7 minute read 5 Dec 2019
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How innovation can help insurers in Asia-Pacific seize opportunities


Grant Peters

EY Asia-Pacific Insurance Leader, Oceania Financial Services Advisory Leader

Insurance expert. Strategic consultant. Building capacity locally and globally.

7 minute read 5 Dec 2019

In their drive for transformation, Asia-Pacific insurers are committed to innovation across their businesses.

This article is part of our 2020 Global Insurance Outlook series.

Framing a dynamic market landscape, EY 2020 Global Insurance Outlook report analyzes the key trends and forces shaping the insurance industry for the next few years, with a focus on the most compelling opportunities and most significant risks.

It also presents imperatives for insurers to consider as they shape strategic plans and prioritize investments in talent, technology and transformation.

In many ways, the Asia-Pacific region holds the key to the insurance industry’s future. It is home to nearly one-third of the world’s population, several of the fastest-growing economies, and multiple countries with a rapidly expanding middle-class.

Yet, even as the industry’s fundamentals look sound, a range of challenges – intensifying regulations and economic uncertainty foremost among them – have emerged to cloud the overall outlook.

The annual EY Asia-Pacific Insurance Outlook (pdf) represents our organization’s perspective on the issues shaping the insurance industry in the next few years. This year’s reports were developed based on our deep sector knowledge, a survey of the entire EY Insurance practice across the globe and a variety of inputs from global and regional insurance leadership, selected clients and external analysts.

The global, regional and individual country reports complement the NextWave series, which takes a longer-term perspective (five years and beyond) and examines specific market scenarios that will shape the future of the industry.

A complex environment with strong fundamentals and emerging challenges

The Asia-Pacific insurance industry is still riding a strong growth spurt, driven largely by China, but also buoyed by positive performance in South Korea. Both premiums and market penetration have risen. However, some mature markets have struggled as their populations age and consumer expectations shift.

Setting the global standard for customer expectations

Customer expectations in the region, especially around digital interactions and experiences, are the highest in the world. In response, Asia-Pacific insurers have committed to innovations across the business. While insurers in other regions envision the customer of the future and model their needs and expectations, the future is happening now in the Asia-Pacific region.

Customer expectations


Percentage of customers across Asia-Pacific who believe they should be able to accomplish any financial task on a mobile device.

Source: Forrester

Shifting demographics

Japanese and South Korean insurers face significant threats on existing portfolios as the population grows older and low birth-rates persist. In contrast, an emerging middle class and millennials in younger Asia-Pacific countries are ahead of their peers in other global regions in metrics as diverse as digital adoption and home ownership.

Insurers must choose the demographics on which they want to focus, while keeping a close eye on the rapidly changing market dynamics.

Slowing growth and rising uncertainty

Low interest rates and failing yields on treasury bonds are challenges common with other regions. And even though central banks have more room to maneuver, a slowdown in other global regions would inevitably hurt the Asia-Pacific insurance industry. Political uncertainty and global trade tensions also threaten the booming growth cycle.

Scarce talent

In the fastest-growing markets, insurers have not been able to find the right homegrown talent fast enough. Retraining and upskilling are crucial and expatriate talent is prohibitively expensive. And, as, both life and non-life insurers get more “digital” in their operations, they will need technical talent to design and support specific disruptive technologies.

Key trends: Non-life

In the Asia-Pacific region, growth in non-life and property and casualty (P&C) lines has outpaced life insurance. However, overall growth has slowed in recent years. And foreign players will drive increasing penetration in markets where local players have traditionally dominated.

1. Embrace regulatory change

Larger insurers are seizing the opportunity to transform finance and actuarial functions in relation to tightening regulatory standards, while smaller, less capitalized insurers are making the minimal effort to achieve compliance. But they must look beyond local regulations and stay informed about global regulatory changes, paying particular attention to standards around conduct risk and consumer protection, such as General Data Protection Regulation (GDPR).

2. Achieve cost efficiency

Insurers are currently playing a volume game to generate profitability but slowing economic growth could make that difficult to sustain. Insurers are also implementing regional shared-service centers and embedding straight-through processing to reduce costs and improve process performance. The link between cost reduction and improved use of technology is strong now and will only get stronger.

