SINGAPORE, September 11, 2017: Aon plc (NYSE:AON), the leading global professional services firm providing a broad range of risk, retirement and health solutions, today launches its annual Global Insurance Market Opportunities (GIMO) report, which examines key areas of potential growth for insurers.
The study highlights that Insurtech could be an enabler rather than a disruptor of the traditional insurance model. The fast-growing entrepreneurial Insurtech segment -- that has secured approximately USD14bn in investments to date across more than 550 start-ups globally -- may have a more supportive role for insurers than previously thought via 'open architecture innovation'. Established organizations play an important role in open architecture innovation, by collaborating in a framework which has both standards that enable scalable solutions for clients and the flexibility that encourages entrepreneurial innovation.
Singapore is becoming a hotbed for Insurtech in Asia. The city-state's access to quality talent is attracting start-ups like Bandboo that are reinventing how customers interact with insurance companies, purchase products and create new markets. It builds a network of like-minded individuals by leveraging blockchain technology for self-managing communities to pool risk. Further, the Monetary Authority of Singapore (MAS) is working with the British Government (UKTI) and 15 insurance companies to accelerate digital innovation.
The report reveals that three of the leading areas where analytics can help with insurance industry growth -- cyber risk, casualty catastrophe risk, and pathogen risk -- could become increasingly insurable through collaborations with Insurtech companies, and technology and analytics providers, thereby opening up new opportunities for insurers and reinsurers to provide new and enhanced products.
Meanwhile, the on-demand economy (ODE) is presenting both opportunity and disruption to the traditional insurance sector, through the requirement for a greater range of time-based insurance products that recognize that assets such as cars and homes are increasingly used on both a commercial and personal basis -- driven by the increasing utilization of services such as Grab, and Airbnb.
In terms of disruption, the report highlights that US motor pure premiums could decrease by more than 40 percent of their 2015 levels by 2050 -- the point at which autonomous vehicles are expected to be fully adopted. However, while accident frequency is anticipated to reduce as a result of driverless technology, the study warns that accident severity could increase and that a transfer of liability could occur, from drivers to car manufacturers and software providers.
Paul Mang, Aon's Global CEO of Analytics, said: "We know that the insurance sector is facing challenges in the current macroeconomic environment; so we should expect leading organizations in the industry to drive change. We are already using technology to make us more efficient as a sector, and to expand into emerging risk markets. However, the true transformation will happen as we re-imagine risk management altogether. In this new environment, collaborations, or what we call open architecture innovation, will be key to creating net new growth."
The 2017 GIMO report contains extensive analyses of the cyber sector; it reveals that the handling of cyber risk is moving beyond traditional insurance, and that a typical cyber insurance policy should now offer access to a panel of service providers for incident response and additional services. These services -- whether offered by a carrier directly or through partnerships -- will provide insurers with a way to broaden their value proposition beyond the traditional insurance policy.