insurtech vs infrastructure - tech for i

1

Insurance Technology Landscape: Insurtech vs Infrastructure

Copyright © Tech For Insurance 2020, https://techfori.com

Insurance

Technology

Landscape:

Insurtech VS Infrastructure

Asia & Middle East

Non-Life Edition

https://techfori.com/

2



Our 2020 analysis of the non-life insurance technology landscape offers a detailed framework

to understand and act on current trends. We’ve used interview and survey data with insurance

professionals from over 50 insurance companies in 9 countries across East Asia, Southeast Asia

and the Middle East to present an assessment based on our understanding and research.

In recent years, Asia and the Middle East has

seen the rise of Insurtech – from being

confined to small pilots and vanity projects to

full-blown investment in R&D

& innovation labs, and a top-of-mind topic for

boards and C-level executives.

As the technology landscape and consumer

behaviour continue to transform, insurers face

an unprecedented need to evolve or face

disruption.

Differentiating Insurtech from

Infrastructure

Yet it is important to note that only digital-

ready insurers can ride on the Insurtech wave

– i.e. those that own a digital, plug-and-play

infrastructure to integrate Insurtech within

their systems, processes and products.

In exhibit 1, we showcase a framework of Insurtech

vs Infrastructure, and the relationship between them.

Infrastructure refers to the set of systems and

processes that make up the insurer’s value chain.

Today, insurers in Asia and Middle East mostly own a

legacy core system, implemented over 10 or even 20

years ago. These legacy systems were built with an

inflexible data and process architecture, that made it

difficult to interface with external platforms to

exchange data or facilitate real-time transactions.

Chinese Incumbents have been known to migrate to

Digital Native core systems –see BCG/OliverWyman.

For East & Southeast Asia, a popular approach used

by most insurers is to integrate with a Middleware

platform, that will then interface with external

platforms. This reduces the need to invest in a risky

and costly move to a new core system. To view a case

study on this, see exhibit 5.


https://www.bcg.com/en-sea/publications/2018/chinese-insurers-digital-innovation.aspx

https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2017/jun/Technology_Value_Driven_o6.pdf

3



Insurtech refers to new tech-driven models of

insurance, be it in new ways to engage with

customers, new products and underwriting

methods, or new ways to manage and process

claims.

Insurtech is often developed by 1. specialized

startups, 2. software houses who frequently

work with 3. business consultants to market

their products, and occasionally 4. insurers

with an in-house innovation unit.

For most insurers, the more common method

is still to work directly with Insurtech startups

– in fact, more than 70% of them. See exhibit 2.

Infrastructure as a Prerequisite

for Insurtech to succeed

For many boards and C-level executives, their

knee-jerk response to the rise of Insurtech is

to plan their immediate implementation,

regardless of the state of maturity of the

current infrastructure.

We believe this may lead to an ineffective

solution at best, and erroneous at worst.

Take the example of Fraud Detection.

Shift Technology, a leading AI Fraud solutions

provider from Europe, has engaged with

multiple insurers in Southeast Asia for pilot

trials. Claims users from one insurer reveal

that the dataset shared to Shift for machine

learning and model validation was incomplete

and potentially erroneous. This led to an

unreliable fraud model setup for them, and

claims users assessed its insights as inaccurate

and unreliable.

Furthermore, the claims users worked on a

manual, mostly offline claims process. Shift’s

digital portal to view its insights did not sit well

within the process, and claims users eventually

stopped using the portal due to reasons of

‘forgot password’ or ‘too much of a hassle’.

The pilot trial eventually failed, wasting an

opportunity to onboard a game-changing

Insurtech into their operations.

See Exhibit 3 for a general view of reasons

behind the failure of Insurtech pilots.

0% 20% 40% 60% 80%

Local Inhouse IT

Global Inhouse IT

Consulting Firms

General IT Firms

Insurtech Firms

Qn: Who provides the Insurtech Tools used in your company?

Exhibit 2: Insurers reveal the source(s) of

Insurtech tools used in their company

No intention to proceed in first place (5%)

Users said it was hard to use

(16%)

Technical reasons -lack of data,

integration fail(19%)

Too expensive; did not prove ROI

(28%)

Users said it did not work

(32%)

Qn: What were the reasons why the Insurtech pilot failed?

Exhibit 3: Insurers who piloted and

then discontinued Insurtech solutions

share their reasons


4



The Role of Infrastructure

We identify three key roles that an insurer’s

infrastructure must fulfil, to effectively

incorporate Insurtech solutions into its

value chain.

1. Enable Digital Processes

When an insurer still runs on manual, offline

processes, it limits the room for Insurtech to

value-add and transform its operations.

