Opportunities abound for insurers in the region, given its growing household wealth, which is set to outstrip North America by 2023, but competition is fierce.
An exploding middle class across developing markets in Asia-Pacific is creating huge demand for insurance as household wealth grows, and while sociodemographic changes are driving insurance needs, coverage remains low in many parts of the region, according to «Making the Most of Asia-Pacific’s Insurance Boom,» a report published by Bain & Company on Tuesday.
The report noted penetration rates of below 5 percent in China, India, Malaysia, and Indonesia, which is a huge opportunity for insurers considering that the region's total household wealth is set to outstrip North America’s by 2023, with the number of middle-class households topping 109 million in China and 83 million in India. This is set to spur increased demand for discretionary items like insurance.
In China, for example, premium income from life insurance has been growing at an average annual rate of 25 percent between 2013 and 2017, with premium income from general insurance growing by 13 percent annually during this period, the report noted.
Success Strategies
However, competition is stiff as insurers looking to gain a greater foothold in the region must contend with new players like digital-only providers and insurtechs.
The report highlighted three areas for insurers to focus on in the region: digital distribution, creating or joining ecosystems to offer customers a wider range of services and options, as well as prioritizing the customer experience to focus on ease of use and access to information and assistance.
«For incumbents to remain successful, the challenge is how best to compete with digital first competitors, without compromising risk and compliance controls, especially in those regions where advances in technology and the growth of digital-first competitors are constant concerns,» Harshveer Singh, a partner in Bain & Company’s APAC Financial Services practice and co-author of the report, said.
