InsurTech to Grow by 48.8% | How You Can Prepare for It
Updated: Oct 11
With the InsurTech industry expected to register a compound annual growth rate (CAGR) of 48.8 percent from 2021 to 2028, it is time to prepare for the next big wave. From how you can ride the wave to what makes Singapore a great hub for InsurTechs, we have it all covered!
Before we dive into the emergence of InsurTech, for some of us, the term “InsurTech” may be new. A short form for insurance technology, InsurTech capitalises on machine learning, artificial intelligence (AI), blockchain, and even drone technology to improve the way the insurance industry operates and better meet customers’ demands.
InsurTech, the Next Big Thing
With more than 40% of customers in favour of a more digitalised insurance company, it is evident that Insurtech has disrupted the insurance industry. The COVID-19 pandemic has also contributed to its progress over the years. Pushing everybody online, there is now an ever-increasing need to digitalise insurance services.
Capturing the attention of profit pools, InsurTech start-ups have gained significant funding over the years:
With such investments only expected to increase in the future, it is no surprise that the InsurTech market size is expected to increase by USD 33.73 billion by 2025.
Instead of competing with InsurTechs, many incumbents are collaborating with them to tap on their technology to complement their current business model. From improving the operational aspect to their distribution and claims functions, InsurTechs are pushing incumbents to become more data-driven and consumer-centric.
What InsurTech Has Achieved
Like FinTech, the initial focus was on the retail end. This trend is clearly evident from the 75% of companies focusing on making their products easily accessible to consumers, providing easy product comparison, and streamlining the purchasing process. Technologically-savvy individuals who prioritise convenience will simply look for a policy that fulfils their individual needs, the innovative technology that InsurTechs offer can quickly win them over.
With the progress that they have made, they are venturing into commercial areas such as loss prevention and efficiency. Bringing with them innovation in the commercial segment, in a research done by the McKinsey Panorama, they found that 46 percent of InsurTechs focus on P&C, 33 percent on health, and the rest focus on life insurance.
What About Singapore?
With InsurTech taking off around the globe, Singapore is not far behind. As a country with more than 80 companies under the Singapore FinTech Association’s InsurTech directory, Singapore has one of the highest concentrations of InsurTech start-ups in the region. As a country with nearly two-thirds of the population already insured, the InsurTech industry in Singapore is concentrating on increasing its reach and improving its current insurance services.
Additionally, regulatory barriers in Singapore have also been lowered. As a result, InsurTechs in Singapore have the luxury to experiment with their innovative business models without having to comply with the full regulatory frameworks incumbents must follow. In a bid to help InsurTech start-ups grow, funding and mentorship schemes have also been encouraged.
Singapore, The Sandbox for InsurTech Firms
As consumers demand seamless digital experiences together with a highly supportive environment for InsurTech firms to grow, Singapore has a strong product-market fit between InsurTech firms and consumers. More importantly, there is also a growing skills gap that insurers are facing. With demand for talent in the InsurTech industry coupled with the strong product-market fit between InsurTech firms and consumers, the “little red dot” is definitely a top choice for InsurTechs to develop.
Singaporeans Want Better Digital Experiences
With two-thirds of Singaporeans already insured, Singaporeans are actively looking for more streamlined and seamless technology. This demand has been sped up due to the COVID-19 pandemic which underscored the need for contactless insurance business models.
Stressing on the vulnerability and importance of health insurance alongside the increase in people working from home increases the need for contactless insurance management, application, and claims processes. As the services InsurTechs offer are able to meet consumers’ wants and needs such as the convenience of managing their policies on the go, Singapore would be a great fit for InsurTech firms as well as traditional firms looking to go into InsurTech.
Singapore’s Highly Supportive Regulatory Environment
Apart from the growing demand from the Singapore market, Singapore also offers a favourable regulatory environment to support the growth of InsurTechs. From the Monetary Authority of Singapore’s (MAS) FinTech regulatory sandbox launched in 2016 to the Global-Asia Insurance Partnership in Singapore, Singapore offers a conducive environment for InsurTech firms to experiment with innovative solutions.
As the first company to graduate from the MAS FinTech regulatory sandbox, PolicyPal is now a leading InsurTech company in Singapore using blockchain technology to help users plan and reach their financial goals. Apart from the sandbox, MAS also encourages financial institutions (FIs) to start innovation labs to experiment with novel ideas in the financial sector.
To attract more FIs, co-funding schemes have been implemented. For new FI’s innovation labs, 50 percent of each qualifying professional headcount’s base monthly salary will be co-funded. In particular for existing innovation labs, their base monthly salary will be co-funded for 24 months. Beyond providing platforms to experiment, the recent Global-Asia Insurance Partnership will also allow insurers and academics to collaborate with policymakers.
With such resources available for InsurTechs to take advantage of, it can greatly mitigate key issues that InsurTechs face - the exorbitant development costs and mentorship to innovate while remaining compliant with the Singapore laws.
