Across all industries without exception to insurance, technology is causing innovation and also disruption.
As an example, self driving cars, in the future, may shift the insurance risk from owners to manufacturers. Peer to peer insurance, a new approach to insurance, is also changing up the insurance industry.
Regulations on the insurance industry
There are notable barriers in most countries for the insurance industry. This is due to dated and strict regulations that make it challenging to increase capital. In Southeast Asia, these are more visible – archaic regimes are regulating insurance sectors and government policies are rarely issuing up to date licenses for life and non life insurance sectors.
Consequently, startups from financial technology are finding it hard to be in contracts with insurance providers. This results in them being unattractive to investors specifically venture capitalists who are wary of being at risk.
These financial technology startups do not have well established reputations compared to big insurance providers which makes it more challenging to attract investors and customers.
Singapore’s regulatory sandbox
Singapore’s central bank, The Monetary Authority of Singapore released guidelines that start financial technology solutions in the financial services.
A “regulatory sandbox” was introduced in the guidelines which reduce regulatory friction. This allows experimentation of financial technology solutions in a regulatory domain where requirements are not too strict and some regulations are focused on finding solutions to failed systems.
Thailand’s insurance technology
Thailand may not be prepared for a regulatory sandbox type of experiment. However, the insurance industry is slowly changing to assimilate insurance technology in 4 areas.
- Access to the insurance products is getting direct and easier due to online channels and personal devices.
- Communication is more accessible through technology. Information is also readily available.
- Analytics from data collection are used to assess behaviors and risks using technology that is wearable which evaluates habits and assesses an insured consumer’s risk.
- Innovative technology like “pay as you go” motor insurance are introduced in the market.
The Thai insurance industry will need to make adjustments. Since the personal market is getting disaggregated, Thailand insurance (ไทยประกันชีวิต) companies may switch to niche or commercial markets. There is a need to modernize the regulatory framework to ensure technological disruptions benefit consumers and the whole industry.