For solutions that augment human intelligence

such as A.I. and RPA, the key benefit is to

automate decisions and workflows based on its

insights. If these decisions and workflows are

conducted offline, then it can only serve as

advice for users – limiting its potential to

automate operations, reduce turnaround time

and transform customer experience.

For solutions that enable new insurance

products or improved risk underwriting, such as

Telematics, Big Data and Blockchain, these hinge

on the ability to perform real-time underwriting

based on the rating rules and limits configured by

underwriters. Should the underwriting system be

unable to interface directly to these solutions,

then the products cannot be offered on a timely

manner to customers and intermediaries.

2. Act as Single Front-end for Users

Then there is the matter of User Behaviour and

Change Management, an important aspect of any

new technology implementation. When users access

Insurtech tools in an adhoc, haphazard way – logging

in to one webtool, reverting back to manual handling,

and then switching to another tool – this is a recipe

for usage churn and reduced user engagement.

Ideally, Insurtech tools should be embedded

seamlessly within a single digital front-end platform,

with the right tool offered in the right context to the

users. This can then institutionalize the proper use of

insurtech within the organization. See exhibit 5.

3. Collecting Data

AI and analytics solutions often require the insurer to

have its own Data Pipeline, which will continuously

feed structured data to churn out insights – for

example, aerial drone data for property assessment,

or car photos for repair estimating. See exhibit 4.

Historical data is also necessary to tailor the AI

solution to each insurer’s business and risk portfolio.

In the case of AI Fraud Detection, detailed historical

claims data is crucial during the model training

process to identify suspicious patterns or risk

characteristics unique to the insurer, and then during

the model validation process by running it against a

test set of past claims (with outcomes masked). Exhibit 4: AI is the new Engine, and

Data is the new Oil. Excerpt from

“Big Data in Insurance” webinar by

Insurtech speaker Sebastian Tan


https://www.linkedin.com/in/sebastiantanyj/

5



Exhibit 5: A middleware platform for Motor claims, acting as insurer’s digital architecture.

Source: Merimen, an insurance SaaS provider serving 150 insurers in Asia & Middle East.


6



Current Insurtech & Infrastructure

Landscape in Asia & Middle East

We have identified how Infrastructure

technology forms the foundation for Insurtech to

prosper. It is then no wonder that different

countries and regions have had differing levels of

Insurtech activity – corresponding to their level

of digitization and infrastructure maturity.

See exhibit 7.

Claims Management remains a core focus area

for both Insurtech and Infrastructure to serve.

In exhibit 8, we compiled over 40 companies and

startups currently serving insurers in Asia and

the Middle East across the claims management

value chain.

Key use cases for Claims Insurtech comprise:

• Transforming the customer experience

especially at point of notifying claim

• Automated triage, screening and offer

computation for every claim

• Remote assessment and diagnosis of

claimant loss or damages

Exhibit 6: Insurers can promise Fast Turnaround Time to customers by

automating approval decisions. In Malaysia, Etiqa Insurance and

Sompo Insurance use Merimen for their Motor claims Middleware.

Source: Insurer websites

0 2 4 6 8 10

Saudi Arabia

Vietnam

UAE

Thailand

Singapore

Malaysia

Japan

China (incl HK)

Qn: On a scale of 1-10, how would you rate the Insurtech

activity in your country?

Exhibit 7: Top 4 and Bottom 4 countries in

terms of perceived Insurtech activity.

East Asia sees the highest activity, followed

by developed nations in Southeast Asia.

Meanwhile, GCC countries and developing

nations in Southeast Asia rank bottom.


7



Exhibit 8: Technology Landscape across the Claims Management value chain

Explanation:

Notify Claim refers to the

process where customer

notifies insurer of its loss,

and is guided to submits

the required information

to file a claim.

Triage Risk refers to the

process where insurer

assesses if a claim is

valid and if it is liable to

pay. This may involve a

survey of the damages,

a checklist, and so on.

Cost Control refers to

the process where

insurer determines the

right payout to make up

for the customer’s loss.

Repairers for a damaged

car or property may try

to inflate the claim.

Recovery refers to the

process where insurer

is not fully liable for the

payout, and will claim

back some proportion

from the liable third-

party, usually another

insurer.


8



Exhibit 9

Showcase of Insurtech & Infrastructure in Claims Management

Source: Press releases from insurers and solution providers

Insurtech: Video Interaction

Leading Japanese insurer MSIG pioneers Video

Interaction tools in Singapore to perform real-time

assessment of motor claims in minutes, reducing

turnaround time by 80%.

