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Subject:                          CN Asia Newsletter No 169: IAG pioneers Singapore insurtech hub; CIRC curbs super-heated growth; and more

 

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Thomson Reuters Australia

Issue 169 , Thursday 23 February 2017

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In this issue

IAG pioneers Singapore insurtech hub

 

CIRC curbs super-heated growth

 

Watchdog combats HK corruption

 

Axa Indonesia launches digital tool

 

EY: winners put customers at centre

 

India's GI profits stall

 

Swiss Re opens Indian branch

 

Editorial team

 


[1]

IAG pioneers Singapore insurtech hub

In a first for Australia, IAG will launch a Singapore insurtech innovation hub to become part of Singapore's global innovation network. IAG said the hub, to be called Firemark Labs, would act as an incubator for IAG "to work with top talent, start-up, research and technology partners to co-create new products and services" that would improve customer experience across Australia, NZ and Asia. Singapore's central bank and the Monetary Authority of Singapore (MAS) supported the opening as part of broader efforts to promote an innovation culture in the financial sector. IAG chief customer officer Julie Batch said: "Singapore is recognised as having one of the most developed fintech landscapes with a growing insurtech scene. We are the first Australian insurer to launch a space dedicated to insurtech in Singapore and will join a network of global innovators with hubs set up in the technology hotspot." She said launching Firemark Labs would enable IAG to lead "development of talent, tools and networks that will help us quickly respond to changing trends and create new customer solutions".

[2]

CIRC curbs super-heated growth

The China Insurance Regulatory Commission (CIRC) is imposing tighter regulations in 2017, expecting to curb super-heated premium growth and limit risks. CN Asia news associate Reuters reports China's CY16 premium income rose 27.5% on CY15 to ¥3.1tr ($A586.5bn) – the fastest growth since 2008. Industry assets totalled ¥15.12tr, up 22.3%. CIRC statistics official Duan Haizhou last week said at a Beijing press conference in the past two years, insurance had "very fast growth out of such safety-net types as health and ordinary life". Life products had grown faster than general insurance (GI), up 31.72% to ¥1.74tr. Property was up 9.12% to ¥872.4bn; and health up 67.71% to ¥404.2bn. Reuters said CIRC would impose tighter regulations and authorities had implemented measures in past weeks to limit risks in the industry, preventing asset-liability mismatches and speculative acquisitions. The measures included tightening control over short and mid-term life products; curbing risks associated with property products; and stepping up insurers' compliance management. In January, CIRC reimposed ceilings on funds insurers could invest, restricting equity investments to 30% of total assets and limiting investment in a single stock to 5% of total assets. Duan said the industry's CY16 investment income from the stock market and the fixed income market fell by 30% to ¥200bn because of increased volatility (CN Asia 15/12/16).

[3]

Watchdog combats HK corruption

Corruption complaints against Hong Kong (HK) insurers have almost doubled in the past three years, fuelled by senior agents increasingly using a new tactic of falsely claiming commissions from junior staff, South China Morning Postreports. According to the HK Independent Commission Against Corruption (ICAC), complaints rose from 19 in 2013 to 35 last year. ICAC chief investigator Tommy Lui Kar-chung said corruption arose when team managers and supervisors made deals and secretly named junior staff as purchasing agents on policy forms to receive more commissions from insurers. Last year, 14 people were arrested for industry corruption and 11 prosecuted.

[4]

Axa Indonesia launches digital tool

Life insurer Axa Financial Indonesia, part of the Axa Indonesia Group, has launched a new digital tool to expand its younger customer base, Jakarta Postreports. Axa Financial Indonesia chief agency officer Nina Ong said the tool and products were directed at "modern dynamic citizens", aged 25 to 45 years old. Axa expected the tool to attract 20-30% of that market and expand its customer base, which was now served by about 14,000 agents. AXA Financial Indonesia recorded Rp1.44tr ($A140m) in revenue in the first nine months of CY16, up more than sixfold on the same period in CY15.

