Insurance: APAC is ripe for disintermediation, especially via mobile channels

In the previous article on Asia-Pacific  we have given due attention to the customer-centric battle cry echoing across the APAC insurance landscape. However, understanding the modern consumer and creating products and services to meet their needs is only half the problem. 

4. Getting Smart About Distribution

Customers want on-demand; customers want personalisation; customers want to receive products and services via the channel(s) of their choice – but not at any additional cost, as insurers’ brethren in the retail and logistics industry have already found out to their dismay. 

This makes it imperative for insurers to reduce unit cost however they can, and this has multiple aspects to it. On the one hand, insurers can control the cost of the back-end systems and the processes supporting the new customer covenant, and this certainly forces them to prioritise what is really required. On the other, they can seek to reduce front-end costs, namely distribution. All of this reduces the amount that needs to be added back onto customer premiums and allows insurers to offer more competitive pricing.

Operating these two prongs in unison – back-end and front-end efficiencies – will ensure that insurers’ products are competitive in their middle-class markets, where new entrants are constantly trying their charms upon a fickle audience, as well as opening up the myriad uninsured for business and thereby enabling vast scale to be reached. We will look at what insurers in Asia-Pacific are doing from a systems-and-processes point of view in the next section; here, we focus on what they are doing to reduce the cost of distribution.

Firstly, let’s take stock of the distribution situation in the region. Anecdotally, we know the market to be highly intermediated, with agencies and banks playing particularly significant roles. However, our Distribution stats showed the direct-to-customer channel to be highly available (with over three quarters of insurer respondents affirming its existence).

"We know already what you want, we can deliver unbiased search. It all comes down to predictive analytics. If, for example, the customer has an iPhone 7, comes to GoBear through a certain channel and travels regularly to Hong Kong, we know based on your profile that there are only going to be three insurance companies you are interested in."

Andre Hesselink, CEO of GoBear

This is totally in keeping with our characterisation of Asia-Pacific as a highly disrupted market. Our position throughout this report has been that customer disruption ultimately stems from distribution disruption, in the sense that it is new (digital) channels that have expanded consumers’ horizons to the new world of products, services and customer service that they now demand as the bare minimum. With consumers moving over to digital, insurers have no alternative but to make themselves available via this channel as well.

Availability is not of course the same as volume, and wider evidence on the APAC market indeed points to this still being a relatively insignificant channel volume-wise, compared for example to bancassurance and other face-toface channels. Recent research from Swiss Re and LIMRA indicated that the direct channel does not exceed 10% of total business in any Asia-Pacific national market apart from China, for which we already drew attention to the meteoric rise of the online player Zhong An in this first part of the article.

The lesser volume of the direct channel within the region as a whole is reflected in the relatively low aggregator impact we measured for Asia-Pacific in our Distribution post (compared to our other key regions), bearing in mind that aggregators predominantly operate through digital channels.


Recent research from Swiss Re and LIMRA indicated that the direct channel does not exceed 10% of total business in any Asia-Pacific national market apart from China ...


As increased availability of digital channels reflects changing consumer behaviour patterns more generally, we expect these to bulk out over the coming years. For the time being though, the lion’s share of insurance business in the region still happens via traditional brokered channels.

These broker channels are highly fragmented, incorporating agencies and banks of all shapes and sizes, each one with a different working culture, a different sales ethos and often different technological constraints. This does not just make it more difficult to offer prospective customers a consistent experience across multiple channels, it is also unconducive to the rapid scale that insurers want to achieve with their new-age policies. 

Indonesia is a case in point, with in excess of a quarter of a billion people spread over nearly 1,000 permanently inhabited islands. Neiva, working out of Jakarta, depicts the situation in the following terms:

‘We've got 6,000 distributors spread all over the place. Indonesia is not known for its technology or its network infrastructure, so there's a big challenge there in terms of connectivity. So whenever we bring digital solutions, the challenge is that it needs to be online and offline.’

It’s clear that insurers in Asia-Pacific are trying to break the shackles of this legacy distribution landscape; indeed, Distribution Diversification was a priority area that Asia-Pacific led on by comparison with our other regions (see Insurer Priorities). Given the high mobile penetration in the region as a whole, the direct-to-customer channel certainly makes a lot of sense in that it allows people to access insurance via a device they already possess. As this is not just widely available but also effectively free of charge, we expect it to be particularly useful for the distribution of micro-insurance products in the region.

We explore the micro-insurance topic in greater depth in our Regional Profile on Africa: access it it straightaway by downloading the full Trend Map here!


While the direct-to-customer channel will certainly become more significant as time goes on, it is not the only answer for insurers seeking to access the huge new market segments on offer in Asia-Pacific as well as to keep the trust of fickle existing customers.

