According to S&P, there are more than 330 insurtech firms operating in Asia today. It’s no exaggeration to call it a full-fledged industry, one that has proven itself to be an integral partner to the centuries-old insurance sector in this digitalized world.
That said, there was a time when it was not viewed this way. Surer, a Singapore-based insurtech focused on distribution, has not been in the space for more than three years, yet co-founder Gordon Tay remembers a time when the narrative was not as welcoming as it is today.
“One example would be back then, a lot of the talk was around, ‘let’s go directly to the customers,’ ‘let’s cut out intermediaries,’ or even sometimes, ‘why should they be paid,’” Tay said in conversation with Insurance Business Asia. “A lot of the reasoning comes down to the fact that intermediaries are only seen as middlemen dealing with paperwork, and how much companies can save through bypassing commissions and passing the savings to policyholders, in effect bringing premiums lower.”
The story has shifted significantly today, however, as Tay noted that there is less talk about why intermediaries exist and more about their importance in driving value and securing the right policies for consumers. Tay also described intermediaries as the first line of defence in a claims event.
“If you think about those two points I made, basically what intermediaries bring to the table would be peace of mind, not only for the consumers and the policyholders; they also save a lot of unforeseen costs for insurance companies,” Tay said. “For example, if you do not have an intermediary in place, then it means that you are handling all of these claims requests, whether they’re warranted or not. It means having to build out these claims customer service teams, and that itself is a cost-based venture.”
Despite talks of cutting out the perceived middlemen, Tay subtly implied that even then, it did not make sense to do so. The founder noted that “a good 70%” of insurance transactions are still done face to face, a figure that necessitates good intermediaries.
“That’s just one thing we observed, and it’s not entirely surprising for us, given that we’ve built our platform where one of our core purposes is to see how technology can supercharge intermediaries,” he said. “We always stood on this ground, believing that intermediaries have a crucial role to play given their expertise on what is available in the market, the best insurer to secure this product. They have the best views on what the customers need.”
The development of the sector also gave birth to a vast field of insurtechs specializing in different fields. Embedded insurance, aggregator sites, line-specific solutions – Tay said that all of these work in favour of the insurance industry as it does not constitute a “homogeneous blob” that keeps to itself rather than complimenting the work that insurers do.
“I think what the landscape is looking like right now is a collaborative effort, where each insurtech focuses on a part of this giant moving engine that we call the insurance industry. These firms develop solutions for problems involving specific parts of the engine, and one cannot do without the other,” he said.
While he acknowledged that insurtechs have it easier now compared to a few years ago, Tay said that there are still challenges facing this sector, though he also did have his musings regarding the one global problem all companies across all industries are facing right now.
“The current economic crisis is interesting to me, because there are still arguments being made for whether we’re in one now, or if we’re just about to enter one. That said, and this has already been proven multiple times, insurance is a good business to be in because some say that it is crisis-proof. The more that you have to worry about, the more coverage that you need,” Tay said.
The real challenge, Tay said, is incertitude, and this one will be felt by insurers regardless of how affected they are by the current economic climate. He divided it into two aspects: digitalization and the mindset, with both posing significant pains for insurtechs looking to grow and develop further in their lines of choice.
“There is still a level of incertitude in terms of digitalization,” Tay said. “From our perspective, it is not incertitude on digitalization itself, but incertitude on the statement of, ‘yes, we are in the midst of digitalization.’ What this really means is that some insurers, they are still in this transformation phase and their technology is less mature as compared to a brand-new insurtech who has built their entire system on the latest developments in the space. Because of this, when it comes to collaboration – for instance, integration – there might be some level of mismatch which might cause some level of incertitude.
“Another level goes towards the mindset. Insurance as an industry has been following a predetermined process for many, many years. Understandably, effort is required to move everyone in the same direction. Even within an organization, you have those who champion technology, and those who are a little bit more averse to changes,” he said.
In the end, whether they are facing one or the other, Tay said that the onus is on insurtechs and their claims around innovation and value propositions. Insurtechs will “drive the results and therefore the interest,” he said.
“Of course – and based on experience – you also need to have people who understand the risk-reward paradigm when you work with newer insurtechs,” Tay said. “The risk would be that this tech has not been proven, and that’s always something to consider. However, the reward as an early adopter of emerging technologies that eventually becomes successful – sometimes even the norm – is that you reap the full value of such propositions.”
For Tay, being an insurtech means understanding your role in a way that does not rely on meaningless drivel, otherwise known as buzzwords. He said that some insurtechs fall into this trap, not realizing that they are failing to iterate and realize their value propositions to insurance companies.
