“Technology export to Asia and the Belt & Road Countries is going to be one of the main thrusts for Digital Insurer ZhongAn in the next few years,” said Bill Song, CEO of ZA Tech Global Limited.
“ZhongAn has a very strong track record in China in terms of providing internet based insurance offerings to the New Generation,” said Song at ZhongAn’s open day held in Shanghai.
“The demographics in Southeast Asia spell a massive opportunity for insurance digitalisation. We are seeking to work closely with both insurance companies and internet platforms to re-engineer their customer relationships, and re-imagine the industry landscape.”
Insurtech has been gaining traction steadily. According to an insurance industry report by Deloitte released in September, global insurtech investment reached USD 2.22 billion in 1H 2019, and the full year figure is expected to surpass the historical high recorded in 2015.
ZhongAn finds the Southeast Asia market particularly promising because of various factors. Demographically, Southeast Asia is more youthful than Europe: the age of its 600 million population average at around 30 years old.
More importantly, internet penetration rate in the region has been recording double-digit growth each year since 2016, while the penetration rate of insurance remains low in the region apart from Singapore.
According to Swiss Re Institute’s sigma report, insurance penetration rate in Southeast Asia is only 3.77%, or 3.26% excluding Singapore. It is just barely more than half of the global penetration rate of 6.13%.
“We see a niche market for ZhongAn in Southeast Asia in terms of insurtech,” said Mr. Song. “There are several pain points in the Southeast Asia market: traditional insurance products can be too complicated and costly to customers.
On the other hand, insurance companies need a new way to reach out to the young generation who are used to living in a connected world, as opposed to the traditional model where insurance companies heavily rely on brokers and banks to distribute their products,” said Mr. Song.
“This is where ZhongAn finds its sweet spot: with technology, we change the way insurance products are created and distributed, and make insurance much more accessible to the users.”
ZhongAn has a strong track record in Southeast Asia. Earlier this year, it has set up a joint venture, GrabInsure, with Grab, a leading O2O platform in Southeast Asia, to explore the online insurance distribution business in the region. ZhongAn is responsible for building up a digitalized insurance sales platform, and for providing the necessary technical support.
With the technical support from ZhongAn, Grab has already issued over 4 million insurance policies between April and November this year, and is expected to offer more than 100 million insurance policies in 2020.
The usage-based insurance technology by ZhongAn has also enabled GrabInsure to open up new markets in Singapore and Malaysia. In Singapore, GrabInsure has partnered with NTUC Income to launch Critical Illness Pay Per Trip (CIPPT), the first micro-insurance plan in Southeast Asia.
The product offers critical illness coverage for Grab drivers, who can pay with each trip made on their driving apps, with the premiums being set between S$0.10 to S$0.50 per each trip made on their driver apps.
It covers 37 types of critical illnesses, including heart disease, cancer, and stroke.