Affinity partnerships, whereby insurers piggyback on other brands already established in consumers’ lives, are a path insurers continue to explore. This is a trend the world over (we explore it also in our Regional Profiles on LatAm and Africa) but we have reason to believe that it will be particularly pronounced in Asia-Pacific.

‘We're looking into partnerships with companies from different sectors: how we can plug in, bringing the insurance dimension and being the insurance carrier while the partner does all the front-end customer-facing stuff,’ explains Neiva. ‘And as I like to call it, we're just a third-party API.’ 

He goes on to give an example of what this ‘API culture’ might mean for insurers: 

If we want to tap into Uber customers, we’ll be another API into the Uber app,’elaborates Neiva. ‘We’re not the front end, we’re not the market-facing bit. And the second thing is: we can be the market-facing bit but live with 3rd-party APIs from other companies. That’s how I see it’s going to move: more from these partnerships between insurance companies and others, not only banks but other companies too, that will add to the customer base.’

It goes without saying that the affiliate channel can also exist without APIs. It can be of enormous help to an insurer to use the scale of a large retailer or telco in the same way as they have used, and continue to use, their traditional banks and brokers. As an example of this, in 2016 we saw BIMA, a leading provider of mobile microinsurance (MMI), partner with mobile network operator Digicel in order to access their subscribers in Papua New Guinea and Fiji.

"It’s hard for intermediaries. This middle man is only useful if they can provide a great customer experience. Lots of companies are trying to build those platforms but often only replicating the online model they have offline instead of rethinking it. Additionally, the big risk is that the market and the customer are going faster and faster and companies are left behind."

Marco Buccigrossi, formerly Business Development Director at Mapfre


5. Fast-Tracking Digital Transformation

In part 5) we explore the final theme out of five: how to successfully manage back-office digital transformation, in discussion with our three in-region influencers:

  • João Neiva, Head of Innovation, IT and Business Change at Zurich Topas Life in Indonesia
  • Steve Tunstall, CEO at Singapore-based Insurtech start-up Inzsure
  • David Piesse, Chairman of IIS Ambassadors and Ambassador Asia Pacific at the International Insurance Society (IIS), based in HK

We explored how APAC insurers are creating new breeds of insurance product fit for the Asian consumer, and reviewed the region's fragmented distribution landscape — a landscape ripe for disintermediation, especially via mobile channels. In this final part of our Regional Profile for Asia-Pacific, our focus shifts to the back office: it's all very well recognising that the battle for insurance will be lost and won at the front end, with nimble newcomers looking to corner the market at source, but how do you ensure your back-end systems deliver what you need? How do you growth-hack the back-office?

You can access the full Asia-Pacific Profile whenever you like, with Themes 1-5 explored in order, by downloading the full Trend Map report. We hope you enjoy reading!


Let's now turn to what APAC insurers are doing with their back office to facilitate their new customer-centric insurance model — at a commercially viable cost. There is no point coming up with a winning concept and getting it in front of millions of customers only to see your engine room break down or to rack up such a high bill that you can’t make any money.

"It is important to be nimble to the extent possible, in terms staffing and financing. Procedures must be on the shelf so that you can move fast when the opportunity presents itself. There also should be the culture for trying things but ‘failing fast’ and not on a large scale when it does occur."

Damon Levine, CFA, CRCMP, ERM Practitioner, Writer & Industry Speaker

Admittedly, it is hard to completely separate the problem of back-office transformation from the broader questions relating to distribution and the customer relationship. If you are able to achieve gargantuan scale with your products, then you can naturally afford more upfront investment in the back office. These factors are all very much unknown quantities, and if, having made your infrastructure investment, you are unable to achieve the necessary scale with your products, then you may even end up going bankrupt – so the question of digital transformation is certainly a loaded one, and insurers will generally prefer to make their quantum leap in manageable, auditable stages, rather than going for broke and hoping scale pays the bills!

It is in these terms that João Neiva, Head of Innovation, IT and Business Change at Zurich Topas Life in Indonesia, frames the digital-transformation efforts within his team in Jakarta:

‘For the next 12 months, our challenge is: how do we make sure we drive efficiencies by digitising a lot of the back end to then drive the unit cost down,’ he muses.

"One of the first steps is to digitise services and sales platforms, the second is to modernise and simplify core policy administration systems, and the third is to move to a modular solution on pricing, underwriting and servicing to ensure flexibility to better serve customers."

Ash Shah, Regional CIO and Chief of Staff Property and Casualty at AXA Asia

This need for a strict balance between investments and deliverables harks back to an important principle we identified in Part I of our Regional Profile on Asia-Pacific: namely that it is better to achieve more straightforward objectives with flying colours than to promise things that aren’t really essential and then under-deliver.

