Regional insurtech, Igloo, has identified climate change, data privacy and road hazards as the main trends to define the insurance sector in the coming years in SE Asia.
Vietnam, Indonesia, Thailand, and the Philippines face unique emerging risks, resulting in distinct nuances within their insurance sectors. Additionally, the combination of rising income levels and growing digital and financial literacy in these countries is influencing a shift in insurance preferences among their consumers.
While these countries together account for over 97% of the region’s GDP per the IMF, insurance penetration in each of these countries remains below 3% . Regarded as one of the world’s next big digital economies, Southeast Asia has seen a rapid uptake of digital insurance products over the past few years. With digitalization, consumers have become used to a speedy and seamless experience when purchasing insurance. This has led to an expansion of distribution channels, which Igloo expects to continue into the coming years.
This digital shift is also driving the need for innovative products that specifically address risks inherent to today’s digital-first consumers. In the Philippines, where according to GlobalData almost 90% of the population shop online, there is a growing demand for secure shopping experiences. With this in mind, Igloo and GCash partnered to offer Online Shopping Insurance providing coverage from undelivered goods, uncontactable sellers, partial delivery, and fake goods.
Meanwhile, consumers in Indonesia are expressing concerns over data privacy and protection. A report by Ensign InfoSecurity states that a significant portion of the personal data stored online in Indonesia is continuously released for sale. Cyber insurance, a product offered solely to businesses in the past, has gained popularity among Indonesian netizens looking to protect themselves online against data breaches, cyberattacks, and financial losses associated with cybersecurity incidents.
Across the different countries in the region, sustained economic growth is seen to positively impact sectors such as transportation, travel and tourism, and property and real estate. As the government continues to improve the nation’s infrastructure, the general insurance sectors tend to benefit because improved infrastructure often leads to increased property value which requires more insurance coverage. In countries like the Philippines where there is heightened susceptibility to natural calamities, Filipino consumers place a premium on insurance products that protect their assets against phenomena such as typhoons, earthquakes, and volcanic eruptions.
Climate change has also brought about risks such as extreme/irregular weather and crop failures which has drastically affected agricultural output for many countries in Southeast Asia. In Southeast Asia, where agriculture accounts for 10.3 percent of the region’s GDP, farmers need protection for both their benefit as well as the economy’s.
When it comes to transportation, Southeast Asia sees the second highest road traffic fatality rate among all WHO regions. Among the countries analyzed Thailand ranked second in traffic- related mortality – creating demand for personal accident and motor coverage. Similar sentiments are also echoed in Vietnam.
As more risks emerge in Southeast Asia, insurers need to continually adapt to these evolving risks by developing new products, revising underwriting practices, and leveraging data analytics and technology to better assess and mitigate these challenges. Additionally, they often work closely with governments, regulators, and other stakeholders to address these risks on a broader scale and ensure the sustainability of the insurance industry in the face of these complex challenges.
Ed. Photo by Vlad Deep on Unsplash.