[5]

EY: winners put customers at centre

In times of market disruption, insurers with the best customer knowledge and regular, direct customer access will be winners in 2017's Asia-Pacific market, Ernst & Young Oceania insurance sector leader Grant Peters says. Developing customer-centric strategies is one of four main priorities outlined in its newly released 2017 Asia-Pacific insurance outlook report. Other strategic priorities include driving performance through digital innovation; reassessing future business strategies; and preparing for widespread regulatory change. Peters suggested insurers focus on millennials in particular because of their increasing spending power and market influence. Asia-Pacific was the world's biggest millennial market, accounting for 60% of them. Targeting millennials would demand greater personalisation, product transparency, competitive pricing, new innovative business models, and a 24/7digital-first experience. Insurers also "would want to" monitor insurtech players (above). Concurrently insurers needed to tackle an ageing population's rising expectations for health and life-annuity products in mature economies, eg Japan, South Korea and Singapore, and emerging markets like China. EY predicted from 2018, insurers would start to apply smarter technologies, eg artificial intelligence; facial recognition; and telematics to understand and reach customers, which in turn would drive further product and business model innovation. The report suggested incumbents monitor the business models of Asia-Pacific's insurtech start-ups, eg Direct Asia, a Singaporean start-up enabling customers to buy products directly; Policybazaar, an Indian online comparison portal; and Zhong An, China's first comprehensive online platform. But to grow their businesses, insurers still needed to invest in traditional agency channels, which would continue to play a "very important role" in the Asia-Pacific region. The report said insurers and agents that shared information to develop customer relationships would be winners in tomorrow's transformed Asia-Pacific market. EY Asia insurance practice leader Jeff Malatskey said: "The ultimate objective is to interact with customers in whatever way they want, whether it be direct access, through a kiosk or a telephone."

Digital revolution secures path to future growth

The EY report (above) predicted the Asia-Pacific industry would increasingly turn to robotics to streamline back-office operations. EY managing partner and Asia-Pacific insurance leader Jonathan Zhao said: "Robotic technology provides … a way to make the business model work better." It enabled companies to reduce human intervention and make the process more efficient. "Next year, insurers will look for new opportunities to apply robotics across the value chain to improve productivity and customer service," he said. Ultimately, once automated, those processes could be embedded into more formal policy administration systems and enhanced by smarter technologies, eg artificial intelligence and predictive analytics. Three paths led to digital innovation – reinventing customer interaction by drawing on the latest analytical tools; embracing insurtech solutions, eg aggregators providing pricing comparisons to on-demand sellers of travel and accident products; and full-scale digital transformation by transforming all parts of the business through digital technology, eg using robotics and analytics, linking insurance, banking, wealth management and payment operations.

[6]

India's GI profits stall

India's general insurance (GI) market has almost quadrupled in value over the past 10 years, from Inr279bn ($A5.4bn) in 2007 to Inr1tr in 2016 but, over the past two years, operating performance has stalled, an AM Best briefing says. The briefing showed the industry combined ratio (CR) for the year to March 31, 2016, was up 7% on the same period in 2014 and up 4% on the same period in 2015 to 117%. AM Best said GI premium growth had been led by unprofitable health business, ahead of motor own-damage. The deterioration seemed to be mostly concentrated among better-capitalised, government-owned insurers, which underwrite about 50% of India's GI market risks.

[7]

Swiss Re opens Indian branch

Swiss Re has opened an Indian branch as one of the first five foreign reinsurers to receive branch licences. Swiss Re said the composite branch licence enabled itto offer general insurance, life and health covers direct toIndian clients and brokers. Kalpana Sampat heads the branch in Mumbai.

[8]

Editorial team

Editor: Eva Wiland. Email eva.wiland@thomsonreuters.com. Managing Editor: Helen Jones. Twitter: @Cover_NoteTR.

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