Asia-Pacific region holds the key to the insurance industry’s future, EY insurance outlook 2019 reveals
Singapore, 12 December 2018
- Region’s life insurance market has delivered stronger growth than global market
- Appetite for life insurance products remains strong in emerging markets
- Focus on cost efficiency continues across Asia-Pacific
Insurers across Asia-Pacific are experimenting widely to capitalize on near-term opportunities and drive the industries long-term growth, according to the EY insurance outlook 2019. Against a backdrop of weak global insurance sector growth, rising incomes and expanding populations have benefited the region’s life insurers, while the non-life sector has seen strong growth fueled by overall economic growth in key markets.
The latest editions of EY insurance outlook series is the result of several think tank sessions of EY industrial and functional professionals as well as strategists and technologists, and cover the major trends, disruptions and innovations that are impacting the Asia-Pacific insurance industry.
Jonathan Zhao, EY Asia-Pacific Insurance Leader says: “Markets across Asia-Pacific, in particular China, will continue to influence the future of insurance because of their intense focus on innovation and disruption. From product design to distribution and technology adoption, insurers in the region continue to experiment to capitalize on the near-term opportunities and drive the industry’s long-term growth.”
Life, property and casualty (P&I) insurance outlook
Across Asia-Pacific, life insurance and P&C insurance have experienced marginal growth in recent years, just 0.4% growth across the region compared with 0.2% globally. Life insurers are facing growth challenges globally due to regulatory issues, outdated distribution and lack of relevant products to the changing customer needs. To address these challenges, the EY insurance outlook 2019 report lays out specific strategic and tactical actions that include linking regulatory compliance and business transformation, analyzing demographic shifts to reassess strategic priorities, elevating the cost management approach from tactical to strategic, and retaining the best of their traditional distribution channels, while wholeheartedly embracing digital. Zhao says: “The appetite for life insurance products remains strong in emerging markets, and the low insurance penetration in these countries represents a win-win for insurers.”
Non-life insurance outlook
Non-life insurers have seen considerable growth across Asia-Pacific in recent years, 8.0% for the region compared with just 0.9% globally, largely due to sustained performance in emerging market. While growth will inevitably slow down, there are considerable opportunities for non-life insurers in the region, especially those who have embraced an innovation mindset. To prepare for this future disruption, the EY insurance outlook 2019 report notes that non-life insurers should focus on evaluating opportunities in health insurance, explore intangible risks to boost commercial insurance, follow China’s lead on digital distribution, and raise the digital bar by deploying analytics and artificial intelligence (AI).
Increasing focus on cost efficiency
Mature life insurers in many Asia-Pacific markets are placing increased focus on cost efficiencies across their businesses. For many, large-scale transformation programs and the adoption of digital platforms provide a solution. Insurers in this region have the added complexity of the critical relationship with agents and bancassurance partners, so solving for cost efficiencies should also focus on enhancing these distribution channels and not be an exclusively digital focus.
Zhao says: “Today’s intense margin pressures mean that cost efficiency is more important than ever. While many insurers across the region are leading the way when it comes to adopting emerging technology and working with InsurTechs. We believe it’s an imperative for insurers to make the critical decision about what capabilities they should own and manage themselves and what to outsource.”
For more information and to view the Asia-Pacific report, visit EY Insurance Outlook 2019.
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