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How COVID-19 is rebooting the insurance digitalisation roadmap in Southeast Asia

The COVID-19 outbreak has forced us to make seismic shifts. Our lives have been uprooted. The things we took for granted are no longer there. People changed – some adapted quickly while there were many others who could not. Across Southeast Asia, malls shuttered and turned into literal ghost towns. School children and white-collar workers were forced to learn and work remotely.

Based in Singapore, I have been working from home since February. I miss my daily cup of coffee from the cafe near Asia Square, where the Swiss Re office is. To get my daily caffeine fix, I turned to ordering a small coffee machine and capsules online. They were delivered on the same day, and I soon picked up this new habit of making my own coffee when I work from home. As the physical distancing restrictions continue, I have chosen to not dine out either and started shopping online for my daily essentials. On days when I don’t feel like cooking, I have my meals delivered from my favourite restaurants. Sometimes I hanker for the "good old days". At other times, I wonder what else I will have to adjust to.

Five years in five months

I know I am not alone in feeling this. But feelings aren't enough. Businesses who were slow to or failed in adopting contactless, virtual methods of engagement were left behind. Shopee, one of the largest e-commerce platforms in Southeast Asia, reported a 74% jump in gross merchandise value processed in the first quarter of 2020, and a 111% increment of transactions processed compared to the same period in 2019. By the end of 2020, the number of digital consumers in Southeast Asia is projected to reach 310 million, a population initially forecasted by Bain & Company just last year to be reached only in 2025. On the other side of the Pacific, Q12020 retail sales in the US demonstrated that the e-commerce penetration rate reached its 10-year trajectory target in just three months, according to a McKinsey report.

Until we reach a clinical breakthrough that enables us to slow COVID-19 and its evolution, this is it – empty stadiums, half-filled restaurants, space to walk on CBD streets. Sci-fi movie and literature scenes are playing out in real life. With this shift towards further digitalised living, consumers are also pragmatically rethinking their protection needs and expectation of their insurers.

From anxiety to action

Insurance, as we know it, is still a service more often sold than bought. Its chief purpose is to protect customers from unfortunate events, and because of that, consumers often don't think about insurance until they face certain hardships. However, the onset of the COVID-19 outbreak has led consumers to reshuffle their priorities, especially when it comes to accessing healthcare and planning for financial security. As consumers reset their perceptions and behaviours to cope with the crisis, more people are turning to their insurers when seeking that much needed peace of mind. Unfortunately, it took a pandemic to raise the awareness and reinforce the need for insurance protection.

The Swiss Re commissioned COVID-19 Consumer Survey reveals that 1 in 3 consumers in Southeast Asia feel anxious and overwhelmed about their financial future. While over half of the respondents (58%) actively searched for new insurance policies to address their concerns, more than 1 in 3 (37%) bought a new policy resulting from that search. For those who have made claims during this period, close to 4 in 5 (76%) respondents valued how insurance helped relieve their financial burden.

As the pandemic continues to unfold, insurers are now presented with a rare window of opportunity to accelerate the digital transformation fuelled by pressing customer expectations in the new normal. While 62% of surveyed consumers are willing to stay with their existing insurers for new policies or renewals, 68% of respondents consider the availability of an end-to-end digitalised journey the next most important factor when choosing their new insurance policy after pricing.

But this window won't stay open forever. Those who lag will lose even the most loyal of customers.

Rethinking priorities

With the pandemic disrupting conventional face-to-face channels, our survey confirms that 3 in 5 consumers now have stronger preference to buy insurance digitally. What's more interesting is that 1 in 5 respondents are more likely to buy through alternative platforms, where agents, brokers, banks and financial advisors will continue to play their roles in assisting customers to better understand policy features and handle transactions of larger amount and longer commitment periods.

Servicing a relatively young and digitally savvy demographic, homegrown ride-hailing tech start-ups like GoJek and Grab have had phenomenal success across Southeast Asia, and they continue to expand their platforms as 'super apps', enabling customers to manage their mobility, food delivery and personal finances at their fingertips. As these decacorns (valued at over USD 10 billion) continually engineer their user experience with gigantic volumes of data and insights aggregated from billions of transactions processed through their platforms every day, Southeast Asia has never been as digitally connected as today.

The popularity of these household super apps provides strong inspiration for insurers to rethink their distribution strategy and reshape their underwriting, claims and overall customer journey. At the same time, insurance can well complement other financial services already offered by these super apps to round off their everyday offerings with essential protection options, especially in times of crisis.

At Swiss Re, we are in the final stage of concluding consumer research on Digital Platform Insurance Solutions, conducted with 1,800 respondents in Indonesia, Malaysia and India. From their mobile payment to digital purchasing experience, we are keen to investigate the consumer behavioural changes and issues concerning their digital insurance customer journey during the pandemic.

When COVID-19 first grabbed global attention, we had little knowledge about its deep impact on our everyday lives, let alone its rippling effects on the economy. Challenging situations demand critical responses, and this means insurers must accelerate their long-awaited transformation to make insurance buying as fast, easy and convenient as making that daily cup of coffee.

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