SINGAPORE (Dec 12): Insurers across Asia-Pacific are widely experimenting on ways to capitalise on near-term opportunities and drive long-term growth for the industry, according to the EY insurance outlook 2019.

Amid weak global insurance sector growth, rising incomes and expanding populations have benefitted from the region’s life insurers, while the non-life sector has seen strong growth fuelled by overall economic growth in key markets.

According to Jonathan Zhao, EY Asia-Pacific insurance leader, markets across Asia-Pacific, especially China, will continue to influence the future of insurance, due to their intense focus on innovation and disruption.

In recent years across Asia-Pacific, life insurance as well as property and casualty (P&C) insurance have seen marginal growth of just 0.4%, compared to 0.2% growth globally.

The challenges life insurers face include regulatory issues, outdated distribution and lack of relevant products to the changing customer needs.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, analysing 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.

Meanwhile non-life insurers have seen a growth of 0.8% across the region, compared to 0.9% globally, largely attributable to sustained performance in emerging markets.

Although it is inevitable that growth will slow down, EY has pointed out opportunities for non-life insurers in the region, especially for 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).

Currently, many mature life insurers are focusing on cost efficiencies across their businesses, such as the adoption of large-scale transformation programmes and digital platforms.

These insurers 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.

“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,” says Zhao.