Traditional insurers lead but digital firms are rapidly rising

Virtual insurers are getting out fresh products for underserved segments in the insurance market.

Hong Kong Business’ annual review of the insurance sector revealed that the total assets of the city’s 50 largest insurers rose 3.54% to $643b in 2018 from $621b in 2017.

AIA International remains the top Hong Kong insurer with $139b in total assets, up from $125b in 2017. Prudential Hong Kong Life retained second place at $107b from 2017’s $99b. HSBC Life went up two places to third with $63.9b, Manulife International placed fourth at $58b, and China Life fell to fifth place with $51.7b in total assets this year.

Even with the presence of these large firms, digital insurers are rising to gain a presence in Hong Kong, which still has one of the lower penetration rates amongst developed countries. So far, two virtual insurance licenses have been issued to Bowtie in 2018 and Avo in 2019. One restriction for virtual insurers is that they are not allowed to accept any business from any channels other than their own proprietary system.

But digital insurers are undaunted. “We are able to create new insurance products that have greater levels of customisation and can be more relevant to consumers, as well as introduce existing insurance products to new channels and underserved segments,” said Avo Insurance’s CEO Winnie Wong.

Since obtaining their virtual licence, Avo has been busy developing protection for uninsured risks and diversifying their coverage. The firm offers e-wallet, cancer, and travel protections which can customised based on a client’s preferences, needs and ability to pay. Protections start from $79 per person annually for e-wallets, $125 to $159 for cancer coverage, and $39 to $69 for travel protection.

Further, Avo is building their own virtual system that will provide a quick underwriting process with simple risk assessment questions. The system will be supported by automation, and will speed up the insurance process for the customer-side. It will also lower internal operational costs. The firm utilises social media to connect with customers, particularly on Facebook and LinkedIn, and a core group of partners to help them craft easy-tounderstand insurance plans that fit their clients’ needs. Being a digital company is an edge over traditional insurers, Wong stated, since they have established themselves from the ground up and can offer a more affordable and personalised service to clients.

“We will continue to focus on enhancing our virtual insurance experience and engaging our customers through our value-added services such as an application, which is set to be launched next year.” Potential in pure protection Another licenced digital insurer, Bowtie, has offerings geared towards life and health protection.

“Penetration for digital channels is below 1% for the life and health business. Only 2% of premiums amongst the market provide pure protection. Thus, we see a very large market for pure protection products in Hong Kong,” said co-founder and co-CEO Fred Ngan. “As a visual insurer, we eliminate commissions and sales intermediaries by going direct.

Going direct allows us to keep our prices low without commissions, maximising the insurance value for customers and enables us to reinvest in the platform,” he expounded. Bowtie introduced the first fully online medical underwriting engine in Hong Kong, which instantly provides health evaluations for its users and gives fairer and more transparent insurance pricing.

They have also offered a full end-to-end digital Voluntary Health Insurance Scheme (VHIS) which can be done through smartphones, streamlining operations and eliminating the need for paperwork. “With the automatic claim process, medical examinations or paper forms are no longer required, and application process is shortened from at least three days to as fast as ten minutes.”

Just like Avo, Bowtie is reaching out to the younger generation looking for a hassle-free experience. “It reflected that most of our customers received smooth self-served experience, which 85% of applications and more than 70% claims submitted online didn’t involve assistance from our dedicated support team,” Ngan said.