The growth of emerging markets represents an opportunity for the insurance industry not only to serve more customers but to turn its back on inefficiency.
Swiss Re recently released a report on the state of emerging markets where they stated that they expect the emerging market share of global insurance premiums to increase by about 50% over the next 10 years. This expansion will be driven by Asia with premium growth there expanding by three times the world average by 2021, and China becoming the biggest insurance market in 15 years.
Emerging market take up in banking has already shown the way that insurance can look to push growth in these areas: mobile FinTech accounts outnumber traditional bank institution accounts in sub-saharan Africa, a region home to over half of the world’s mobile money accounts.
There is a clear correlation between economic growth and insurance demand, so as the emerging markets continue to develop the insurance industry will need to respond. With the typical pattern being highest penetration first in non-life personal lines such as motor and home, insurers who can tap into the established habit of engaging with financial services through mobile will have a head start.
This also provides opportunities to push usage-based and on-demand insurances too, which are being promoted in developed markets a response to generational shifts in buying patterns, and which can also work in emerging markets to generate an insurance-buying habit.
Trade barriers and other regulatory restrictions can affect the industry’s ability to deliver capacity in some of these markets. Setting up service companies and local branches to operate in order to work around barriers provides challenges in terms of internal reporting. As restrictions relax, insurers may look to delegated authority to exploit on-the-ground knowledge and distribution.
Emerging markets give insurers an opportunity to build models without their existing legacy infrastructure and processes. The bordereaux is an example: if your risks are sold digitally, and with distriBind, you have the tools to report them in real time, why would you settle for a monthly spreadsheet?
The days of the bordereaux are numbered. Emerging markets will lead the way.