3. Deliver value with new technology and data

Emerging and disruptive technologies, as well as the massive increase in data volumes, will have a big impact. However, it’s important to note that the trend is very regional, with some markets, such as Hong Kong, lagging behind. Insurers must develop a roadmap of skills that they need in the next three years if they are to maximize their tech ROI and fulfill their ambitions for digital transformation.

4. Digitize the sales force

Distribution patterns and practices vary widely across the region. Asia-Pacific consumers are more receptive to new platforms and better digital tools than those in other regions. But platform and channel integration can be a major challenge. Across sectors, the objective is to engage more customers with the intuitive and personalized experiences they want.

Key trends: Life

Life insurers in most markets in the Asia-Pacific region have experienced slowing growth. Insurers are shifting toward protection-based products, and while a number of common challenges confront life insurers across the region, local conditions differentiate individual markets.

1. Manage the persistent regulatory focus

The coordination among regulatory bodies and increasing standardization of regulatory guidance across the globe are leading to a waterfall effect of best practices. IFRS 17 remains a key focus area, along with customer protection and enhanced transparency. Insurers must understand how compliance can be used to foster innovation and drive product development.

2. Win the war for talent and skills

Asian insurers, like their counterparts in other regions, are focused on finding scarce digital and data science talent. Looking ahead, more Asia-Pacific insurers will look to invest in developing their own talent bases, given that foreign and expatriate resources are more expensive.

The pressure to retool or even transform the workforce is critical for firms actively seeking to diversify beyond plain vanilla insurance products and launch new business models that vertically integrate the value chain.

3. Achieve cost efficiency

Life insurers have been trying to reduce their costs for much of the last decade. But the key is to ensure cost efficiency measures do not stifle innovation.

Process automation and straight-through processing in claims and policy administration are among the priorities, and the ability to set up highly efficient and centralized models has proven to be a strategic differentiator for large insurers with multinational presence in the region.

4. Digitize the sales force

Insurers in the region have made progress in digitizing the workforce in recent years, largely by providing tools for agents to maximize their productivity. Yet ROI on such digitization initiatives has not been as large as hoped, given the size of the investments.

Those insurers that can successfully transform their sales force and effectively digitize distribution channels will seize the promise of higher efficiency and unlock significant growth opportunities.

Digitizing the sales force


The reduction in the number of life insurance solicitors, South Korea, 2013-2018.

Source: Korea Insurance Research Institute

5. Drive growth through direct channels

Many insurers are working to vertically integrate their business models, particularly in health lines.

Direct engagement with digital-first customers through engaging platforms is another critical component of growth strategies across the region. Increased investment and activity in this space are to be expected, even though it’s well understood that initial returns may be modest.

How insurers can move forward

For years, insurers across the Asia-Pacific region have understandably focused on seizing the growth opportunities presented by healthy economies and a growing middle class. But in some markets, that focus on driving growth has left key parts of the value chain – such as underwriting, claims and other internal processes – lagging best-in-class standards.

At the same time, digital capabilities have often been built on top of existing operations and without end-to-end digitization plans.

Opportunities, strategies and priorities will vary. But in evaluating, selecting and deploying new tech, insurers must take a holistic approach. Even the most powerful tools won’t solve problems by themselves.

Instead, they must be used to solve specific and well-defined business problems and meet specific objectives. Indeed, technology is just one variable in the equation for successful long-term change. The need to master all of these dimensions of the enterprise reflects the complex matrix of issues facing the Asia-Pacific insurance industry.

For more in-depth insights, read our Asia-Pacific insurance outlook (pdf) report which includes country snapshots of China (pdf), Japan (pdf) and South Korea (pdf).  


EY 2020 Asia-Pacific Insurance Outlook reveals key trends and forces shaping the insurance industry for the next few years. Customer expectations in the region, especially around digital interactions and experiences, are the highest in the world – one reason why insurers are so committed to innovations across their businesses. Industry fundamentals are sound, but sustaining growth still presents challenges.

About this article


Grant Peters

EY Asia-Pacific Insurance Leader, Oceania Financial Services Advisory Leader

Insurance expert. Strategic consultant. Building capacity locally and globally.