Can you share more about the partnership with Cover Genius and what it means for SOMPO?
The insurance industry has evolved over the years, especially more so in the last two years as the impact of COVID-19 has led to a shift in consumer habits with more consumers moving towards engaging insurance solutions through digital intermediaries or platforms. The partnership between SOMPO and Cover Genius will help SOMPO further strengthen our strategies, enhance our value proposition and build a sustainable market position in the fast-growing embedded insurance space.
We envision the future of embedded insurance to seamlessly integrate innovative insurance solutions into third-party product or service providers within Cover Genius’ extensive ecosystems; and for us to gain access to more date to better understand customers’ evolving needs and preferences. This is especially relevant to the diversity in our global Retail markets. Understanding how to better service customers virtually will allow SOMPO to tap into non-traditional digital affinity distribution that can be scaled across the Sompo Group internationally.
Combining our underwriting capabilities with Cover Genius’ licensing and technology will create a compelling leadership position in the fast-growing embedded insurance market. We want our global Retail business to be even more sustainable, competitive and create more brand value.
Are you able to provide additional information on how SOMPO's strategic investment will contribute to insurtech players across the region, particularly India?
Universal Sompo General Insurance (Universal Sompo) is in the process of digitizing our entire ecosystem and is going to be a part of the larger fintech sector, where we will underwrite, distribute and service insurance policies using tech and digital assets. Insurtech side of Universal Sompo will create actuarial and risk discovery tech models.
SOMPO’s investment into Cover Genius reflects a rise in insurers looking to digitize through insurtech players. According to a recent report by Bain, with 90% of consumers open to the idea of having an ecosystem of services for automotive, home, health and life insurance, it is clear that the insurance industry is likely to experience tremendous growth through digital distribution channels.
Regionally, insurers are experiencing a change in the way consumers engage insurance solutions. With the landscape constantly disrupted by the pandemic and the change in consumer purchasing habits, incumbents besides traditional distribution channels will have to relook at their strategies when it comes to selling services. Our partnership with Cover Genius will not only open up more opportunities within the broader tech ecosystem, but also give insurtech players the chance to evolve and work towards delivering better insurance services more efficiently.
With its burgeoning middle-class population and increasing mobile and internet penetration, India has become the second largest insurtech market in the APAC region and one of the fastest growing markets in the world. Our country has over 70 insurtech entities. Consumers prefer to buy covers like health insurance from insurtech entities besides legacy firms, as insurtech has made the process simpler and faster. SOMPO's strategic investment will enable Universal Sompo in India to integrate with various eCommerce players and serve the tech-savvy population of our nation.
Can you share some insights on the insurtech industry in India?
Insurtech has encouraged innovation in the insurance sector in various ways – product, services and data driven solutions across the value chain have emerged from Insurtech. While non-life insurance penetration in India is below 1%, penetration of the internet in India is at 45%. Nearly half of the 1.37 billion population have access to the internet. India has a strong line-up of fintech and insurtech entities that have successfully created large digital distribution channels. According to a report by BCG and The Indian Insurtech Association, the Indian insurtech sector has seen progress over the last five years, with life and non-life insurance segments growing by 17% and 14%. Despite this growth, the market remains underserviced, with the Indian insurance penetration rate currently standing at 4.2% as of FY21.
Digital services remain a promising market for insurers to tap on, especially as recent digital adoption rates in India doubled from 330 million in 2016 to around 650 million in 2020. This growth, primarily driven by rising smartphone adoption has also seen increased consumer preferences to purchase goods and services online. In addition, we have seen more government bodies pushing for digitalization across various industries, encouraging companies to keep up with upcoming digital services coupled with the increase in digital consumption. Young digitally-savvy consumers are also open to switching to a new provider, including companies beyond the insurance industry such as retailers and technology firms.
Regionally, we have seen a rise in insurtech players as investors seek opportunities in emerging markets. India for example, has seen significant growth in insurtech funding, from $11 million in 2016 to $287 million in 2020, according to reports from BCG.
With these trends in mind, Universal Sompo remains committed to diversify our existing services and expand our reach across the technology ecosystem, offering products such as embedded insurance as a new way to distribute insurance services efficiently.
Can you tell me more about what the future of embedded insurance will mean across APAC?
Embedded insurance refers to a service that bundles protection or coverage within the purchase of a product, service or platform on a technology ecosystem or eCommerce platform. It allows a non-insurance company to offer insurance products directly through its platform, enhancing its value propositions and creating new revenue streams.
Furthermore, insurers are able to integrate seamless, faster claims management and payment processes – addressing many of the supply and demand issues that insurers were facing. In turn, insurers are able to redirect their focus on creating new products through the adoption of advanced technologies and improving customer experience.
While embedded insurance does not solve the protection gap, it addresses many of the supply and demand challenges that India faces and could act as a catalyst for wider industry business model transformation.
For SOMPO, the future of embedded insurance means that for customers, they will have access to a simpler and affordable solution that can be made at the touch of a button. We expect to see more interest in embedded insurance across APAC as businesses invest in insurtech.
Can you share more about SOMPO’s upcoming plans across APAC and global retail and how it will impact India?
SOMPO has plans to expand on its distribution channels in the embedded insurance space and affinity market by leveraging Cover Genius' global ecosystems to provide tailor-made solutions to our customers.
Today, consumers want convenience and have the option to customize services that cater to their different needs. We have seen that while consumers expect services to be quick and convenient, the human element is key to insurance in some markets. Consumers want a well-balanced mix of solutions that cater to their needs at different customer journey touchpoints. We will continue to identify suitable and like-minded companies as part of our affinity partnership strategy to position SOMPO ahead of others in the embedded insurance space and advance the Group’s brand value and digital agility. Universal Sompo is in the process to digitally distribute insurance covers, integrating with a variety of e-commerce players.