The future of the Life Insurance sector in Asia

In an industry whose business is to predict, measure, and avoid risk, one might think that innovation is not natural. However, insurers are no less capable than other industries to innovate -it's really a question of mindset and necessity.

With banks having made their digital transformations over 10 years ago, many insurers, in contrast, look like dinosaurs. While banks have had to evolve due to the high number of monthly customer touchpoints, the need for insurers to innovate has been less pressing. In an industry whose business is to predict, measure, and avoid risk, one might think that innovation is not natural. However, insurers are no less capable than other industries to innovate -it's a question of mindset and necessity.

In insurance, as in all sectors, when companies are not investing in innovation, they are quickly overtaken by their competitors, and if they do not react, they will eventually disappear. This is a fundamental law of the market economy that exists in all industries. Insurers have the same capacity as other companies in other industrial sectors to invest in innovation. It is simply a question of ideas, willingness, and methodology. However, we observe many disparities, which often have to do with the company's culture and the mindset of management.

Although late movers, a big advantage for insurers is that they can leapfrog over technological steps that banks have had to take. As insurers have fewer customer touchpoints, it is also possible to venture into related areas to increase engagement: health, wellness, lifestyle, sports training apps, meditation tools, online genetic testing, diet food delivery, remote consultation with doctors and psychologists –a few examples. These solutions were not as common 10 years ago. Insurers can now employ these solutions to innovate their business models.

We are witnessing the disruption of current business models for banks, particularly with DeFi, fintechs, and the cryptoeconomy. Insurers do not have to face such profound changes. Not yet. However, Insurers should be prepared for it as signals, albeit still weak, of deep disruptions to the current insurance model are already visible –for instance Genetic Engineering and New Space.

With the discovery of CRISPR (gene-editing technology), advances in technology mean that we can alter our societies and consequently the management and prediction of human risks. Insurers will need to work with governments and the private sector to help define the ethics around this technology. For instance, would you give someone a lower premium based on their DNA or willingness to have a microchip inserted?

Secondly, New Space (private companies doing business in Space) is another area in which the insurance industry will have a significant influence. Historians discovered traces of the first insurers for merchant ships in the Roman Empire, and a modern insurance model was created in the Netherlands to insure ships. The vessels of that time were no less complex for the ordinary person than reusable spacecraft. And the International Space Station is no more distant and fantastic than the ships that crossed the Atlantic in search of new lands. Insurers have been at the forefront of this transportation and exploration revolution.

Fundamentally, innovation is converting knowledge into money. Calculating the real Return on Investment in Innovation (ROI2) will allow insurers to make bold but necessary decisions in order to once again be at the heart of human societies’ revolution.