evolve into their respective niches and also indirectly raise the level of competency and professionalism of the advisers in the industry. A 
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