This is the second part of the feature series with the Head of Asia Pacific of R3, Amit Ghosh on blockchain and the coronavirus that hit the world early this year.
Prior to COVID, APAC’s sizable insurance market had been experiencing rapid growth—to the extent that certain markets were outpacing the growth of even the US insurance market, including Hong Kong, India, Japan, Singapore, and South Korea.
However, despite this tremendous growth, operating expenses and IT costs today still make up a significant portion of many APAC insurers’ cost bases.
As insurance providers face pressure for greater cost efficiency, they are increasingly looking to digitization to blockchain to realize cost savings, said Amit.
A 2020 survey by Ernst & Young highlighted that 4 of the 5 most pronounced insurance trends within the APAC region related to digitization; including increased pressure for cost efficiency, threats and opportunities from emerging and disruptive technologies, the digitization of their sales-force, and the emergence of partner or competitive insurtech companies.
“The recent COVID-19 pandemic has only served to compound the necessity of cost-effectiveness, profit maximization, and digitization for insurers, with profit margins squeezed due to a fall in consumer demand, an increase in claim volumes, and a broader shift to digital channels.” Amit commented further.
As a result, both insurers and insurtechs have been actively leading and participating in blockchain initiatives to realize such benefits. We see numerous digitization use-case areas that address the immediate needs of insurers in the region, including in both bancassurance and microinsurance verticals.
First, blockchain may be used to streamline data sharing between banks and insurers, so that banks may more efficiently and effectively provide customers with access to insurance products—creating increased customer acquisition for insurance providers through bancassurance partnerships.
By sharing data on the blockchain, banks would not require the duplication of information or lengthy onboarding processes to provide customers with insurance products. As a matter of fact, constant updates to customers information at the bank level can also flow seamlessly to insurers, leading to an enhanced customer experience and greater revenue potential for both banks and insurers.
“Microinsurance is also being made economically viable through the use of blockchain technology. Historically, legacy placement, underwriting and claims processes have made microinsurance infeasible as associated processing costs would far outweigh the small premiums of such policies.” emphasised Amit.
When we asked if the issues are a huge part of the whole process, Amit further commented that it is often exasperated by complex value chains with agents, co-operatives and credit unions sitting between the customers and insurers.
R3’s Corda is now being effectively utilize by Blocksure to further automate processes end-to-end across the entire value chain. As future technology is now being the most-discussed topic in the supply chain sector, it also enables a real-time processing of microinsurance policies at viable costs leading to greater customer experience and product feasibility.
Alas, we are not just seeing a development in the industry, but we are progressing towards the new world order and technological advancements in 2020 on-wards.
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Nurul Zamrè is an ardent writer for the past 15 years of her living tenure on science & technology, agriculture, health, communities, management and more. She is also a News Anchor at RTM, a general manager of AHVN, a model, VO artist, emcee, gymnast, ballerina and a lover of everything chocolates.
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