Tempcover: How the insurance industry finally embraced the power of tech
Graham Cutbill-White is the Head of Insurance Content at short term insurance provider, Tempcover. Here he examines how the insurance market in Asia has evolved.
Technology and auto insurance: How the industry finally embraced the power of tech
Insurtech, the now booming industry which uses technology to innovate and improve the insurance model, was born out of a need to resolve the long-standing frustrations between the insured and the insurer.
Fixing age-old issues
Historically, the world of insurance, particularly auto-insurance, has been famous for its jargon, technicalities and exclusions. These intricately worded policies were often over-promised and under-delivered, causing resentment and a lack of a long-term relationship between company and customer.
Seeing an industry which has remained largely the same for the past 80 or 90 years, Insurtech pioneers took the common issues and addressed them to create a service that put customers’ needs first. They also looked beyond the existing parameters of insurance using technology to develop new products such as AI underwriting and temporary car insurance as well as creating a user-friendly experience that encourages greater brand engagement and repeat business.
The start-ups making a name for themselves
This approach initially made small waves in the insurance industry. But while the big names were ignoring these start-ups, other areas of business were extremely keen to get involved in these tech-savvy brands.
An early example of this was China’s ZhongAn. As the country’s first online-only insurance provider, ZhongAn drew massive amounts of attention at home and abroad. This excitement garnered large financial backing which in turn lead to serious results both in terms of customers (630 million in its first year) and further financial success (Raising US$1.5 billion on its opening day on the HKEX).
While this was a case of a well-backed business that had plenty of help to get to the top, the innovative nature of their product was responsible for the interest and investment at a level that no traditional insurer could ever inspire.
Across Asia, there are a growing number of innovative start-ups that have embraced the Insurtech philosophy.
Go Bear have looked to redefine the car insurance comparison site model and adapt it in the Insurtech model to the newly emerging South-East Asian market. Their aim is simple - make comparing insurance as transparent as possible by removing the boring and confusing language that often stops consumers from being able to compare fairly.
Fed-up with the unfair way big insurance providers do business, co-founder, Andre Hesselink asked himself and his employees the simple question…
“What’s the simplest and most transparent way to make the best decision on insurance, credit cards and other complex financial products?”
Go Bear was the answer to that question. They looked to redefine the car insurance comparison site model and adapt it to fit Insurtech principles in the newly emerging South-East Asian market.
With no affiliation to providers, they’re able to offer a fair and independent service. They also use a simple, jargon-free approach to wording that allows for a great experience for consumers. When you package this all up in a slick, mobile-optimised and user-friendly design, you get everything Insurtech was designed to offer.
The need for technology in the Asian insurance market
While start-ups in the Insurtech field have had successes around the world, it’s rapid growth in Asia is due in no small part to the geography of the continent and the challenges of insurance that this creates.
Extreme distribution and diversity of the population in many Asian countries means that an efficient insurance solution is often difficult to market and issue. The shift to a digital-focused service removes many of these issues. Customers don’t need to call or visit a commercial space, they’re able to view, compare, purchase and claim within in an app or online. This massively appeals to those located away from central hubs as well as the new tech-savvy generation.
By addressing many of the common complainants that car insurance causes, as well as connecting vast populations without the costs of multiple commercial sites, large insurance providers soon came calling.
Big names like AXA, Aviva and Swiss Re have invested in start-ups, in-house schemes and partnerships in China, Singapore and India to develop their versions of the software and user experience Insurtech’s offer. As the Mckinsey Management Group put it in a recent white paper on ‘digital disruption’:
“The incumbents have a choice: be disrupted or be the disruptors. Those that prosper in the digital future will be those that choose to be disruptors and invest in innovation today”
- The rise of insurtech: a new dawn for the insurance industry
- Guidewire on How Insurers Can Ride the Insurtech Wave
- Insurtech startup to provide affordable insurance for farmers
- Read the latest edition of FinTech magazine, here!
Finally embracing the power of technology
At the risk of being overtaken by the young up-starts, the car insurance industry as a whole has been forced to adopt at least the technology if not the customer focus that the smaller start-ups provide. It took the risk of losing customers and ultimately profits that drove the world of insurance to adopt the technology that has quickly become the norm.
So the next time you purchase a car insurance policy on your phone, make a claim with an app or earn money back for sticking with your provider, remember to think of the early Insurtech pioneers who’s hard work and innovation have made the auto insurance a far more customer-friendly and user-experience focused industry.
3 security concerns for financial service providers in 2021
The financial sector has been a long-standing target for cybercriminals for a number of years.
Not only does it hold the financial details of millions of users but banks and financial organisations arguably hold more personal information than any other institution. Not only do these institutions have information on how much money you have or earn but also they can gain insight on how you spend or save this money.
The sheer amount of data that these organisations hold on each individual means that cybercriminals could obtain your money but also your identity.
What’s more, the past year has seen a multitude of industries navigate a global pandemic, and working from home has caused additional challenges for the sector.
When the UK went into its first lockdown back in March 2020, financial institutions moved swiftly to adjust their operations. But cybercriminals also worked rapidly to take advantage of the now remote workforce that created a feeding ground for online criminal activity.
As a result, credential and identity theft have skyrocketed in the past 12 months as cybercriminals looked to exploit vulnerabilities in personal firewalls and antiviruses; using malware attacks and ransomware to target users and obtain confidential information. While the global workforce looked to navigate the new remote working environment, cybercriminals have been trying to exploit it with a number of challenges currently facing the financial sector.
Credential theft on the rise
Credential theft, whereby a cybercriminal is able to obtain a victim’s proof of identity, is not a new threat to the financial industry. In fact, from the 2021 Verizon Data Breach Investigations Report, it is stated that credentials remain one of the most sought-after data types and also the fastest data point to compromise. While the threat itself may not be something new, the environment we find ourselves currently navigating is, and cybercriminals are using this to their advantage.
As the workforce rapidly shifted from being siloed to remote, many organisations had to roll out additional services and solutions to remain operational. However, these devices or services also gave cybercriminals additional entry points within their networks. With many organisations operating via cloud-based solutions, having access to these networks means that hackers can gain access to a multitude of sensitive data within minutes.
Alarmingly, the majority of credential theft is the result of targeted phishing or malware attacks. As many people reuse their passwords for a number of services, once a single password has been compromised they can then try to connect with another service or network. With people working remotely, educating staff on the importance of setting resilient passwords, isn’t on the agenda for many organisations and therefore leave them vulnerable due to this negligence.
Increased AI adoption
Artificial intelligence (AI) has been a technology that has been cementing itself within many sectors for a number of years. Due to its ability to carry out repetitive and arduous tasks, organisations are beginning to see the benefits from rolling out this technology with the financial sector also taking note. A report from Deloitte revealed that 30% of financial service organisations they describe as “frontrunners” are more adept when it comes to utilising AI; using the technology to enable them to increase revenue at a faster rate than their competitors.
What’s more, the report states that 45% of “frontrunners” invest US$5mn in AI initiatives with 70% planning to increase their spending within the next year. Yet, as AI continues to establish itself within the financial services sector, business leaders need to ensure that they have robust and resilient infrastructures in place.
With so much trust being placed on the AI to automatically manage, distribute and in some cases, duplicate data, these organisations need to ensure they have protocols in place if this technology is also targeted by hackers and cybercriminals.
Fintechs need cloud-based security
Technology is helping to solve many of the financial sector’s challenges and protect various institutions through advancements in the digital landscape. The evolution of cloud computing, which was traditionally valued for its cost-saving capabilities, is now invested in its enablement for future innovation.
Cloud-based technologies also allow financial institutions to implement critical cybersecurity measures that prove extremely difficult to penetrate including shielded logins, disconnecting the end-user environment, and Zero Trust Architecture (ZTA).
With many organisations still working remotely and as we seemingly emerge into a new era of hybrid working, financial service providers are undoubtedly going to be providing additional solutions for their workforces to remain efficient. However, with credential theft on the rise, we can see the vulnerabilities that these expanded ecosystems present when it comes to phishing and malware attacks.
Financial institutions can look to easily implement the offerings of cloud-based solutions via shielded logins to external partners they’re dealing with. Using an authentication service whereby the user’s logins are transported via the browser as a client, all other authentication processes are performed by backend systems.
This means an extra layer of protection is provided when coordinating third-party involvement. Additional processes in the cloud can be implemented for further security, such as dynamically generated, unique passwords and tokens that the service provider does not store, so that the login information to applications remains hidden for all other users.
More and more organisations are also embracing Zero Trust Architectures aimed at protecting modern businesses from security threats by removing the “trust” from an organisation’s network.
As a result, many are utilising identity and rights management systems powered by blockchain technology to bolster the level of security for these organisations. Using these systems, users gain self-determination over their data by means of digital authorization chains meaning it is always traceable who has accessed which data or systems when and with which authorisations and where these authorisations originate from.
Remote workforces and data security
The past year has forced a number of sectors to rethink the way in which they operate. As remote working looks to remain on the agenda for many financial service providers, it’s imperative that they consider the sensitive nature of the data that they hold.
Additionally, with many cyber-attacks being the result of phishing or malware incidents, organisations need to first educate their staff on the importance of vigilance around protecting their credentials whilst also ensuring that they roll out the right technologies that can combat these kinds of phishing attacks. Innovative cloud-based solutions can offer a solution.
Implementing end-to-end cloud security systems provide simple yet highly effective barriers to intrusion. Sensitive data cannot afford to wait therefore investing in secure cloud solutions now will ensure the safety of your organisation’s future.