Personal experience teaches that our satisfaction with a product or service often has more to do with what we have been led to believe about it than with the objective quality of the final thing; in this way, a tin of beans that ‘does what it says on the tin’ can procure a more positive customer experience than second-rate caviar.

Neiva’s principles of clarity and transparency, which we touched on earlier, operate very much along these lines. The primary goal of insurers needs to be to not disappoint the customer. Once this condition is met – and only when this condition is met – should insurers start pursuing more high-flown goals, such as one-hour turnaround for claims resolution.

‘Digitalisation’s first stage is pretty much front-end: we try to make things nice for our customers and distributors,’ Neiva comments. ‘But then the back end is still very manual. We're no exception, so we still have that challenge.’

He cites underwriting as an example of where this mismatch between front-end promises and back-end systems can cause problems:

‘When we talk about underwriting, we can bring a fancy front end but, if you still have an old-fashioned way of looking at underwriting at the back end, you will still have a lot of stuff going through manual or case underwriting rather than going into a straight-through process.’

We can see from this that there is an obvious trap insurers can fall into, and this applies equally to all digitally disrupted industries: chasing the game at the front but neglecting the more mundane-seeming stuff at the back, which, unexciting as it may seem, is as necessary today (and tomorrow) as it was yesterday.


Even if insurers do have the budget to match their front-end ambitions with back-end investments, this is not always wise. Digitisation initiatives have enormous financial implications, and the cost of failure is therefore substantial. One approach that recommends itself is to spread risk and guarantee a base level of return by focusing not just on the big one-off system replacements but also on incremental improvements to the surrounding processes, workflows and even mentalities.

Two areas that Neiva believes all organisations should focus on are new methodologies and new ways of delivering things, such as fast-prototypingdesign-thinking and Agile. These can benefit the entire organisation and yield positive results both operationally and in product development.

On the workflow side, there is plentiful interest in robotics and process automation – for instance, nearly half of (re)insurers in Asia-Pacific have automated some aspect of claims-handling – but we often encounter the fetish of the turn-key solution. While methods for automating underwriting and claims-processing are improving, we are not talking about achieving 100% straight-through processing. 

In reality, the systems in question are akin to giant traffic wardens and while, to use underwriting as an example, they can take a lot of straightforward policy creation off the road, anything non-routine will remain to be dealt with. Unless the manual processes – and employees themselves – are suitably informed and keyed in when these non-routine cases come along, we will still end up with congestion in the back office, and in some cases worse congestion than what existed before.

Back-office digitisation is not therefore synonymous with automation. It also involves, in addition to the systems aspect, a redesign of general organisational workflows and a sea-change in staff mindsets. 

"It is increasingly important to find ways to renew the business model, and data and innovation capabilities are an important prerequisite. New roles and organisational set-ups might help to achieve this goal. Big Data, and the ability to collect the right data and act upon it, is one of the key skills needed by the industry in the future."

Monika Schulze, Global Head of Marketing at Zurich Insurance

This sea-change cannot be limited to carriers but, especially in a market such as Asia-Pacific, must embrace agents and brokers as well. While the proportion of business coming through direct lines is likely to increase, the indirect channels can still play a positive, facilitating role as part of the omnichannel mix.

Get the complete Profile for Asia-Pacific here!

Much of this comes down to instilling agents with the same ethos as one’s own staff (or a least with a compatible ethos that takes on board the changes that are occurring in the insurer-customer relationship). On a more prosaic level, it involves aligning agency processes and incentives with those of the insurer, and it may even entail equipping agency sales forces with more up-to-date tools (such as tablets) and analytics.

"The new way of dealing with insurance data could dramatically improve the efficiency of agents and customer interactions, as well as improving cost structure with a decrease of human resources involved, thanks to automation. It will increase insurers’ competitiveness in the long term."

Minh Q Tran, former General Partner at AXA Strategic Ventures

The point about organisational alignment across the value chain is particularly pertinent in the case of bancassurance, where numerous possibilities exist for cross-selling and for complementing insurers’ data with that of the banks as regards their shared customers. This channel warrants a separate mention, on account of its growing significance in Asia-Pacific. According to stats from TechNavio, annual bancassurance market revenue in APAC currently stands at 173 billion USD and is growing at a compound annual rate in excess of 8%.


According to stats from TechNavio, annual bancassurance market revenue in APAC currently stands at 173 billion USD and is growing at a compound annual rate in excess of 8% ...


That concludes the Profile on Asia-Pacific (see also our earlier entries on Europe and North America). If you don't want to wait, you can access all the Regional Profiles (along with our dedicated sections on Global Trends and Technology Developments) as part of the full Trend Map report, which you can download for free at any time.

Alexander Cherry

Alexander Cherry, Head of Research & Content at Insurance Nexus.