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May 2024

InsurTech: Hype or Substance?

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Source: AIR | Nov 2017

Asia InsurTech Technology

Whether InsurTech is hype or substance remains to be seen. Particularly in Asia, the value that disruptors bring largely depends on the respective markets’ needs, says Mr Stephen Goldstein, Country Director of US Pivot Ventures, on the sidelines of the InsureTech Connect (ITC) 2017. Here he shares some of the key takeaways – from the world’s largest InsurTech gathering of technopreneurs, investors and insurance industry incumbents – that can be applied to the InsurTech ecosystem in Asia.
By Chia Hoe Seng
Q: What was it like at the biggest InsurTech event in the world? Was it more hype than substance?
I felt as if the hype was more in people’s minds. InsurTech solutions have been around for some time but the buzzword has only caught fire over the past few years. For that reason, it almost feels cool to be in insurance now because we have added a ”tech” to our name.
   That being said, I would actually say there is more substance than I would have thought. There were plenty of impactful speakers and powerful solutions, which will really help the insurance value chain – both for policyholders and carriers.
Q: What about the InsurTech scene in Asia? Do you think there’s more hype or substance?
I don’t necessarily think it is more hype. To begin with, Asia is a very dynamic continent where each market’s customers’ needs and preferences differ. Insurance penetration depends on demographics and disposable income too. As such, the InsurTech solutions present in each market somewhat follow what the customers want.  
   So, this means some places will have more substance than others. On the whole, I believe Asia has done some great things in the InsurTech scene, especially in China. They can be touted as the only country to have an InsurTech that has done an IPO valued at over US$1.5 billion and that is tremendous.
Q: How can start-ups better reach out and engage insurers? Is there an ideal formula? Likewise, how can insurers help facilitate meaningful partnerships?
I would say there is no “ideal” formula. However, there are some tips I can provide.
For start-ups
Firstly, they really need to know what problems they are solving. Are they a solution for the policyholder or the carrier? Are they helping with operational efficiency, new innovation and/or customer experience? They should be clear of which part of the insurance value chain they are solving.
   Next, if they do not have someone on the team who is a seasoned insurance expert, go get one. The whole team does not need to be (insurance experts), but they must have some insurance expertise on the team.
Once this is done, along with the powerful solution, find out who the decision-makers are in the organisation they are targeting – typically the distribution or operations function and leverage their network to get a meeting.
   The following advice was given by Mr Benoît Claveranne, Group Chief Transformation Officer of AXA during ITC:
  • When a start-up approaches an incumbent, they should make clear what they are looking for – to be invested in, bought out, or partnered with. A lot of time is wasted on this during early engagement, and will help move the conversation along if it is clear early on.
  • For start-ups – make a call after 1-2 meetings to see if the incumbent is serious about doing business. Do they have a budget and a team to develop it? If not, it may be time to move on to the next client.
For insurers
Companies have to know what it is they are looking for.  It is worth sitting down to identify strategy and priorities, then work to find start-ups that can fill those areas of the value chain. Only when this is done should they engage with the start-up, with reference to the points highlighted by Mr Claveranne above and prepare accordingly.
Q: What learnings can the Asia’s InsurTech industry learn from the US and vice versa?
What Asia can learn from the US
The biggest frustration that I had working in Malaysia for four years came down to execution and project management. I found that this was not just a Malaysia phenomenon, but something pervasive around the region. The primary reason for this is that Asia (regardless of the market) always feels like it is in growth mode and because of this, there is less time to do proper planning because things needed to go live yesterday.
   I am not going to say the US is perfect in this aspect, however, I would say that project management as a principle is not as well embedded in Asia as it is in the US (or in the UK, where I have spent eight hours a day, over 2 weeks with a project team just to come up with a project plan!).
   If teams (both incumbents and start-ups) can stop, sit down and strategically plan (both in terms of deliverables and requirements), this will make the execution process much better and easier for all.
What the US can learn from Asia
The US should take more risks in pushing InsurTech boundaries like what Hong Kong and Singapore are doing. These markets have regulatory sandboxes, which allow start-ups to test the environment before going live. This creates an opportunity where insurers, start-ups and regulators get together to collaborate and communicate – a win-win situation for all parties.  
   But one key aspect that regulatory sandboxes are easily implemented in these markets is because there is only one regulator. In the US, you have overarching national standards  and then 50 state regulators, which makes things more complex. However, there are definitely ways that this can be resolved, to allow for more start-ups to try things out without having to go through so many layers. I recognise the need for regulation, but I am always of the view of taking a balanced approach. This dynamism is why I have rated Asia as being ahead of the US in the “Insurtech leader’s club”.
Q: What are the top tips you would give to European/US start-ups looking to tap Asia's markets?
  1. Understand the dynamics of each market in detail before just saying “I want to expand in Asia”.
  2. Pick one market to start with.
  3. Find a MNC to work with that you are already working with in your home country.
  4. Partner with someone that can advise and introduce you to the local market.
  5. In parallel to point 1, take time to understand the consumers of the market you are going to. Not all Asians are the same.
Q: Will InsurTech have a bigger impact on emerging or mature markets?
I think technology solutions for insurance can help both markets. For emerging markets, technology can help a lot with two issues – cost and access. Through the use of wearables, telematics and IoT, insurance will be more affordable and readily available through various digital platforms.
   For mature markets, the same principles above apply. Additionally, there will also be opportunities to really help people with more complex insurance planning, in particular the life and health space, where HealthTech providers are already actively engaging consumers. A 
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