MSIG improved its survey efficiency and achieved a

significant cost saving of 88%.

Infrastructure: Digital Processing

Leading global insurer AIG launched a digital claims

management platform in Thailand to digitize and

automate the end-to-end claims value chain, first for

Motor and then Property and Personal Accident.

More than 95% of garage quotation and repair details

can be reviewed and approved within 24 hours.

Insurtech: A.I. Fraud Detection

Top life insurer Prudential pioneers an A.I. solution that

assesses hospitalization claims in seconds.

The system’s intelligent decision-making capabilities

shorten claims assessment time from seven days down to

mere seconds.

Infrastructure: Mobile App

Top Singapore insurer NTUC Income offers a convenient

mobile app to report claims digitally.

The app allows users to file a claim and provides 24/7

access to the insurer’s accident response team.


https://www.msig.com.sg/corporate-news/msigs-industry-first-video-interaction-technology-brings-convenience-and-speed-motor

https://www.prudential.com.sg/company/newsroom/2017/20171113

https://www.nationthailand.com/noname/30374775

https://www.todayonline.com/business/new-ntuc-income-app-lets-motoristsfile-accident-reports

9



Conclusions

While insurers in Asia and the Middle East face the

pressure to disrupt or be disrupted, the reality is

that some have yet to lay a digital infrastructure as

the foundation for innovation and Insurtech.

We note that there are varying levels of digitization,

both across countries and lines of business. For

Motor insurance, commonly the largest portfolio by

GWP, insurers in Singapore, Malaysia and

Indonesia have reached a highly digitized state of

processes where the end-to-end value chain is

digitized. Meanwhile in the GCC, countries like

Saudi Arabia and UAE are still operating largely

manual and offline processes both for policy

underwriting and claims processing.

The stark reality is that industry leaders who have

invested in a strong base of digital processes and

systems are now well-positioned to grasp the

exciting opportunities created by the rise of new

technologies and the sea change in customer trends.

Industry laggards may yet succeed in catching up.

The rising popularity of Middleware platforms has

enabled insurers with legacy platforms to continue

product innovation and interface with new

Insurtech platforms.

Migrating to a modern core system has also become

a more affordable and lower-risk option , as digital

native core systems offer lower cost cloud-based

solutions and flexible Software-as-a-Service pricing.

Some, like ZA Technology, offer a risk-sharing

model where their implementation fees are reduced

in exchange for a share of the profits.

With the steadily maturing landscape of

technologies that enable new innovative products

and distribution channels as well as more rigorous

and efficient claims management tools, insurers

now face clear paths to innovation and growth.

The question remaining, then, is for which path to

take, and when.

Related Reports

▪ Insurtech Directory 2020

– Asia Claims Management edition

– Middle East Claims Management

edition

▪ Core System Transformation:

From Legacy to Future-ready

▪ Motor Claims Automation:

Best Practices playbook

▪ Top 10 Middleware Platforms

For more info, contact [email protected]


mailto:[email protected]

10



This report analyzes technology trends in the Asian non-life insurance industry.

We’ve used firsthand interview and survey data with insurance professionals from

over 50 insurance companies in 9 countries across East Asia, Southeast Asia and

the Middle East to examine current trends and present an assessment based on

our understanding and research. This report is meant to provide an objective

perspective on current trends and key areas of opportunity; it does not

recommend or endorse any specific company, solution or course of action.

About

Tech for Insurance

TFI is Asia’s leading Insurance Tech

Consultancy and Think Tank.

The Insurance industry is being disrupted by

fast-changing consumer trends and the 4G

technology revolution. Digital-ready insurers

tap on A.I., RPA and other tools to automate

operations, control claim costs and deliver

winning products and customer engagement.

Traditional insurers must transform their DNA

and operations before being overtaken by

digital leaders, or disrupted by Insurtech

startups. It's a matter of WHEN, not IF - and

the best time to start is now.

Partner us to join the race. We're here to help

you win.

How TFI supports clients

• Consulting on Digital Transformation and

Insurtech Innovation projects

(Problem discovery, Project design,

Vendor sourcing & selection)

• Market research and Futurescape studies

for Insurance and Insurtech

• Advisory and Board engagement on Tech

strategy

Recent Consulting Topics

▪ COVID19: the Impact on Claims and

How Technology can Help

▪ Big Data in Insurance: Unlocking the

Potential of Claims Data for Risk

Management

▪ Transforming Customer Engagement

to deliver winning customer journeys

▪ Core System Transformation projects

▪ Motor Claims Automation projects

For more info, contact [email protected]


mailto:[email protected]

insurtech vs infrastructure - tech for i

Documents