Insurtech challenges Singapore's largest insurance firms

Quite late to the digital party, insurers find room for startup collaboration.

Singapore Business Review’s Insurance Industry Survey saw a reshuffling in the top five companies over the course of 2017. AIA Singapore Private Limited held on to the top spot with assets numbered at around $39b up from an estimated $38b in the previous year. Second placer NTUC Income Insurance Cooperative Limited fell to fourth place with a total number of assets rounded off at $7b

Meanwhile, Prudential Assurance Co. Singapore (PTE) Ltd steps up one notch from third place in 2016 to second place, hitting $33b estimated total assets, a little over a 10% increase from an estimated $29b assets in the previous year. The Great Eastern Life Assurance Company moves another notch up too, on the back of a 10% increase in assets from an estimated $29b to an estimated $32b. Manulife retains fifth spot with an estimated total number of assets at $7b.

Faced with an increasingly older population and a growing pool of startups, Singapore’s insurance bigwigs are under increasing pressure to compete and step up to the digital challenge. Singaporeans are living to an average age of 82, eight years of which are spent in dire health amidst rising healthcare and caregiving costs. To make matters worse, Singapore’s citizen old-age support ratio is estimated to reach a record-low of 2.4 in 2030, after having dropped to 4.4 in 2017 compared to 4.7 in 2016.

To close these gaps, insurance executives have finally decided to ride the innovation bandwagon and transform their demand for roles, now with an emphasis on web and app developers, digital specialists, and data scientists, amongst others. 

Patrick Teow, chief executive officer, AIA Singapore, said that insurers are faced with a huge amount of big data at their disposal. With the continuing rise of technology and the Internet of Things, Teow said that the future could see insurers being able to collect and analyse this data with such granularity to allow them to monitor the health and risk-taking behaviours of individuals. They can then use this data to the advantage of both parties, and adjust policy coverage and premiums for each individual in a timely manner.

“Technology enables better customisation at both the corporate and individual level. This creates an opportunity for insurers to empower individuals and companies to take charge of their own health and financial future. This role of individuals in taking charge of their health and financial future will become increasingly important with the rise of the gig economy, as individuals with short-term employment contracts will be more reliant on individual insurance for sustained protection for the long term,” Teow said.

Collaboration is key
Reputed to be a very traditional sector, the insurance industry saw innovation as a key sector theme in 2017. According to Arvind Mathur, chief technology officer, Prudential Life Singapore, insurtech startups have shown that change and innovation are possible in an industry that has largely done the same thing for decades. 

“They have shown us, that in this industry (and any industry for that matter) that is dramatically being reshaped by technology, the only way to survive and thrive is by re-thinking business models, questioning every limitation, and having innovative, accountable, empowered, and collaborative people working together to invest in the future. We have absorbed those values into our culture at Prudential,” Mathur added.

True to its word, Prudential launched the PRU Fintegrate Partnership Programme to offer partnership opportunities with global fintech startups to co-develop solutions for customers. According to Mathur, they are convinced that the programme will result in faster development of solutions to enrich the customer experience. For them, it is necessary to collaborate with insurtechs for agility and innovation as 2018 is expected to see more cross-industry collaboration and emerging solutions that will definitely transform the day-to-day operations of insurers.

In the lead up to greater collaboration with insurtechs, Prudential has begun using new-to-the-industry capabilities such as artificial intelligence (AI), robotics, and data analytics to help its people work smarter and provide better services to its clients. Prudential launched askPRU, an industry-first chatbot, in order to provide round-the-clock access to policy-specific information. askPRU allows more than 3,600 of Prudential’s financial consultants to assist clients within seconds, compared to minutes on the phone or hours for a trip to the customer service center. Mathur said that with askPRU, the call volume to the Customer Service Centre dropped by a staggering 30%.

“Claims automation is another area we are focusing on. The process of claims submission, assessment and settlement can be rather laborious. With artificial intelligence, we can reduce the amount of work and time spent on processing claims. In 2017, we began trialing an industry-first machine-learning based e-claims solution designed to help reduce claims assessment times from days to seconds,” Mathur added.

AIA Singapore is also working on its own chatbot, following an internal launch in 2017. The chatbot is already on its second phase of refinements with the help of AI startup Cognicor, which was selected and mentored through the AIA Accelerator Programme. MAIA, a personal chatbot assistant, leverages natural language processing (NLP) and is trained to understand questions keyed in by AIA FSCs.

AIA has also launched several other digital solutions ranging from a first-in-the-market digital underwriter through which 90% of new business applications are submitted and instantaneously approved to the AIA eCare app through which customers can get their policy edocuments at the tip of a finger.

What’s up ahead
Considering the legacy systems that have been in place in the insurance industry, analysts believe that transformation will come in phases and take a longer time than other industries. Once insurers realise the need to enhance digital capabilities and soon as efficiency gains are seen, the organisation of incumbent firms will likely change as insurers rebuild business processes and adopt new technologies.

“Prudential has started to make this shift with the launch of myDNA – a test which provides personalised insights into how an individual’s genes may affect his or her nutrition and fitness needs. From a business efficiency perspective, we expect to see more creative solutions that’ll improve processes and streamline operations in insurance, enabling Financial Consultants to work smarter and send more time engaging meaningfully with customers, and for customers to receive a better service experience,” Mathur said.

Furthermore, AIA Singapore eyes 2020 as the year that the company will be completely paperless and cashless, enabling 100% eTransactions for its clients so they can perform transactions 24/7 via any channel they desire. The banking industry, amongst others, is known to have long offered these solutions and will probably innovate further down the road. The important thing is that insurance incumbents are following suit, and are learning from peers in other sectors.

Insurance and pension inclusion
Deloitte’s Singapore Fintech Festival 2017 reports that digital transformation can advance insurance and pension inclusion. According to the report, 1.2 billion young, low-income, non-salaried workers in Asia, Africa, and Latin America lack access to formal pension programmes. There is a need for simple, affordable pension, and insurance solutions that are well-supported by public policy and advocacy.

“Another wrinkle is the role of data in managing risk and tailoring the customer experience. Accurate data can be hard to come by, particularly amongst lower-income customers. At the same time, there’s a growing trend to protect data privacy via regulation. Insurtech’s challenge will be to address the first situation—perhaps with technologies such as cloud storage, machine learning, and AI—whilst staying in compliance with the second,” analysts at Deloitte said.