2018 will be pivotal year for insurtech in Asia: Clyde

The next year will see technology transform Asia’s insurance industry as insurtech comes to the fore in many of the region’s major markets. This is the prediction of international law firm Clyde & Co, which has made a number of forecasts concerning the international insurance industry in 2018. Primary among these predictions is the pivotal role that insurtech will play in India, Hong Kong and Australia. According to Vineet Aneja, a partner at Clasis Law in Mumbai, 2018 will be the year of accelerated innovation among Indian insurers as the value and potential of new technology becomes clear. “To date, Indian insurers have approached insurtech-led innovation cautiously, more in an experimental way rather than as an organisational priority,” he said. “However, as innovative startups and the applications they develop begin to demonstrate real value-add, whether by way of cost reductions, process efficiencies or radical changes to the customer experience, insurers will become increasingly dependent upon them.” Mr Aneja cited recent digital initiatives led by the Indian government as a key catalyst in the development of more insurtech services, as well as the Indian regulator’s recent licensing of two general insurance companies that will operate online only. He also referenced the successful implementation of blockchain into one general insurer’s travel and motor products, adding that it is “just the tip of the iceberg” in terms of blockchain applications. Meanwhile, insurtech startups are expected to emerge in Australia thanks to a new licensing regime implemented this year by the Australian Securities and Investments Commission that allows eligible insurtech businesses to operate unlicensed for 12 months in a regulatory sandbox. With the scheme set to be extended to 24 months, Clyde’s Sydney office expects more companies to take advantage of this option as they become more familiar with the benefits of a regulatory sandbox. But the greatest insurtech prospects still lie in Hong Kong, according to Clyde. Reinsurers’ interest in insurtech is likely to be heightened by the industry watchdog the Insurance Authority’s two initiatives designed to promote new technology in the insurance market – Fast Track and Insurtech Sandbox, the former providing a streamlined authorisation process for digital-only insurer startups. “This is great news for insurers,” said Joyce Chan, a partner in Clyde’s Hong Kong office. “We predict that insurers will blend technology with insurance products, from distributing microinsurance products via chatbots to using internet of things devices to collect customer data, thereby monitoring risks more accurately and offering more competitive prices to customers.” However the rise of insurtech will have some implications for insurers, said Clyde. Firstly, greater use of digital channels for distribution as well as transactions will mean a greater emphasis on data privacy. Secondly, greater use of algorithms for underwriting and claims analysis will force regulators to “up their game” in order to keep track of the potential risks. According to Nigel Brook, a partner in Clyde’s London office, regulators will not only pay more attention to insurers’ use of algorithms, it will also have to look at how to regulate the few specialist insurtech businesses that provide this kind of technology and “start thinking about how insurtech itself is best regulated”. Nor were Clyde’s predictions limited to insurtech. Among other forecasts, the law firm also expects Asia to emerge as an insurance-linked securities (ILS) hub in 2018. More specifically, it expects Singapore to take the “next step” in its plan to develop the domicile as the leading insurance hub in the region. For example, Singapore is yet to issue its first catastrophe bond but the Monetary Authority of Singapore is planning to launch a grant scheme that will fund 100% of the upfront costs for issuing a cat bond out of Singapore. The scheme, along with the MAS’s “regulatory flexibility”, will see the first cat bid launched in 2018 and “the emergence of a new ILS marketplace that will provide competition for those jurisdictions that currently lead the way in ILS offerings”, according to Ian Stewart, a partner in Clyde’s Singapore office.

2018 will be pivotal year for insurtech in Asia: Clyde

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Related Articles