Exclusive: Learning from the super apps, Fred Pi, in The Insurtech Magazine

Fred Pi in Hong Kong on post-COVID lessons for insurers in the APAC region

For years, insurers grabbed opportunities to benefit from healthy economies and a rising middle class in the Asia-Pacific (APAC) region. But now that growth (pandemic aside) is slowing, how should they move forward?

COVID-19 has had a significant impact on business, particularly the suspension of face-to-face meetings and restrictions on crossborder travel. Hong Kong’s unique position means it has been hurt more than most. Insurers there have seen new premiums for policies issued to mainland visitors from China fall 57.7 per cent between Q1 2019 and Q1 2020. Chinese visitors mainly buy critical illness or whole life coverage in Hong Kong and accounted for a quarter of all new premiums in the same period last year. But the pandemic could also be a chance for traditional insurers to climb aboard fast, digital, third-party platforms and reach the end-customers they missed before. Or they could leverage their existing customer bases and networks to build their own platforms for hosting third-party partners.

Platformification (which in Asia often translates as the super app) is not just a matter of numerous plug-in functions that might seem complementary to each other. Nor is it simply about acquiring a stake in a digital platform under the badge of a ‘strategic investment’. Rather, an organic platform play should be based on solid customer data analysis, which points to how transactions should flow from one segment to another, be it on-demand delivery to insurance, or property protection to SME loans. EY’s 2020 Asia-Pacific Insurance Outlook shows that 73 per cent of consumers there believe they should be able to accomplish any financial task on a mobile device. That’s particularly true of mainland China, Thailand and Australia, where life insurance consumers prefer digital channels to agents – although that’s notably not the case in Singapore and Malaysia.

Super app v platformification

Platformification became a feature of western markets a few years ago, primarily as a way for banks to connect with fintechs. Asia’s super apps don’t necessarily connect banks and fintechs, but European audiences will be familiar with Tencent’s WeSure insurance on WeChat Pay or Grab’s and Gojek’s insurance offerings, which have grown out of their ride-hailing platforms. Super apps go way beyond a platform play, especially in areas of largely unbanked or underbanked populations that lack access to a bank account and financial services. In theory, a full-package financial platform is a natural direction to go in, whether you are an ecommerce giant (Alibaba) or an insurtech (ZhongAn), as long as there are a significant number of customers and reliable transaction data. But this should also work for traditional insurers that see the potential and seize the chance.

Ryan Cheong, MD of digital for business at OCBC Bank’s insurance arm Great Eastern, told Insurance Asia News recently: “The growth of the internet economy opens up new [insurance needs]. Rapid urbanisation [combined with] a young population and workforce, translates to a growing middle-income class with discretionary income for savings and protection needs.” That might explain Great Eastern recently taking a 22 per cent stake in Malaysian fintech Boost, a subsidiary of telco Axiata in the Association of Southeast Asian Nations, which offers an excellent platform for Great Eastern to leverage Axiata’s network and digital capabilities to reach underinsured customers. While not the only way to improve revenue, it’s common sense for insurers to invest more in digitising their model.

China’s ZhongAn, the country’s first internet insurance company, has been focussing on upgrading the insurance value chain by leveraging tech. Notwithstanding the pandemic that has so badly affected incumbent insurers, ZhongAn issued a profit alert in June, announcing that net profit for the year ended June 30 was expected to have increased by 100 per cent compared with the corresponding period last year. Its US$600million fundraise in July was the largest debut US dollar bond offering by an Asian corporate so far in 2020 and it ranks number one in global insurtech debt financing. The insurer’s 95 per cent claim settlement automation rate, with 85 per cent of requests handled by robots, could be a factor in its performance.

ZhongAn launched its virtual life insurance business, ZA Life, as a joint venture with Fubon Life Insurance in Hong Kong two months ago. Last year, it partnered with Grab as part of the latter’s ambition to form a super financial services app. So, Asia-Pacific could still be the Promised Land for insurers if they embrace platformification. Given the pandemic’s impact on business-as-usual, now is an opportune time.

This article was published in The Insurtech Magazine: Issue #4, Page 28.