SO, it’s not just banks which are facing an Uber moment. The same applies to insurance companies, it seems.
According to a PWC report released in June, close to half of insurers they surveyed fear losing up to 20% of their business to standalone fintech (financial technology) or insurtech (insurance technology) companies within the next five years.
The same message is being dished out by Bank Negara governor Datuk Muhammad Ibrahim. Speaking at this week’s Insurance Summit in Kuala Lumpur, Muhammad noted that industry is ripe for transformation to a new growth trajectory and that it is approaching the point of inflection in the “S-curve”. (The S-curve is a business management concept to describe the journey of businesses that typically start out slowly, grow rapidly until they approach market saturation, and then level off.) He noted that Bank Negara will continue to pursue the innovation agenda and that technology advancement is here to stay.
Bank Negara has already liberalised motor insurance tariffs, paving the way for user based insurance. This is where insurance companies can have more dynamic pricing of their premiums based on driving patters of the people they insure. This is achived using telemetics, which in turn is enabled by the Internet of Things (IoT), where devices (vehicles in this case) are connected to the Internet for monitoring purposes.
Another favourable move that Bank Negara has brought about is in issuing a regulatory sandbox framework that will enable experimentation of fintech solutions in a live setting. So now that the stage is set, it will be interesting to see what ideas get to play in this sandbox.
Ultimately, the great thing about innovation and fintech and insurtech is that these ideas tend to bring more value to the end users, that’s you and me. Actually, its more than you and me. A big area is in financial inclusion, where start-ups are bringing financial services to the unbanked and uninsured and thereby spurring new avenues for economic growth.
Back to the area of insurtech, there are a few start-ups pursuing solutions. For example Atilze Digital Sdn Bhd, an IoT player and part of listed company Yen Global Bhd is working with several insurance companies to offer usage based insurance for the automotive sector.
Here’s a glimpse into what some cool insurtech firms are already offering in markets like the US, Cananda and UK. Hopefully similar offerings will be available for Malaysian consumers one day soon. It would good to see some of these ideas tested in Bank Negara’s regulatory sandbox. Here they are. Note almost all these services are offered within minutes through a smartphone app.
Cover: allows consumers to snap a photo of what item they want insured and then shops around insurance providers to bring the consumer the best rate for that service.
Guevera: cheaper car insurance by providing a digital platform for groups to pool their premiums together online, with savings of up to 50% to 80%.
Cuvva: Offers hourly insurance for example when you want to borrow someone’s car.
Bought by many: Uses a combination of search engine and social media data to group together people who have similar insurance needs. This allows them to negotiate with insurance companies on behalf of the group which translates into better pricing or enhanced benefits
Metromile: Pay-per-mile car insurance
Quantifyle: allows users to “shop around” their wearable and other health data to insurance companies and find the best price
FitSens: helps life and health insurers leverage data from wearables
Safer: designed to help millenials identify what kind of insurance they need by tapping into their social data
Spex: Started by claims adjusters to make the claims process more digital and user friendly. Files are stored in the cloud and new methods of gathering information – like drones – are used.