Asia will be the key pillar in the coming revolution of insurance and in all likelihood will become the hottest market for insurance technology (insurtech) globally. It’s no longer just a pipe dream, as this time all the stars are aligning. Take the sheer population size and rapidly emerging tech-savvy middle class, together with low effectiveness of traditional insurance distribution. Combine that with a destabilizing wave of political populism, making its rounds across much of the developed world, and you’ve got most of the ingredients for a region that will take on a leading global role for insurtech.
So what, if anything, is missing to really ignite insurtech in Asia? It turns out that while the region is ripe for insurtech, the actual quantity and quality of startups in Asia is nowhere near that of other regions… at least not yet.
Share of investments in insurance startups can be used as a good proxy to the overall level of insurtech activity around the world. According to the figures, the U.S. takes 63%, with Germany (6%), U.K. (5%) and France (3%). China is at 4% – which doesn’t account for Zhong An’s massive investment in 2015 — and India at 5% (Source: CB Insights).
See also: The Future of Insurance Is Insurtech
So the logical question is, why aren’t there more startups in Asia, considering the substantial opportunity and funding that exists in the region? Is it due to a shortage of experienced entrepreneurs, difficulty of starting a business, lack of access to investment or something else? The answer is that it’s likely a combination of a few factors, including a weaker early-stage entrepreneurial ecosystem, which doesn’t yet effectively support startups, and a cultural aspect of lesser tolerance for failure. Both of these are changing fast, though, and entrepreneurs across Asia are starting to identify and test innovative insurtech solutions.
The following are just a few recent notable insurtech startup examples across Asia that have already reached beyond Series A funding: Zhong An (an $8 billion Chinese insurtech startup), Connexions Asia (Singaporean flexible employee benefits platform with a U.S.$100 million valuation), and two large insurance aggregators out of India– Policybazaar and Cover Fox.
Probability and “Survival of the Fittest”
The lack of critical mass of startups in the region means that they will not enjoy the same quality filters and network effects of the larger entrepreneurial ecosystems of the U.S., Europe and to a somewhat lesser degree China.
“Surviving” U.S. and European startups have to fight their way across a lot more competition to reach scale in their home markets. Hence, where a weaker startup in Asia could get repeated life support simply because there aren’t that many others to invest in, natural selection weeds out the weaker models in EU/U.S. much quicker in favor of more robust ones. Stronger startups then get to attract the best talent from the entrepreneurial ecosystem, including talented entrepreneurs whose models didn’t work as well, further reinforcing successful EU/U.S. startups.
Home Market Advantage
Success in a large home market like the U.K., Germany or a few U.S. states gives a substantial boost to any startup. It provides both credibility and cash flow to allow a much more aggressive expansion into other regions. This also gives a startup flexibility to develop the necessary adjustments to the business model to adapt it for Asia.
The U.S. and EU have a deep domain level of insurance expertise, which gives EU/U.S. startups from those regions a further edge to tap advisory expertise locally, because most of the largest global insurers are based in these two regions.
Lastly, considering that most startups adopt a collaborative approach with insurance companies, having a relationship that originates close to the top decision maker at headquarters gives an added advantage to EU/U.S. startups when they are looking at expanding to new regions. I’ve personally experienced examples of relationships developed in Europe that later carried over in creating a pre-warmed partnership with the insurer’s operations in Asia.
Asia is made up of a large number of countries, where each has its own insurance regulator, who possess views on how things should be run. This means an additional potential growth hurdle for Asian startups.
For example, a startup out of Singapore will need to figure out how to navigate the neighboring Asian country regulatory regimes pretty early in its growth cycle. Thailand, Malaysia, Indonesia and Vietnam markets all have diverse regulatory requirements. This lands the Singaporean startup at a disadvantage vs. a more mature startup out of EU/U.S. – which not only has experience dealing with regulators in its home market but also possesses a proven track record and a larger resource pool that it can use to overcome any regulatory issues.
Meet Future Leaders of Asia InsurTech
Here are . Granted that not all of these startups will successfully adapt their models for Asia, a few would and will go on to successfully dominate Asia’s insurtech landscape in the foreseeable future.
Credit: George Kesselman
The future of insurance in Asia is coming fast, and it’s looking pretty exciting!
See also: Insurtech Has Found Right Question to Ask
Below are links/brief description of each of these 35 ventures.
- Guevara – People-to-people car insurance
- Bought by Many – Insurance made social
- Cuvva – Hourly car insurance on-demand
- SPIXII– AI insurance agent
- Gaggel – A better alternative to mobile phone insurance.
- ClientDesk – Digitizing the insurance industry
- Insly – Insurance broker software
- SimpleSurance – World’s leading e-commerce provider for product insurances
- Friendsurance – The future of insurance (P2P)
- Getsafe – One-stop digital solution for all your insurance matters
- Finanz-chef24 – Germany’s largest digital insurance for entrepreneurs and self-employed
- Money-Meets – Save money and improve finances
- Clark – Insurance as easy as never before
- MassUP – White-labeled platform for online insurance sales
- FinanceFox – Your insurance hero
- Metromile – Pay-per-mile insurance (usage-based auto insurance)
- Oscar – Smart, simple health insurance.
- Zenefits – Online HR Software | Payroll | Benefits – All-In-One (EB distribution)
- Policy Genius – Insurance advice, quoting and shopping made easy
- Embroker – Business insurance in the digital age
- Slice – On-demand insurance for the on-demand economy.
- Trov – On-Demand insurance for your things
- Cover Hound – Compare car insurance quotes from top carriers
- Insureon – Small-business insurance
- Bunker – The marketplace for contract-related insurance
- Lemonade – Peer-to-peer renters and homeowners insurance
- Cyence – Comprehensive platform for the economic modeling of cyber risk