Digital initiatives and regulatory exemptions by the Indian, Australian, and Hong Kong governments are expected to spur the development of their local InsurTech start-up sector in coming years, as regimes seek to encourage economic growth through building an environment conducive to tech-innovation.
In Clyde & Co’s recent report on expectations for 2018 re/insurance trends, analysts noted the potential for expansion of InsurTech in these regions as governments become increasingly aware of the benefits of technological disruption and look to grow local tech hubs.
The Indian government has launched strong digital initiatives, such as aadhaar-based identification (a unique identification number given to Indian citizens), e-KYC, digital lockers, a unified payments interface and a mandate for e-insurance accounts (for keeping e-policies), all of which are creating enabling systems for the simplification of transactions.
Indian insurers have also started to use big data and analytics solutions providers to improve customer experience.
As a result, more opportunities have emerged for retention and cross-selling of artificial intelligence (AI) and data systems integration.
Greater innovation in the InsurTech space is also expected in Australia throughout 2018 after the government relaxed regulations for InsurTech start-ups in an effort to encourage innovation in the industry.
In 2018, Clyde & Co said “the Australian Securities and Investments Commission (ASIC) will actively encourage insurtech start-ups to enter Australia’s regulatory sandbox and make use of a world-first licensing exemption which applies a “lighter touch” regulatory environment.
All general insurance and life insurance products will now potentially be eligible for the sandbox.
Products can be dealt with in the sandbox where the sum insured is less than AUD85,000 for general insurance products and less than AUD300,000 for life insurance products.
“As InsurTech start-ups achieve a better understanding of the benefits of the regulatory sandbox, we expect more companies to take advantage of this option,” said Clyde & Co.
Pressure is expected to mount for the Australian Government to further liberalise the regulatory regime to take account of the unique characteristics of insurtech start-ups.
Indian insurers have approached InsurTech-led innovation cautiously, more in an experimental way than as an organizational priority, but this is expected to change in coming years.
The Hong Kong insurance innovation market is also forecast for growth in 2018, on the back of two recently launched pilot initiatives by the newly established Hong Kong Insurance Authority to promote new technologies in the insurance market, Fast Track and InsurTech Sandbox.
Clyde & Co predicts that insurers will blend technology with insurance products, “from distributing microinsurance products via Chatbots to using Internet of Things devices to collect customer data, thereby monitoring risks more accurately and offering more competitive prices to customers.”
As firms and governments become increasingly aware of the value-add of start-ups to reduce costs and accelerate process efficiencies, uptake of InsurTech solutions is expected to accelerate into 2018 and beyond as firms learn to maximise the benefits of the regulator’s supportive stance.
