Perhaps 2022 will be the year in which the Asian insurance market overhauls its long-established, risk-based model for developing new products and instead embraces an approach which puts the customer at its core.
According to McKinsey: ‘Effective product innovation is tied to a deep understanding of customers’ emotional and practical needs and wants, paired with the ability to quickly get those products to customers – a departure for many incumbents’ default philosophy of aiming to be fast followers.’
But customer-centricity is the direction of travel, and in Asia this is closely tied to two things. The first is catering to the needs of multiple generations whose concerns range from elderly care and retirement planning through to wealth generation and optimising educational opportunities for their children. The second is the growing influence of, and reliance on digitalisation.
It is the task of insurers to develop products that cater to a wide age group, but which can be accessed easily and securely through popular digital channels.
While this has often appeared to be an uphill struggle for Asian insurers, it will be worth the effort. In an article published in May, The Fintech Times said that when compared to the global average of 3.88 percent, the low insurance penetration in Southeast Asia alone is a clear sign of growth potential.
The burgeoning middle class in Asia which has grown up with digital technology, will increasingly expect a digitalised offer from insurers. They bank through mobile apps, they shop through mobile apps, they communicate through mobile apps, so why would they not choose to buy and manage their insurance policy through an app? What’s more, 50 million consumers will have joined the middle class within the year, bringing over $300 billion in disposable income.
While the entire demographic is underinsured and therefore ripe for a modern approach to insurance products, it is millennials that offer the biggest opportunity to expand the customer base. Asia has six times more millennials than the United States and Europe combined, but according to Bain & Company there is work to be done in engaging them. ‘Insurers are falling short on providing value to customers of all ages, but the gap is most pronounced among digitally active millennials – people who expect instant, personalised service on their smartphones and tablets.”
A survey we conducted this year into purchasing and risk attitudes amongst 500 millennials living in Singapore found that despite 80% claiming that they would be distressed if their smartphone or tablet was lost or stolen and 70.8% would be distressed to lose their laptop, only 12.2% actually had insurance cover for these precious items. The issue lay not in their willingness to pay for insurance, but in finding a straightforward digital service that would give them price advantages, ease of use, a good buying experience and offer a speedy claims process.
It will be interesting to see how quickly, and how effectively insurers in Asia shift in the coming year to acknowledge the rapidly changing landscape. Products must cater not just for digital natives, but for all consumers who are looking for modern services designed with them at the forefront. The time for preparation is over, now it is time for action.