It is said that modern insurance can trace its roots at the Greater Fire of London in 1666, and the first accident insurance became available in the late 19th century. But as they say… that is ancient history.
These days, the insurance industry is under siege not by a customer looking to buy insurance but by outsiders taking the business away from incumbents and with that – clients’ wallets.
In a nutshell, the insurance industry is discovering what banks have learned years ago, digital technology is empowering non-traditional insurers to capture market share and potentially make insurers obsolete at their own game.
But we believe it’s never too late to be part of innovation.
EY says insurers must embrace change and rethink business models to move towards a compliant, secure and digitally enabled operating model to enhance customer, employee, partner and other stakeholder experiences.
The tools are here, what is needed is a willingness to embrace the possibilities.
Peter Tay, chief digital officer, NTUC Income, explains that insurance-as-a-service was created to hold all the capabilities and experience of NTUC when it came to innovating, launching, executing, and scaling digital insurance innovations in Singapore into a holistic set of offerings for its strategic partners in the region.
What is insurance-as-a-service?
He adds that the offerings are tailored by design and built-in a way that our partners can have the ability to quickly launch these tried and tested models in their local markets. He acknowledges that these models have already been launched in Singapore before – so battle-tested at least for consumers in Singapore.
“Insurance-as-a-Service offers what we call a modular plug and play format, where partners could get on board very quickly, test-bed these products in their markets so that they can quickly learn and continue to evolve their product. Along this process, we also work closely to support our partners in localising the product as well as getting the product launched in their markets,” he continued.
Market opportunities across Southeast Asia
With a population of over 600 million, Southeast Asia presents a large distribution area for NTUC and its partners. Tay says markets like Indonesia, Malaysia and Vietnam have a relatively younger population that have high digital connectivity and high mobile phone penetration rates.
Tay says its partners are looking to tap this market opportunity but want to do so without heavy investment. “The insurance-as-a-service plugs this gap, where we can offer a suite of products that allow our partners to get into a market quickly and allow someone like us who has launched this in a consumer market to share these experiences and the capabilities without them going through years of building up,” he explained.
Challenges ahead for digital insurance
Tay acknowledges that when it comes to insurance, there are decades of mindset that needs to be changed. He sees the reimagining of the whole ‘insurance consumption journey’ requiring potentially a complete shift away from the traditional mindset.
Product development among incumbent insurers is linear progression – much of it involving mostly the provider with little input outside the organisation. In contrast, Tay says digital insurance takes a lot of input from the customer.
“Digital insurance products development is iterative, require keeping our ears on the ground, and accepting that the first product that rolled out may or may not meet the needs of customers,” he added in explaining an evolving digital product. He also conceded that a product in one market may not necessarily work in another.
The second important challenge is the regulations.
“Insurance continues to be a heavily regulated industry in any part of Southeast Asia; hence we work very closely with our partners to make sure that we could counter the first challenge - the mindset - and then we can solve the easier one; the regulations and re-iterating the product over time,” he continued.
The changing insurance landscape of SEA
Tay concedes that the rise of digital ecosystem platforms, e-commerce and COVID-19 have all contributed to a ‘big digital push.’ He says the growing digital population will drive digital insurance consumption over time.
With projections of as much as US$7.6 billion between 2020 to 2025, this presents a huge potential across the region for insurers looking to tap this fast-growing market.
“I think people look for insurance that is easily accessible, simple so that with a click on the phone, they can acquire insurance, start and stop insurance plans, all at their fingertips,” he opined.
Educating the market
Tay acknowledges that digital insurance is still relatively new and therefore a lot of consumer education is needed. The good news is that NTUC’s experience suggests that consumer pickup in some segments is easy.
Outlook in SEA
Tay is bullish on the prospect of lifestyle-embedded insurance in the region.
“We believe that tech-enabled lifestyles have opened up real opportunities for digital-first insurance solutions,” he added. He also believed that NTUC’s insurance-as-a-service solves one of the bigger challenges for traditional insurers looking to enter a new market – the heavy investment needed to get traction locally, not to forget the hurdles of meeting evolving, local regulatory process.
With insurance-as-a-service, “we supply the innovation and tap our partner’s existing local license, and their ability to do the due diligence with in-country regulators,” said Tay.
“We have been sharpening our digital capabilities over the last couple of years, and this gives our partners an opportunity to shortcut that process and the journey by tapping on our experience, especially when they believe that there is value in a partnership like that,” he concluded.
Click on the PodChat player and listen to the dialogue with Tay as he elaborates on the possibilities of insurance-as-a-service.
- First, in a nutshell, what is the business of NTUC Income?
- What is Insurance-as-a-Service (IaaS)?
- Where are the market opportunities and appetite for IaaS in Southeast Asia?
- How will IaaS enable Income’s regional partners to grow new market segments and revenue streams?
- How will the rise of digital consumers change the insurance landscape in the region?
- What does the outlook for digital insurance in Southeast Asia look like?
- What is your advice to insurers when considering insurance-as-a-service?