Revolutionising insurance with technology: SFF 2022 Highlights
When InsureTech Connect first visited the Singapore Fintech Festival (SFF), we had to look hard to find insurance/insurtech exhibitors and plenary sessions. The world of finance/fintech seemed to be heavily dominated by banking, payments and wealth management. But finally, we managed to find our way, interacted with booths from insurtechs and insurers as well as attended some panel discussions related to insurance/insurtech.
Echoing our sentiments, SFF speaker Varun Mittal, Founder of Fintech Nation and Chief Growth Officer at Singlife with Aviva, pointed out there is a lot of focus on the underbanked and no one talks about the under-insured. He was delivering opening remarks at the Knowledge Plenary on Insurance, Pensions & Wealth Management.
Before introducing the panel sessions under the plenary, Mittal noted that three trends are disrupting the insurance sector namely demand for new products from new segments such as omnichannel products; democratisation of access to smartphones and data as well as embedded finance.
How AI is supercharging insurance?
The landscape of insurance and pension is also being changed by trends of people living longer resulting in an ageing population and more joining the gig economy where workers juggle different types of jobs and are typically not covered by insurance, said panel moderator Dr Mara Balestrini, Digital Transformation Lead Specialist, Inter-American Development Bank at a session on supercharging the insurance & pensions industry using AI.
AI can help to address such trends by creating new opportunities such as super-customised services and bridging data gaps in risk assessment, shared panellists.
AI is trying to ease the customer experience in buying insurance but without compromising the rest so insurance is sustainable overall, said panellist Lee Sarkin, Regional Chief Analytics Officer, APAC, Middle East, Africa (Life & Health) at Munich Re whose role is to use data and AI to try and improve insurance.
According to him, the customer experience in insurance has a long way to go to catch up with other verticals in the financial services sector like banking with smartphone banking applications. “The main pain point that you'll see in most digital strategies of insurance in Asia and beyond is the customer experience onboarding journey,” he said.
Sarkin explained that when people apply for insurance through a digital channel, they have to go through the process of risk assessment or underwriting. This process is very invasive and time-consuming as it requires applicants to provide a massive range of information including medical conditions as well as undergo a medical examination.
This is where AI helps by automating the process of risk assessment with many customers so that insurers can issue a policy on the spot at the point of sale without further manual underwriting, he said. By being able to predict an underwriting decision on a customer's point of sale, insurers can avoid 80 days of lengthy inconvenience to customers according to Sarkin.
He noted that with the rise of several software applications that have tried to automate underwriting, a range of rules-driven automation had entered the insurance sector which has built up an ecosystem of data. The sector has legacy systems generating data like underwriting outcomes and claims for many years which has given rise to the possibility of advanced analytics models like AI models, added Sarkin.
However, he pointed out there are risks when it comes to using AI to do underwriting given insurers are relying on historic data which is not perfect. This means the insurance sector would have to understand what model errors can occur and what implications they might have.
Enhancing propositions with embedded insurance
In recent years, the insurance industry has undergone extraordinary development and innovation –a trend only expected to accelerate with the introduction of embedded finance according to panellists at a session on embedded digital insurance.
To panellist and Income Insurance CEO Andrew Yeo, embedded finance refers to how his insurance company provides its products and services seamlessly to customers within their lifestyle so they do not feel the burden of buying insurance.
He added that the customer journey actually should be embedded within the digital ecosystem platforms that are now an integral part of the consumer's lifestyle. That way, the provision of insurance is essentially invisible as customers go through their day-to-day activities and get themselves covered in life, health, or even investments according to Yeo.
He also highlighted the difference between embedded finance models and online insurance aggregator platforms, citing that most insurers do not want to “play an aggregation game”.
“We have to be very nuanced to understand that when we talk about embedded finance, it's not about finding the cheapest product at the best price, it's really about how we use embedded finance to provide the relevant proposition at the right time for the customers together with our partners for them to enhance their proposition to their customers, said Yeo.
He added that most of the insurance ecosystem players his company partners with are not insurance players, but want insurance to enhance their proposition. That is where we can work together with them and their data to give us insights on what problems customers are facing and what products will be relevant to them, said Yeo. From those insights, new risk products can be designed at the right pricing.
Chiming in, fellow panellist Mittal noted that some channel partners distributing insurance products want to become an aggregator and control the end-to-end experience for customers. However, some distribution partners want to co-create customer journeys, he added.
On servicing customers purchasing embedded insurance products, Mittal noted that while e-commerce or telco firms could be the right partner at the point of sale, the rest of the customer journey including servicing and following up and expansion can be handled by the insurer.
Easier Access to Insurance Policies
Separately, at the SFF, Lawrence Wong, Singapore’s Deputy Prime Minister, Minister for Finance, and Deputy Chairman at the Monetary Authority of Singapore announced that information on insurance policies will now be included in the Singapore Financial Data Exchange (SGFinDex). The exchange is the world’s first public digital infrastructure that enables individuals to securely access their financial information across government agencies, banks, insurers, and the central securities depository.
Individuals in Singapore will now be able to easily access information on their insurance policies through financial planning applications or websites of participating insurers, and banks, as well as through MyMoneySense, a free government financial planning digital service.
“This will enable Singaporeans to identify potential gaps in their protection more easily, and have a more comprehensive view of their financial positions,” said Wong.