For a long time now, traditional insurance companies have struggled to connect and engage with customers in a meaningful way, signalling that the industry must change.
Leading industry players and governments have now understood this and are looking for ways to transform their business model while pureplay insurance companies are popping up to take advantage of the existing opportunity in a market that is quickly going digital.
Pureplay or virtual insurers have a lot of power and hold the key to transforming the industry and setting new standards in terms of how customers are served and supported during their lifetime.
With millennials and Gen Z customers demanding digital-first services, entrepreneurs are looking to move fast, and regulators are sifting through existing laws to remove barriers and facilitate the revolution to support residents.
In Hong Kong, the Insurance Authority recently granted the first virtual general insurance license (the first virtual life insurance license was issued last year) to a purely digital insurance firm. Being a pureplay firm will sell its products online without the use of agents or brokers.
The firm is a younger brand and more appealing to millennials and young professionals, while its parent is an established brand. The two will have different market positioning.
These factors gave the firms strong reasons to establish a different company and brand to achieve the most desired outcome.
The Insurance Authority, the Hong Kong’s regulator, introduced a ‘Fast Track’ scheme to provide a dedicated queue for newcomers seeking to operate solely through digital distribution channels back in September 2017.
The firm’s launch two years later is an indication that the market in Hong Kong is preparing for a wider digital revolution.
The authorisation of new virtual insurers under Fast Track encourages and facilitates wider applications of Insurtech in Hong Kong, the CEO of the Hong Kong Insurance Authority noted.
Uses of Insuretech : Insurtech provides the opportunity for both consumers and the industry to improve the customer experience, enhance inclusiveness, build a sustainable fintech ecosystem, reduce the compliance burden, and induce greater supervisory efficiency.
While life insurance seems to have gone digital a while ago, non-life insurance products, especially general insurance products have a lot of room to breathe when it comes to serving customers in a digital world.
The online insurance firm and other upcoming virtual general insurance companies in Hong Kong are expected to set the expectations of customers, providing more transparency in terms of pricing and agent commissions, and more clarity around duties, rights, and liabilities of policyholders.
Work with the relevant stakeholders will continue to happen in order to maximize the value of Insurtech for the betterment of society. The region hopes to continue working on bringing in more digital initiatives to support the insurance industry.
What Hong Kong is doing is neither new nor novel, but shines a light on an important trend in the region and across the globe.
The message is loud and clear: the insurance industry is changing quickly, and there is an urgent need to go digital, driven by a deeper need for better engagement and more intelligent service.