InsurTech: The road ahead

AICB-PwC Malaysia FinTech Survey: Insurance Cut

This report is the insurance-focused cut of the Asian Institute of Chartered Bankers (AICB) and PwC Malaysia report on FinTech, “Catching the FinTech Wave” which gathered views of 84 senior professionals from banks, insurers, asset managers and FinTech companies in Malaysia.

 

Are insurers prepared for FinTech?

Flexible and customer-centric innovations are already commonplace in industries such as retail, entertainment and hospitality. And insurance, being an industry with products that at times can seem incomprehensible, is prime for some disruptive innovation.

Large global insurers - most with presence in Malaysia - including AXA, Allianz, AIG and MetLife, are taking note. Many have established their own in-house venture capital funds.

Total funding for insurance technology (InsurTech) start-ups exceeded USD 1 billion in the first half of 2016 alone, according to CB Insights. The deal volume experienced during that period makes it likely that the year’s investment will top 2015’s record of USD 2.7 billion.

However in Malaysia, insurers appear unconvinced. 40% are still on the fence about customer readiness to accept FinTech.

This uncertainty about customer readiness creates inertia amongst insurers when it comes to embracing digital innovation to bring about change at every point along the industry's value chain.

 

The key messages

Survey results revealed that there is a disconnect between perceived FinTech disruption and insurers’ willingness to act.

 

The way forward

With the rise of FinTech, insurance companies must think forward and start to seriously address the changing landscape. Here are four key areas they will need to address:

Insurers are unsure about consumer readiness to accept FinTech

Base: Financial institutions – 66, Insurance companies – 30, FinTech companies – 18

FinTech isn’t top of mind for insurers strategically

Base: Malaysian financial institutions – 66, Malaysian insurance companies – 30, Global – 544

However, they are way behind in engaging FinTech companies

Base: Malaysia, all – 66, Malaysian insurance companies – 30, Global – 432

Regulation, IT security and IT compatibility are the key challenges in dealing with FinTech companies

Base: FinTech companies – 14, Insurance companies – 14

Source: AICB and PwC Malaysia FinTech Survey 2016

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