Traditional Insurance Companies Are Going Digital
Striving to be more data-driven and consumer-centric, processes such as documentation, customer verification, and underwriting have all gone online. With built-in AI chatbots, customers are now able to enjoy assistance anywhere and anytime.
As incumbent insurance companies recognise the need to go digital, there is now an increasing skills gap that insurers are facing: digitalisation of services following a shift in skills required. As such, the demand for technological skills in the insurance industry is expected to rise by 55 percent by 2030. This will include skills such as product management, software engineering data analytics, and cybersecurity that will help with underwriting, risk and compliance, actuarial, and sales. But this should not scare you.
Beyond such jobs, there are many roles in the InsurTech industry with low barriers to entry such as project managers, making it relatively easy for most mid-career switchers. With the exception of financial sales advisors, most roles do not require you to study a new degree. Of course, it will be much easier for experienced professionals from the financial services sector as they would have worked with insurance and investments previously and are aware of the law regulations. Yet, with the relevant training and mindset to learn, anyone will be able to catch up.
Additionally, who would say no to a higher salary! With an average increase in salary of 15 to 25 percent in technological roles and 5 to 15 percent in non-technological based roles, making the switch could not only aid your career progression and development but also increase your spending power.
With the demand for talent pool in the InsurTech industry, Singapore is no doubt a great location for InsurTech firms to grow.
How You Can Ride the InsurTech Wave
To put it simply, the only way you can successfully ride the InsurTech wave is to upskill. Yet, many insurers do not have the Learning and Development (L&D) resources to successfully train their workers. What is common among the best L&D programs is the leverage on industry insights, allowing you to apply the concepts to real-world issues. This is where TechFin comes into the picture.
Through the accessible and high-quality curated courses, TechFin hopes to empower individuals with the relevant knowledge and skill sets to excel in this digital age. With courses structured to help you to gain in-depth knowledge of the current market needs, insights from the industry experts, and more importantly, helping you understand how to apply it to your workplace, you can be sure to be ready to ride the InsurTech wave.
In collaboration with the Singapore Management University (SMU) Academy, TechFin offers 2 InsurTech courses - InsurTech 101 and Advanced Certificate in InsurTech. To improve your accessibility to these programmes, you will be able to receive up to 90% of SkillsFuture funding, with prices starting from as low as SGD$121. This will be applicable to all participants aged 25 years old and above. With such attractive subsidies, there is no reason why you should give this a miss!
The courses offered will provide in-depth coverage on the introduction, processes and opportunities that the InsurTech industry holds, and expose you to the new technologies available. Beyond acquiring InsurTech knowledge, you will also be able to pitch your unique business ideas and forge connections between other InsurTech companies, opening up doors for future opportunities. As an added bonus, at the end of the courses, you will be awarded a certificate from SMU Academy which will aid you in your next job hunt!
In collaboration with SMU Academy, the InsurTech 101 course will give you an overview of the InsurTech landscape and the technology powering it. Through insightful sharings by industry professionals such as Val Yap, CEO and founder of PolicyPal Group, real-world case studies as well as interactive programs, you can be sure to acquire InsurTech and digital transformation skills by the end of the course.
Advanced Certificate in InsurTech
Designed for insurance professionals to take the first step in incorporating technology into their business model, the 12-day in-depth course will examine new technologies - Blockchain and AI - and how they are being utilised in insurance today. Extending beyond the technological aspect, the Advanced Certificate in InsurTech will also help professionals understand how policy and regulation are shaping the InsurTech industry in Singapore.
Create Your Own Course With TechFin
Beyond the pre-designed courses, companies also have the option to customise their own courses for their employees. Because every company is unique, having a specialised course created alongside industry experts will not only increase the effectiveness of the course in enhancing a consumer’s digital experience on your site, but will also drive growth in your company.
In numerous instances, participants who currently specialise in marketing within their firms attended not just Modules 3 and 4 of the SMU Advanced Certificate in InsurTech, but also applied for Module 5, which heavily discussed compliance and regulations within the Industry. These participants who attended more than 1 course can facilitate their learning and growth within their industry and even apply new found strategies to help improve their key results.
The Industry Is Changing
With an increased emphasis on technology, the insurance industry has not been left out. Studies have projected that 95 percent of interactions between insurers and customers will be powered by chatbots by 2025. But it will not stop there. In the marketing world, insurance companies have tapped on gamification to promote insurance products to Millennials and Gen Z, with over 60 percent of consumers responding positively to it.
Now more than ever, it is crucial that incumbent insurance companies learn from InsurTechs and find innovative ways to incorporate technology into their business models. Be it to better fulfil customers’ needs and wants or increase their business operations, the InsurTech wave is undeniably here to stay. Join us today and explore how TechFin can help you prepare for the future of your business and the InsurTech industry.