Sunday and SCB 10X engage APAC with insurtech’s potential
Sunday stated in its that the money generated would fuel its further expansion into the Asia-Pacific (APAC) region, specifically in Thailand and Indonesia. Also, the company will enhance its benefits platform and to include health and car insurance products.
Providing affordable insurance
One of the APAC region’s pioneering insurtechs, Sunday has the distinction of being the first company of its kind to hold an underwriting license.
It uses data models and machine learning-based optimisation algorithms to deliver the right products to the right people at an affordable price. The company also prides itself on a holistic and comprehensive customer service approach.
CEO and Co-Founder Cindy Kua intimated that Sunday’s method of operating is particularly important for the region in the post-COVID-19 world:
“In times of great uncertainty, consumer demand will shift towards affordable core insurance products that truly help with risk management.
“As a team, we believe Sunday is uniquely positioned to deliver one-stop personalised insurance coverages and services that meet these evolving risks and growing demands from businesses and individuals in Southeast Asia.
“We are excited to push through our mission to build an insurance group that is truly adaptive and most importantly, always there for people in times of need,” she said.
Exciting insurance-related developments are noticeably accelerating in APAC, in no small part, it could be theorised, because of the pandemic and its associated risks.
Digital technology is providing the impetus for a re-evaluation of the insurance market, particularly how to engage customers and build awareness of products and services.
However, , companies are facing an uphill struggle in regions like Indonesia, where, despite relative increases in consumer wealth, only a small percentage of the adult population are ‘insurance literate’.
Mukaya (Tai) Panich, Chief Venture and Investment Officer at SCB 10X, remains optimistic about APAC’s potential, “Southeast Asia has more than 360 million internet users, who are the most engaged mobile internet users in the world,” she claimed.
As such, Panich considers the market to be primed for insurtech investment:
“Utilising data and AI, Sunday is bringing its full-stack, affordable, always available, and personalised insurance products to fit the needs of consumers in the region. In SCB 10X’s perspective, owning the insurance value chain end-to-end is a unique differentiating factor for Sunday among insurtech companies.”
Insurtechs are winning the race with legacy system companies
Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.
That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.
The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector.
What exactly is insurtech?
Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.
Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.
The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.
Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.
More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.
Insurtechs and risk
But there are some obstacles in the way of insurtech’s continued evolution.
Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.
Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?
There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.
While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.
Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal.