With social distancing and health protection evolving into the order of the day amid the COVID-19 shock, virtual insurance has gained momentum in Hong Kong, transforming the way people seek and buy protection for themselves and their families. He Shusi reports from Hong Kong.
The technological and digital revolution knows no borders, encroaching into wide sectors of economic, business, academic and social life worldwide, fanned and compelled by the coronavirus pandemic that has pushed physical encounters to the limit.
The insurance business is among the latest to embrace the shift as authorities and enterprises look to insurtech as a way to claw back what has been lost in the past few months.
Insurance buyers in Hong Kong are fast dispensing with the need to meet up with insurance agents and are going online against the COVID-19 backdrop. Industry players, on their part, hope to use the opportunity to educate the market, reforming the way people purchase protection through technology.
They believe the insurance market is now on a faster path to digitalization, with the Hong Kong Insurance Authority issuing the city’s fourth virtual insurance license.
Unlike traditional insurers, virtual insurers offer services and products through online platforms, without any agent to conduct face-to-face consultations with clients.
Fred Ngan, co-founder and co-chief executive officer of Bowtie Life Insurance — Hong Kong’s first virtual insurer founded in late 2018 — said in light of the pandemic, virtual medical insurance has come in timely, offering comfort for consumers wanting health protection when stringent social distancing rules put the lid on person-to-person communication.
According to the HKIA, Bowtie Life Insurance topped the list with regard to direct channeling and pure-protection products in the life insurance sector in the first quarter of this year. The company’s website traffic has surpassed 1 million per month since the pandemic erupted early this year — a 300 percent growth over 2019, Ngan noted.
Despite the economic downturn, Bowtie has defied the sluggish trend, outperforming its peers with a steady 30 percent growth in sales in the first half of 2020.
“Looking ahead, we are confident and optimistic about the virtual insurance market as the city is pushing for fintech developments,” Ngan said. “Virtual insurance will retain its unique advantages of direct interaction with consumers without middlemen, thus maintaining a very competitive premium, and leveraging technology to bring unparalleled convenience to consumers.”
In defining the company’s relationship with traditional insurance companies, Ngan said Bowtie has not only created an alternative for the market, but also opened up a new market segment for those who may not have previously bought, or even considered, health insurance.
“Bowtie aims to motivate the industry to innovate and embrace technology for a delightful experience,” he said.
Ngan said the company is not particularly worried as traditional insurers have been investing more in online services. It could help promote online insurance and educate the consumer, making the pie bigger in the long run, he said.
Some virtual insurers have traditional insurance giants as their stakeholders. For instance, Sun Life Financial invests in Bowtie. With the former’s support, Bowtie has raised more than HK$234 million (US$30.2 million) in A-round financing.
Winnie Wong, CEO of Avo Insurance — Hong Kong’s second virtual insurer owned by Asia Insurance — said the company can leverage the local experience of Asia Insurance, which has been a leading general insurance player in the city for the past six decades.
She believes virtual insurance will refresh the overall insurance industry in Hong Kong. Many people are first-time insurance buyers, as they find insurance complicated, or they have not found it relevant in their daily lives, she said.
Avo plans to launch new insurance plans each month to accommodate consumers’ ever-changing needs.
“We believe COVID-19 has inspired many people to reconsider their individual medical insurance needs,” said Wong. With healthcare becoming one of their biggest concerns, Avo aims to offer more health-related insurance protection options, such as gender-specific cancer protection and children vaccination protection, she said.
“The pandemic has also fueled the industry’s digital transformation and technological innovation, acting as a catalyst to further educate the public on the need for virtual insurance in future,” Wong said.
Avo, backed by advanced technology and data, can understand the changing needs of consumers in the digital era, and develop innovative and affordable solutions covering every aspect of life — from e-commerce, travel to health — she said.
One of the industry’s key challenges is building a smooth and seamless virtual insurance experience with big data, and protecting all the data collected, Wong said. With its eWallet protection, Avo hopes to thwart unauthorized online transactions and other cybersecurity threats.
Avo has also built a dedicated customer relationship management system to analyze user behaviors and purchasing preferences, and collaborated with trusted technology experts to create models to meet consumers’ needs.
Alvin Kwock Yin-lun, founder and CEO of Hong Kong’s third virtual insurance company OneDegree Hong Kong, launched their first insurance product — insurance for cats and dogs — in April. Since the launch, the company received a positive market response, with more than 10,000 clients making price enquiries online.
He revealed that the first claim lodged by a consumer was settled in two days. Powered by its large database, the company aims to settle 90 percent of claim within two days in the future. So far, through continuous efforts to seek partnerships, OneDegree has established cooperation with half of the pet clinics on Hong Kong Island on data sharing.
According to Kwock, the virtual service can ensure data accuracy and greater efficiency without requiring any paperwork by clients, doctors or the insurance company.
As the leader of an insurance startup without any traditional insurer as a stakeholder, Kwock believes the industry trend is that the entire claim process can be completed within hours, or even seconds, by applying big data and artificial intelligence.
He hopes OneDegree can set up a standard of digital insurance solution for the whole industry, with fast, precise and digitized service flow — from consultations and risk evaluation to claim settlement.
Cigna Hong Kong — a healthcare service provider — has teamed up with OneDegree to make its medical insurance plan available on the latter’s digital platform, to provide customers with simple and fast online insurance services.
Many insurers overseas have been in touch with OneDegree, to obtain technical support for improving their online services. Once the pandemic is over, Kwock said the company plans to expand its operations to Thailand, Taiwan and the Chinese mainland.
PwC Hong Kong partner Billy Wong said virtual insurers in the market are relatively small at present, but their emergence would almost certainly continue to raise public awareness of online platforms as a distribution channel for insurance products.
He observed increased insurance sales via online channels in Hong Kong in the past few months amid the pandemic, including more investments by traditional insurers in online services.
Generally, the smaller size and simpler operations of virtual insurers allow them to respond more quickly to changes in the market and customer needs. Their products are also relatively simple, such as those covering travel, motor vehicles, pets and health insurance, he noted.
Billy Wong believes that as online distribution channels mature, a wider variety of insurance products, including longer-term products, will be available online. One of the key success factors for insurers, whether they’re traditional or virtual insurers, is that they continue to use technology to improve the end-to-end customer experience, he stressed.
As for the risks posed by virtual insurance service, Jenny Yu, counsel in insurance practice at global law firm Mayer Brown’s Hong Kong office, said the main issue is how to ensure that a customer better understands the product when a sale is not made face-to-face, and whether the insurer or insurance intermediary has given the proper and appropriate disclosures.
There are risks when the customer may not disclose all relevant circumstances, or may not completely understand the disclosures, she said. There’s also a greater risk of fraud as there’s no face-to-face verification of identification, when another person may be posing as the customer.
If the local industry intends to move forward on virtual or online insurance, it has to work with regulators to address these risks using technology, Yu urged. For instance, technology can be used to verify a customer’s identity and check the authenticity of the identification document.
Noting that COVID-19 has provided a chance for the insurance business to transform and change, she said market participants must innovate and work together with regulators to better serve customers through technology.
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HONG KONG NEWS