In 2024, the insurance industry faces challenges caused by the rise in property and auto rates due to inflation, geopolitical uncertainties, and increasing regulatory scrutiny. Technology is emerging as a key driver for insurers navigating the turbulent landscape.
A survey conducted by Gartner found that 58% of the insurance respondents have allocated increased funding for digital innovation. This ongoing trend towards digitalization and business automation, accelerated by COVID-19, is projected to continue into 2024, with insurtech playing a crucial role in enhancing insurers’ performance through modern technologies.
According to industry stakeholders and experts, a number of technological trends will be shaping the insurance sector in Asia-Pacific (APAC) and globally this year onwards. These trends include the use of artificial intelligence (AI)/machine learning (ML), natural language processing (NLP), and cloud-based services to improve operational efficiency and allow for hyper-personalization. Embedded insurance is also projected to keep growing, driven by the fast pace of digitalization, changing consumer behavior, and more collaborations between traditional insurance firms and tech companies.
Hyper-personalization of the insurance value chain
In APAC, hyper-personalization is driven by evolving customer expectations for tailored experiences. Capco’s recent insurance survey showed that nine in ten policyholders in Hong Kong (94%) and the wider Greater Bay Area (GBA) (90%) would be motivated to share additional personal data with insurers in return for a range of benefits including more personalized services, cheaper premiums and enhanced claims processes. The results are similar across other surveyed markets such as Singapore, Thailand and Malaysia. Respondents also say they are open to new ways of sharing personal data such as wearing wireless smart devices and using smart devices in the home.
According to Neutrinos, a Singaporean finance software provider, insurers are responding to this demand by increasingly turning to machine learning (ML) algorithms and gen AI to analyze customer behavior data and customize insurance products in real-time.
AI-powered chatbots and NLP
Another trend is the use of NLP and gen AI-powered chatbots to redefine how insurers engage with customers.
Gen AI allows insurance companies to automate tasks across the value chain. This includes assisting customers and advisors in understanding policy coverage and aiding sales agents in recommending appropriate products.
NLP, meanwhile, streamlines processes by analyzing vast amounts of textual data from sources to assess risks accurately, detect patterns indicative of fraudulent activities, and ensure policy compliance. The technology can also be used to gain insights into customer preferences, market trends and competitor strategies, aiding data-driven decisions and targeted marketing campaigns.
Interest in gen AI and NLP is growing in the insurance sector as consumers grow more comfortable with using chatbots. Some researches have shown that 74% of users prefer using chatbots when looking for answers to simple questions, with 64% of consumers indicating 24/7 availability as their most helpful feature.
The drive for operational efficiency
In the current economic climate, insurers in APAC are under pressure to operate more efficiently while delivering value to customers. Previously, they focused on growth and customer acquisition, often outsourcing back-office tasks to save costs. But this reliance on cheap labor hindered technological advancements.
However, recent years have seen insurers prioritize operational overhaul, leveraging technologies like automation and AI to cut costs and enhance efficiency.
A 2023 study by Clearwater Analytics highlighted the keen interest of insurers and insurance asset managers in Hong Kong and Singapore in advanced technologies. 86% of the professionals polled in the two locations said they foresaw a rise in technology spending in the coming year. The C-suite prioritized the implementation of AI, ML, and cloud-based solutions, reflecting a proactive stance to leverage cutting-edge technologies for improved operational efficiency and decision-making.
Insurance everywhere
Another trend highlighted by Tata Consultancy Services and McKinsey and Company is embedded insurance, an approach which is seen as a big opportunity for both insurers and consumers.
For consumers, embedded insurance offers convenience and simplified processes. Customers access personalized insurance coverage at the point of need with a quick sign-up process and hassle-free claims. For insurers, embedded insurance holds significant potential for market expansion by offering additional distribution channels and facilitating access to new and broader customer segments.
According to Tata Consultancy Services, embedded insurance offers an effective way to address the lack of insurance coverage in Asia. It does this by providing clear insurance products right at the point of sale for other goods or services.
For global consultancy McKinsey and Company, insurers in Asia stand to benefit significantly from participating in embedded insurance, especially by accessing new customer segments through fully integrated partnerships with non-insurers.
The consultancy predicts that by 2030, the market for embedded insurance in Asia could grow to be worth US$270 billion in terms of gross written premiums (GWP). 66% of this growth is anticipated to stem from GWP shifting from traditional channels like agency and bancassurance, to embedded channels.
From June 04 to 06, 2024, InsureTech Connect Asia (ITC) Asia, one of the region’s largest insurance ecosystem conferences, will be coming to the Sands Expo and Convention Centre in Singapore for a comprehensive and global gathering of insurance industry incumbents, tech entrepreneurs and investors.
Over the course of three days, the industry will convene to share their insights and trends in the insurance market, learn how to increase productivity and reduce costs through innovation and digital transformation.
Industry experts and leaders will delve into some of the biggest opportunities and most pressing challenges faced by the sector, addressing topics such as embedded insurance, AI and ML for digital transformation, creating a conducive environment for innovation across Asia, and the rise of gen AI.
Participants can expect an enriching experience tailored to their specific interests and goals. They will get to connect with insurtech entrepreneurs and delve into potential commercial relationships, network with investors and fellow innovators, and gain visibility into promising young insurtech companies.
Insurtech Trends Discussed at the ICT in Singapore
Fintech News Network subscribers are entitled to a special discount of their ticket prices with the code ‘FNN200’. Register here for the event
Featured image credit: edited from freepik
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- Source: https://fintechnews.sg/95986/insurtech/the-biggest-tech-trends-in-asias-insurance-sector/
