Re/insurance industry executives operating in the Association of Southeast Asian Nations (ASEAN) markets continue to take a measured approach to digitisation, but expect the rise of digital technologies to positively impact growth over the longer-term.
The third edition of the ASEAN Insurance Pulse, produced by Dr. Schanz, Alms & Company on behalf of Malaysian Re, explores the digitisation of the region’s insurance players.
The report includes the results from interviews with the majority of ASEAN insurance, reinsurance, broker and trade association executives, and finds that overall, they expect digital tech to have a modestly positive impact on premium growth over the next two – three years. Over the longer-term, executives predict a more sizeable contribution to growth from digital tech.
Zainudin Ishak, President and Chief Executive Officer (CEO) of Malaysian Re, commented: “ASEAN insurers are faced with a dilemma. Our consumers’ behaviour is increasingly shaped by digital technology. They expect immediate transactions, access to transparent information and instant gratifications. The increasing sophistication of their purchasing behaviour presents opportunities for insurers as product offerings can be efficiently customised and scaled up.
“While digitisation will boost revenues and reduce costs, the region’s insurers need to upgrade their legacy systems and improve their access to data to transition to the sophisticated technologies essential to sustain their long-term competitiveness.”
The latest ASEAN Pulse finds that the majority of ASEAN insurers are focused on the digitisation of their existing value chains, and typical invest around 1% – 2% of their total revenues into such initiatives. Executives interviewed identified the digitisation of their distribution and marketing processes as quick wins.
In the non-life space, over 80% of those interviewed said that their own company’s level of digitisation is somewhat advanced, and this includes things like online sales and web-based claims management capabilities.
However, the same executives also reported that a severe lack of IT and data sciences talent is viewed as a key hindrance to their digitisation efforts.
Ultimately, the non-life space expects that over the short-term, distribution and marketing are likely to be those parts of the value chain that will be mostly impacted by digitisation.
Regarding premium growth, and executives expect that in the non-life space, the short-term impact of digitisation will be modestly positive, with a maximum additional annual premium growth of 5%. At the same time, the report finds that these same executives are less confident about the impact of digitisation on technical profitability.
Henner Alms, Partner of Dr. Schanz, Alms & Company and co-author of the report, said: “This year’s third edition of the ASEAN Insurance Pulse, which we produce on behalf of Malaysian Re, focuses on the state of digitisation of the region’s insurance players.
“Launched at the occasion of the 12th ASEAN Insurance Congress in Bali, Indonesia, our survey analyses the impact of digitisation on the region’s US$ 31 billion non-life insurance markets and their growth and profitability prospects.”
Looking forward, and the report notes that the ASEAN region’s strong economic and premium growth momentum remains the most positive strength of the non-life insurance space. Digital tech and advanced analytics are viewed by many as the most relevant mid-term opportunity for ASEAN non-life markets.
At the same time, the region remains vastly underinsured, and at roughly 1%, the region’s insurance penetration level is less than a third of the global average, which represents a huge opportunity for insurers and reinsurers to develop affordable and effective solutions that meet the needs of the non-life ASEAN markets.
Interestingly, 77% of executives interviewed expect non-life premiums to grow in line with or faster than GDP over the next year, compared with 82% previously. While 46%, compared with 38% previously, expect premiums to outgrow the economy at large.
