The global insurance industry is set to grow to an estimated US$5 trillion in 2016. However, according to an Accenture survey, 40% of consumers said they’re not happy with their insurance coverage and intend to change insurance providers. Of those surveyed, 67% said they would consider purchasing insurance products from companies other than traditional providers. Based on these figures, one could argue that the insurance industry is ripe for disruption and that huge opportunities exist for those companies who can find innovative ways to provide the right products while meeting customer service expectations. Sensing the air of opportunity in this sector, online giants Google and Amazon have each launched their own lines of insurance products. With innovation at their core and armed with huge coffers and mountains of customer data, these companies represent the biggest threat to the traditional insurance players.
People are looking for new ways to interact with their insurance providers and digital channels are becoming more and more popular. Nearly 80% of consumers now use digital and mobile communication channels to communicate with insurance firms according to an EY report. Clients have also become accustomed to the ease of use experience provided by Apple and Amazon and want the same convenient accessibility and responsiveness in their relationships with insurers. So what role can digital security play in the reshaping of the insurance industry in Asia?
As customer engagement models become more digitized, there’s a greater need for digital security solutions to ensure protection of customers’ sensitive data as it’s shared across services. The need for increased security has been highlighted by numerous recent data breaches that targeted insurance companies. In February 2015, the second largest U.S. health insurer revealed that it had been hacked, compromising nearly 80 million customer records. A Deloitte survey also reported that new IT insurance infrastructure could aggravate the potential consequences of breaches, especially the layering of new systems onto legacy platforms. Data protection is desperately needed and digital security companies have an opportunity as underlined by EY in forecasting a 2015 “spend trend” for international insurers in cyber security.
Insurers must keep up-to-date regarding evolving cyber security rules. Regulations which protect client data are evolving at local, regional and international levels, in response to intensified data breaches and cyber attacks in the insurance community. Regulators in the Association of Southeast Asian Nations (ASEAN) have strengthened outsourcing processes and measures for financial institutions (see the 2014 Monetary Authority of Singapore Consultation Paper on this topic). Laws continue to be drafted in China, Hong Kong, Indonesia, Japan, Thailand and Vietnam about data protection to fight cyber crime, and many government agencies keep emerging such as CyberSecurity Malaysia, the national cyber security specialist agency under the Ministry of Science, Technology and Innovation (MOSTI), the Cyber Security Agency of Singapore (CSA), and the National Cyber Security Coordination Centre (NCCC) in India.
Furthermore, the simultaneous development of regional insurers, the fact that insurance products are being sold across borders, as well as the rise of cloud and intra-territory data storage, the issue of data sovereignty is in everyone’s mind. There is a critical need to identify which data can be legally transmitted to where and how it is stored. Challenges arise as regulations vary across the Asia-Pacific region, for instance, Singapore and Australia regulations are particularly cautious with regards to data sovereignty. To comply with new regulations, insurance firms should identify new metrics and processes to monitor data security and customers’ privacy compliance. A robust yet flexible data security model is essential for all insurers to stay compliant with emerging regulations.
Opportunities in the insurance field are numerous for digital security companies, especially in Asia. While consumers yearn for digital channels and innovation in the field, the need for increased protection of client data is paramount. As a response, regulation is quickly evolving to answer cyber threats and to adapt to the industry’s shifting landscape. Meeting these various needs requires specialised companies with innovative, flexible solutions and for now, the FinTech/ InsurTech sector brings together companies with suitable answers.
Digital Security Perfected – APrivacy Ltd. is an award-winning company which combines military-grade data security with a seamless user experience on any platform, any device, anywhere. APrivacy Ltd.’s enabling technology now allows the financial services industry to confidently communicate with clients using their favourite channels leading to increased revenues and reduced costs while meeting the strictest regulatory requirements.
