Beyond the tech revolution

The younger brother of the more recognised fintech market, insuretech is steadily attracting interest from large insurance institutions, venture capitalists, business journalists, technology analysts and, most importantly, risk managers. In the age of driverless cars, wearable technology and the internet of things, the insurance industry has come somewhat late to the technology party but it is making up for lost time. On the insurance and risk conference circuit, the talk is of digital disruption – the overthrow of traditional business models and product lines in favour of internet-based, on-demand policies.

Yet, as interesting as these developments are, there is still plenty of innovation on display that is not wholly reliant on technology or the internet. In our latest issue of Commercial Risk Asia, the features and news stories highlight the full range of insurance solutions available to corporate risk managers – from captives to parametrics, from catastrophe bonds to insurance-linked securities and from reinsurance to global programmes.

While these are not new solutions, they are constantly developing, particularly in their application. They are also of particular relevance for Asian corporations and their risk managers, many of which have underemployed these solutions as part of their insurance strategies.

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For example, global programmes may be the de facto choice for Western corporates but they are still seldom used by their Asian counterparts. However, this is beginning to change – due, in part, to the international expansion of so many Asian corporates.

Reinsurance is also set to grow within Asia thanks to a recognition among policymakers and regulators that it is a vital tool in building resilience against large risks, hazards and exposures, and to closing the so-called protection gap.

And there is a similar recognition among policymakers and also corporates that insurance captives and mutuals can provide much-needed capital for risk transfer, particularly for those risks that are not priced so attractively on the traditional insurance market.

This is not to say that technology has no role in these kind of products. Look at parametrics, for example, where the latest meteorological tools are combined with advances in data analytics and a growth in the use of indices to create insurance products that promise to solve two of the problems that have given corporate insurance such a bad name – disputes over losses and delays in claims settlement.

Similarly, we should not dismiss the notion that the high rate of adoption of new technology among Asian corporates may see it leapfrog many Western companies in terms of development (including risk management).

All I ask is that any risk managers looking at the latest, online, peer-to-peer, auto insurer to attract a wave of venture capital, also consider the full range of ‘traditional’ insurance products available to them.