Global re/insurance broker Willis Towers Watson has reported that the total transaction volume of InsurTech mergers and acquisitions (M&As) in Asia hit US $460 million over 2017, a figure over three times greater than the one recorded over 2016.
In its fourth Quarterly InsurTech Briefing, Willis Towers Watson attributed the surge in Asian M&A activity to a renewed push towards greater digitalisation as re/insurance industry incumbents and new entrants try to promote efficiency and engagement throughout the value chain.
The research, which was produced by Willis Towers Watson Securities and Willis Re in collaboration with CB Insights, showed that InsurTech transactions continued to focus on digital distribution, consumer models and data analytics, with other priorities including claims management and back-end processing applications.
Willis notes that the surge in Asian M&A activity also helped drive global InsurTech transactions to a record high in 2017, with re/insurers making 120 private technology investments and InsurTech funding totalling $2.3 billion, up 36% from 2016.
Vincent Lien, Managing Director of Willis Towers Watson Securities, Asia Pacific, commented: “Investments have picked up especially in the areas of artificial intelligence, automation, process enhancement and customer engagement as companies hope to drive further efficiencies in business operations.
“InsurTech certainly plays a significant role in those areas via the use of data and analytics. They are still to reach prominence across Asia Pacific, so the opportunities are huge.”
Kevin Angelini, Head of Strategy for Willis’s Insurance Consulting and Technology business in Asia Pacific, added: “Thanks to advances in technology, now a growing abundance of data is available enabling insurers to use sophisticated data analytics to reward people who live a healthy lifestyle.
“This is a growing trend within insurers and the next challenge is to gain alignment from the wider ecosystem such as regulators and reinsurers.”
Willis also reported that China and India alone accounted for 73% of InsurTech transactions in Asia, with Hong Kong, Singapore and other Asia markets making up the remaining 27%, up from 4% in 2015.
Angelini commented: “As companies seek InsurTech transactions to tap new technologies, they are looking mostly to Asia, and in particular to Hong Kong and Singapore, amid low growth and even lower interest rates in the U.S. and European economies.
“Hong Kong and Singapore have well-regulated free markets, mature insurance customers, and access to international capital markets. These make it easier for investors to integrate resources.”
Willis contends that Hong Kong and Singapore are competing to position themselves as the leading Asian FinTech hub, with initiatives like the InsurTech Sandbox launched by Hong Kong’s Insurance Authority aiming to facilitate pilot trials and fast-track licensing for authorisation of online re/insurers.
Similarly, in February the Monetary Authority of Singapore announced plans to attract high-growth start-ups to the region with the ASEAN Insurtech Launchpad, which aims to facilitate collaboration between local re/insurers and tech start-ups.
High profile transactions from last year include Yunfeng Financial’s $1.7 billion acquisition of MassMutual Asia, and the capital injection that Singapore Life received from China Credit.