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Key considerations in the face of InsurTech

By Dennis Liu, Head, Business Transformation and Technology, Etiqa Insurance Singapore

Dennis Liu, Head, Business Transformation and Technology, Etiqa Insurance Singapore

Technology developments and transformations in InsurTech have led disruptions in the traditional landscape of insurance, which is getting interesting with innovative solutions offered by insurers of varied expertise, from veteran industry leaders to entrepreneurial tech start-ups.

Faced with various challenges such as new competition, cost pressures, ageing technology, increasing regulatory requirements, cyber risk, and difficulty in acquiring and retaining talents, etc., the insurance industry is compelled to change and renew business models. But how do we combine innovation with the fundamentals of insurance, and recreate sustainable value chains?

Business model innovation is critical to transformation, and the change must start from top management

To succeed, insurers need to cultivate the culture of innovation and collaboration. To put it simply, an organisation needs to adjust the mind-set and embrace change by: thinking big, start smart, fail fast, and learn fast.

New technologies such as social, mobile, analytics, shifting customer preferences, and new models of competition and collaboration drive companies to update and renew its business model, in order to stay competitive. From our experience, the greatest challenge lies in incubating a ‘change’ culture, and this is often a stumbling block to success.

Based on Mckinsey’s study in 2013, 39% of staff and 33% of management behaviour are resistant to change, and this has a direct relation to risk and responsibility. Many internal processes, especially in the financial service industry, are designed to reduce or eliminate potential risks, and to pinpoint responsibility if something goes wrong. However, it will be beneficial for organisations to re-evaluate the necessity of each process and its accompanying opportunity costs.

Along our business transformation journey at Etiqa Insurance Pte Ltd (EIPL), we often face difficulties when it comes to changing or eliminating processes, even if certain processes are redundant. In fact, some companies mandate a simple approval paper to have more than 10 signatures. Why? It is to share responsibility. So in order to make the change, the culture of innovation needs to be set, and this can only come from the top management. Instead of penalising staff who take risk or make mistakes, encouragement and empowerment to make decisions should be welcome.

InsurTech has driven greater value and speed, an essential to business efficiency

InsurTech has driven greater value and speed in this digital transformation era, and these are two key components that insurers are paying more attention to. Direct distribution and direct interaction with customers allow insurers to create and offer more meaningful and affordable products that suit the needs of customers. From the business perspective, innovation is required for companies to stay in competition, and in doing so, insurers can achieve greater operation efficiency and create greater value for customers.

Improving business efficiency shall help to reduce the cost of production. The lower the cost of production, the more value is created. At EIPL, we rolled out robotic process automation (RPA) to improve operational efficiency and shorten turnaround time, automating ~80% of our processes and reduced 30% of backend staff. The streamlined internal processes free up resources to allow us to focus more on creating value for our customers, and we are able to launch a new product within two months. At present, EIPL is proud to offer the most number of online insurance products in Singapore. 

Our relentless dedication to being a digital and innovative insurer has resulted in new solutions over the past year such as pioneering the EASY save series of insurance savings plans online and direct to customers, answering customers’ enquiries via the WhatsApp instant messaging app, and the delivery of a customer-centric experience e.g. automated flight-delay claims, chatbot, voice service via Google Assistance etc.

Increased opportunities to connect and collaborate

In considerations of today’s technological megatrends, we are also seeing a shift in terms of the value offered by insurers. There are great opportunities for those that are quick to renew their business models with their customers in mind. InsurTech is driving a value transition in the insurance industry, from protection against potential risks to prevention of these risks in the same place. In the midst of providing product and service innovations, insurers are open to possibilities of revenue growth aside from underwriting and investment profits. There are more opportunities to connect and collaborate, which will contribute to a share economy.

The right partnerships can improve business efficiency and provide win-win solutions for all parties involved. Zhong An - the first and only company in China that has an Internet insurance license – has underwritten over 630 million insurance policies and serviced 150 million clients in its first year of operation. Co-launched by China’s Internet service and insurance titans, Alibaba and Tencent, the cross-industry partnership leverages their user bases with the help of Ping An to grow into traditional industries. 

For EIPL, we believe in creating value through collaborations too. We are the first online insurer to integrate with ‘MyInfo’, a digital data vault launched by Government Technology Agency of Singapore (GovTech) and the Ministry of Finance. This collaboration eliminates the pain of completing application forms, reduces up to 80% of application time, and yields higher approval rate with better data quality, allowing immediate approval upon purchase. In 2017, EIPL helped more than 100,000 customers purchase products online and achieved more than 500% annual growth in online revenue. 

Staying rooted 

Insurance is about helping people, helping them to protect their assets, maintain their lifestyle and build a better future. While companies invest heavily in Insurtech and offer unique solutions through the transformative environment, it is important to keep in mind the organisation’s mission and values by asking the following questions:

• Is it possible to grow company value like a tech company instead of solely focusing on short-term profit?
• What type of business model shift will help us to achieve breakthrough performance?
• How do we strike a balance to innovate without jeopardising the core business?
• How do we build the capability to develop, rapidly test, and scale new models?

Inspiring an organisation to change is not a trivial undertaking, but given the current strategic environment, it is a critical one. At EIPL, we always fall back on the fundamentals of insurance – policy creation, underwriting, and claims management – and review how we can improve our current processes and products, in order to help people.

Last year, EIPL introduced automated flight delay claim  – a first-in-market feature in Singapore –to bring convenience to customers in the event of a travel delay. In our straight-through digital claims process, customers can receive their travel delay benefits within a day, without the hassle of informing the insurance company. Instant payouts via PayNow or Direct Credit from eWallet for claims or policy cancellation refunds are available. 

Constant work-in-progress

Transformation is a journey for us, and we are still in the middle of it. There are still many things to do and much to learn. There is no sure-win formula in the InsurTech movement, but one thing is for sure: the insurance industry coupled with technology will constantly evolve. While traditional intermediaries still play a role, the shift to digital, especially for simple products, is set to take place sooner than one expects. This is an opportunity for insurers to use technology enablers to provide insurance with better customer experience and grow revenue while keeping in line with regulations. It is a constant work-in-progress.