Insurtech in China is set for a rapid rise. Craig Ford is Chief Executive Officer SCOR Global Life Asia Pacific. SCOR has been pursuing an innovation agenda to actively support its clients as the industry enters a period of unprecedented change.
Stationed in Singapore, the Fintech hub of Asia, Craig is well positioned to give a (re) insurers view of the advances made in China and the ever-expanding use of Data. Craig’s insights come backed by a global study of 8,000 insurance consumers across 14 markets commissioned by SCOR’s subsidiary, Remark (a world leader in alternative and direct distrbution) called “Life Is a Rollercoaster”.
What key insights did SCOR derive from the study?
There were 4 key insights:
- Consumer beliefs and values are changing, and the chronology of lives today is very different. Understanding the new triggers and beliefs is crucial for insurers to remain relevant
- Health is the new wealth and has become the key currency for customer engagement
- The successful convergence of automation and advice is needed to convince customers of the value of data exchange
- There needs to be enough choice for customers to feel empowered but not so much that it becomes overwhelming
Customer expectations are rising based on their interactions with other industries – reinforced by the growth and power of communication and data aggregators. In China, Tencent’s WeChat is used by a high proportion of the population as part of daily life (889 million daily users!) for social media, instant messaging and payment services. WeChat now has access to the data of hundreds of millions of consumers and insights into their daily behaviours. More importantly for insurers, WeChat has a much deeper insight into what it is that drives those behaviours.
The issue for insurers is how to gain access to understanding how consumer attitudes and behaviours work. The challenge from there is in designing and adapting products that fit these new requirements. The ability to gain these insights is increasingly falling into a smaller number of company’s hands. The global tech players have insights that insurers can currently only dream about.
Increasingly innovation is coming out of China where everyday life has bypassed email and mobile phones. China has moved straight to smartphones and WeChat, driving a completely different customer mindset as to how they want to interact.
The barriers to entering the insurance industry in the past were high – access to distribution, capital, product design, experience and data etc. Potential new entrants no longer need these, as data, or more specifically access to consumer attitudes and buying behaviours is the new currency.
The sheer scale of the new generation of businesses is mind-blowing. Zhong An (formed as a combination of Ping An, Tencent and Alibaba in 2013) has to date, digitally sold over 7bn policies to some 500 million customers. We are witnessing a huge shift as consumers see how easy and effective this method of distribution is. Businesses with huge data sources are prepared to partner with insurers and figure out ways to optimise the use of their data to create better experiences for their customers.
The Top 10 companies in the 2017 Fintech100
- Ant Financial – China
- ZhongAn – China
- Qudian (Qufenqi) – China
- Oscar – US
- Avant – US
- Lufax – China
- Kreditech – Germany
- Atom Bank – UK
- JD Finance – China
- Kabbage – US
Courtesy of KPMG Fintech100
How can incumbent insurers catch up?
We think we can support our clients by experimenting in areas like Artificial Intelligence, Robotics and Genetic Testing to ensure we and they become increasingly relevant in the light of these new paradigms. Some of the most successful “innovations” are relatively incremental. As an example, we are exploring how genetic testing can drive better outcomes for customers at the point of a claim by optimizing and focusing the treatments they receive.
We are also helping clients with text mining on claims to better analyse their data using robotics. This gives our clients greater insight into their claims experience and history which in turn drives better focused propositions. In Korea, we are working with an AI partner and a specialist hospital to develop a data base which can be used to develop future products covering important conditions not currently covered.
In the US we have developed an underwriting algorithm based on the use of multiple data sources replacing traditional underwriting methods. All have been developed in conjunction with and in support of our insurer clients. The industry really is leading the charge and demonstrating that it is determined to stay relevant – and doing a good job at it too.
In your role, you cover Asia Pacific. Which country stands out in terms of innovation?
Of all the countries I visit, China is the stand out regarding innovation. It doesn’t have the insurer infrastructure and history of other established countries. China does have young, bright and capable people coming into an industry with data and digital distribution in abundance and a huge drive for consumer engagement. They are happy to trial and develop products (e.g. freight insurance for the on-line sellers like Alibaba, and flight delay insurance) as simple examples with which to engage customers.
Moving specifically to Australia, there is a clear hunger from the industry to be at the front of the change. As a result, there is a desire for global insights and experience that can be adapted and adopted in Australia to make insurers more relevant and effective with their customers. The industry has come from a position where it has some of the most advanced products in the world and has been a clear leader in areas such as disability income that remain in their infancy elsewhere.
The media is laying bare the relationship the insurance industry has with consumers. The industry is responding, and I believe will ultimately be successful given the attention and focus we see being applied. There is no doubting the desire!