“We always stand by the fact that insurtechs should be built to empower and enhance the ecosystem that players are already inhabiting,” Tay said. “I say this because we do not want to go out there and say, ‘hey, we’re disrupting the industry’ without backing that statement of how exactly we are disrupting. Even then, disrupting can mean two different things: are we disrupting for the better, or for it to get worse? Sometimes, I think that the word ‘disruption’ is a word that has been used too lightly. It is, in a way, a buzzword that’s meant to catch attention, but it’s important to know what it really means.”
With that in mind, Tay said that empowerment and enhancement should always be the key priorities for insurtechs. “We believe each and every player in existence today have their own intrinsic value,” he said, and that it should complement the insurance industry with their different lines of businesses.
“With these different players, including claims handlers, intermediaries, etc., it is – like I mentioned before – just like one giant engine with multiple moving parts,” Tay said. “Ultimately, there are going to be parts of this engine that need upgrading or fixing, and it’s in this that we see the role of the insurtech comes in. Look at where the pain point is, what parts do you need to replace or upgrade, and then focus on it – in essence, be the solution itself.”
He also offered his thoughts on generative artificial intelligence, something that, in his words, many people see as “disruptive” to the industry. However, unlike many others entrenched in tech, he urged caution in its proliferation, and said that it’s still too early to say how impactful AI will be for the good of insurance.
“We think that the potential of AI in insurance is huge – immense, even,” Tay said. “However, we also believe that this tech, like many others, should be leveraged for the right purposes, and should only be implemented when a particular insurtech company or insurer is able to use it with good impact. Once again, it should also be not just another buzzword to be tossed around. ‘Oh, now I’m using AI,’ but it’s actually just a chatbot. Sometimes, the angling of the word ‘AI’ becomes a bit muddy; some firms create a chatbot which just asks questions you see on a form, and they just call it AI. It should go deeper than that.”
Tay did note that Surer’s tech division is “keeping an eye on AI,” especially with how the insurtech can leverage it for its distribution purposes using its immense capabilities. Impressiveness aside, however, he was very sceptical about the idea that artificial intelligence can somehow outright replace the entire industry.
“In the case of underwriters potentially being replaced by it, I do not want to be someone who completely dismisses this potential scenario,” he said.” “Our current sense is that the technology that is available today is still very young. Context-wise, we are still lacking in data. If you were to try working with ChatGPT and ask it questions about what kind of insurance you need, it will give you a good picture of what you should consider. However, you’ll also realize that you will not get very specific recommendations; ‘look at this insurer,’ ‘look at this particular plan,’ etc.”
Echoing the thoughts of another insurtech leader, one that’s more focused on AI, Tay said that the technology will still need the proper input, and in this context that input needs to come from an experienced human underwriter.
“If you say that it is going to totally replace a particular role or a particular industry, then I’ll say right now that that is not the case,” he said. “However, if you ask if it is going to take away some of the more mundane work, then yes, definitely.”
As a longtime player in the startup space, Tay said that he has been through a lot. His decade spent working at startups like PropertyGuru and Carousell – both Singapore-based successes – taught him that the success of any good startup relies on how clear the founder’s vision is. In the case of Surer, it relied on both him and his co-founder, Derren Teo.
“I’ve always had this idea of one day being able to build something that I can use to meaningfully solve a problem for any industry,” Tay said. “That said, for quite some time, nothing came that I was passionate about. This is where Derren – my co-founder – stepped in. He’s basically the insurance subject matter expert, as someone who’s spent his entire career in the insurance industry, spanning more than 13 years. He held roles across claims, underwriting, business development, etc., and worked for insurers like MSIG, QBE, and other big names.”
Discussions over drinks about the industry’s pain points, mainly with intermediaries, led to both Tay and Teo trying out their hand at raising an insurtech. A couple of years later, the firm has made significant strides in its growth, including partnerships with both Zurich and Etiqa. The future, meanwhile, still has a lot to hold, and Tay said that just as it was when it started, it will be Surer’s vision which will guide them through the coming years.
“The vision of Surer has always been to be an ecosystem that can facilitate multiple win situations, where policyholders can be better served because they have a supercharged, tech-enabled intermediary serving them,” Tay said. “This intermediary, of course, can now advise better, provide customized, bespoke products, more options, and with greater speed and accuracy. Lastly, the insurers have a more efficient distribution channel for their products and the ability to capitalize on new opportunities that they see for themselves without the burden of recruiting a new, specialized set of representatives.”
Building towards this vision is at their core, Tay said. If this means the use of AI, then he will have it leveraged, especially if it furthers the firm’s vision. However, calling back to buzzwords and their dangers, he did place a couple of guardrails on the tech and the role it will have on Surer’s future.
“That said, I believe that we’ve always been practical about how we view things. If there is no strong use case, if it’s just a marketing spiel, then that will not be a route that we will be taking,” Tay said.
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