Insures in southeast Asian urged to upgrade legacy systems to remain competitive: ASEAN Insurance Pulse
Insurance executives in southeast Asian markets are taking a “measured approach” to digitisation, choosing to concentrate on digitising their existing value chains, according to the latest Insurance Pulse survey for the region.
But this attitude could cost them their competitive edge as customers in the region embrace technology with gusto.
The qualitative survey, published on behalf of Malaysian Re, found that executives were investing between 1 and 2 percent of overall revenues in digital initiatives. Respondents said they expected digital technologies to have a “modestly positive impact on their premium growth in the next two to three years”. However, advances in technology are expected to make “a more sizable contribution to growth” in the longer-term, results showed.
An analysis of the results said: “Executives spot quick wins in digitising their distribution and marketing processes as personal lines products exhibit a higher transactional frequency and standardisation than commercial lines.”
Despite the tempered approach to embracing digital, insurance penetration in these countries is forecast to increase as premium growth outpaces GDP.
The survey report explained: “Fundamentally, the ASEAN [the Association of Southeast Asian nations] insurance markets continue to profit from the region’s strong economic growth momentum. Driven by technology savvy populations, with low median ages, insurers are seen to benefit from the region’s growing middle classes and their appetite for personal lines products.”
Zainudin Ishak, president and chief executive officer of Malaysian Re, said: “ASEAN insurers are faced with a dilemma. Our consumers’ behaviour is increasingly shaped by digital technology. They expect immediate transactions, access to transparent information and instant gratifications.
“The increasing sophistication of their purchasing behaviour presents opportunities for insurers as product offerings can be efficiently customised and scaled up.
“While digitisation will boost revenues and reduce costs, the region’s insurers need to upgrade their legacy systems and improve their access to data to transition to the sophisticated technologies essential to sustain their long-term competitiveness.”
Henner Alms, partner at Dr Schanz, Alms & Company and co-author of the report, said: “This year’s third edition of the ASEAN Insurance Pulse, which we produce on behalf of Malaysian Re, focuses on the state of digitisation of the region’s insurance players.
“Launched at the occasion of the 12th ASEAN Insurance Congress in Bali, Indonesia, our survey analyses the impact of digitisation on the region’s $31 billion non-life insurance markets and their growth and profitability prospects.”
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