China has become a poster child for the success of virtual insurance – insurance products marketed and served primarily via digital channels Mordor Intelligence estimates that Chinese online insurance market at nearly US$46 billion in 2019.
A need for more competitively priced products appears to be the underlying theme in a survey of consumer sentiment around virtual insurance buying in Hong Kong. According to Field Resources Consultant, surveyed respondents were broadly familiar with online insurance.
In the survey, Reimagine: Virtual Bank and Virtual Insurance, FRC noted that the primary target for these products are in the 20-45 age-bracket. This group is familiar with insurance products, including terms and conditions, and has a good experience with claims. But they are price sensitive and will do their homework for the right product and price.
According the online survey that conducted in June, nearly 70% of total 879 respondents said they interested and considered to apply insurance on virtual insurance companies Among these services, travel insurance topped the list (75%), followed by medical and accident insurance at 62% and 59% respectively. In addition, 73% said they have more interested on medical insurance due to COVID-19 pandemic.
There remains, however, lingering lack confidence that virtual insurance companies are sustainable. They understand the pure online nature of virtual insurance, with lower prices and more flexibility, but they are unable to differentiate virtual insurance and the online services of traditional insurance companies.
The survey showed that consumers’ biggest concern with virtual insurance is of no post-sales follow-up on insurance matters and a lack of protection.
The virtual insurance companies’ reputation is not high, which is hard for the consumer seeking their peer’s authentic user opinion. Many people prefer to rely on personalized service.
There are currently four companies licensed to offer virtual insurance in Hong Kong. Bowtie Life Insurance is the best-known virtual insurer brand (23%), followed by Blue (4%) and ZA Insure (3%). The fourth and most recent licensee is OneDegree.
Almost a third of the respondents (30%) are interested in the insurance services of virtual banks. Among these services, travel insurance topped the list (87%), followed by home and accident insurance at 64% and 62% respectively.
Walter Chan, managing director and head of User Research of Field Resources Consultant, opined that virtual insurers could fill a market gap by launching simple products that are relevant to everyday life as an entry point to build public confidence in the company.
“Virtual insurance is still relatively new. For future development, it could also cooperate with traditional banks, leveraging on their reputation to enhance visibility. It would also be conducive to the future development of longer-term insurance, such as savings insurance and life insurance,” he concluded.
Despite the Insurance Authority having launched various initiatives to promote Insurtech development in Hong Kong including an Insurtech sandbox and set up what it refers to as a Fast Track programme to accelerate applications for digital channels. Still Chan is says the success and growth will depend more on the private sector. Click on the podcast player to hear Chan's opinion on this.