Why insurtech in Singapore has been a tough nut to crack

Insurtech firms had a high-profile 2020.

From Singlife’s merger with Aviva and CXA Group’s successful fundraise to PolicyPal’s acquisition by AMTD and GoBear’s demise, Singapore startups in the space had their fair share of time in the spotlight.

But save for some cosmetic changes, the insurtech sector – which encompasses everything from customer onboarding and claims processing to distribution and new products – has seen little innovation in the past decade, several industry players observe.

Innovating has been hard to do in an insurance sector that is capital-intensive, highly competitive, and strictly governed. In a small market like Singapore, scaling – and achieving profitability – poses an added challenge for startups that often lack the right partners or are unable to find critical mass.

Traditional insurers have also had little incentive to change the status quo when the product, designed around a promise of a future payout, is one consumers care little for.

“If you spend your time paying a premium and you never get reimbursed, you feel frustrated because you don’t know what you’re paying for,” says Matthias De Ferrieres, CEO of Singapore-based My-Insurer, a startup that runs a customer relationship management software for financial advisors.

Consequently, “nothing has really changed in the past 20 years,” De Ferrieres says.

“No one cares about insurance”

Unlike owning an Apple Watch or dining at a restaurant, an insurance policy isn’t tangible.

“The first principle to be aware of when you sell insurance is that no one cares about insurance,” says De Ferrieres, who was formerly the regional head of marketing for general insurance at French insurance giant AXA in Singapore.

Most of the time, people have to be driven by necessity or fear into purchasing a policy. If a product has little perceived value, people won’t be willing to pay for it, adds the CEO. This makes it difficult for insurance companies to upsell more products.

But as it is, insurers already have enough on their plates trying to hire, train, and retain financial advisers, who are expected to grow in importance as a distribution channel in Singapore, Angat Sandhu, a partner at management consulting firm Oliver Wyman, tells Tech in Asia.

Singapore, with a population of 5.8 million people, may well have one of the highest agent-to-population ratios in the world.

Many financial advisers are lured into the trade by its high commissions and somewhat easy entry – a certification is relatively cheap to obtain and requires taking only a few tests. However, about 75% leave the market by the second year in part due to the limited career mobility in the profession, De Ferrieres estimates.

A “transformation” in insurtech

Cosmetic disruption

Fundraising challenges

Singapore’s challenge

The future of insurtech