Deloitte Southeast Asia’s Lim Siang Thnia highlights need for insurers to evolve to mitigate risks, maximise growth

As the operating environment changes, insurers should focus on creating a work environment focussing on innovation and digital expertise.

In today's dynamic insurance landscape, navigating challenges presented by rising interest rates has become increasingly pivotal for insurers seeking to stay competitive and leverage opportunities in the increasingly dynamic market. 

Offering valuable insights is Lim Siang Thnia, Insurance Sector Leader at Deloitte Southeast Asia, a qualified actuary with more than 20 years of experience in the insurance industry. He has worked for a direct insurer, a reinsurer, and as a consultant based in Singapore. He actively participates as a speaker at various actuarial conferences across Southeast Asia.

Siang Thnia is involved in a wide range of insurance advisory work across Southeast Asia. His expertise includes M&As, independent actuarial reviews, and providing strategic advice for insurers, amongst others.
 
In a recent interview, Siang Thnia, as a judge in the Insurance Asia Awards 2024, emphasised why insurers need to evolve and adapt in order to better serve the industry, consumers, and society as a whole to stay competitive within the insurance sector of Southeast Asia.

As the Insurance Sector Leader at Deloitte Southeast Asia, what are some of the most pressing challenges you see insurers facing in the region today, and how can they navigate these challenges effectively?

The rapidly evolving landscape of the insurance industry brings about various challenges which insurers must navigate effectively to address the changing operating environment and precipitate even greater societal impact.
 
Insurers today face a relatively unfamiliar environment of higher interest rates compared to several years ago. Not only do insurers need to adapt their investment and product strategies to the new environment, they should also look into equipping their distributors with the tools and capabilities to navigate this environment.

Insurers are also facing challenges in health insurance. Incumbents are encountering challenges in balancing affordability and profitability, whilst potential new entrants seek to differentiate themselves. Health insurance is complex, and insurers will need to work closely with governments and healthcare providers to ensure its sustainability. 

There has also been an escalating frequency and severity of global risks. From climate change to cybercrime, the insurance industry now has a bigger role to play and is facing greater pressure to act as society’s “financial safety net.”
 
Insurers can no longer react to all risks, as the growing number of risks may make this financially unsustainable moving forward. We see that transformation efforts are underway so that insurers can better support their customers in preventing losses from happening or mitigating their severity. 

Insurers need to embrace technology and leverage data analytics to predict risks and offer preventative solutions. Partnering with insurtechs that specialise in areas such as wearables or smart homes, or even healthcare providers, can incentivise preventative behaviour. Placing the focus on risk mitigation services is also crucial – insurers can offer policyholders additional services such as home security assessments or implement safety training programmes. 

In the same vein, there has been an increase in technology and cloud investments in the insurance sector. However, insurers often encounter challenges preventing them from realising the full value of such investments. It is crucial for them to proactively manage, monitor, and adapt their strategies to harness the full potential of technology and cloud investments to realise the value expected. 
 
Given your extensive experience across various sectors of the insurance industry, could you elaborate on the role of M&As in shaping the landscape of the insurance sector in Southeast Asia?

Macroeconomic factors have dampened M&A activity globally since the second quarter of 2022. As interest rates continue to rise and inflation eases, pent-up activity may drive an upsurge in deals in 2024. The increase in M&As could shape the Southeast Asian insurance landscape in three key ways. 

Firstly, the increasing capital and regulatory scrutiny will compel insurers to operate at a reasonable scale. This means that fragmented markets, especially in general insurance, will see potential M&A activities, creating fewer but larger players. Secondly, technology adoption, such as through the acquisition of insurtech firms, can accelerate the adoption of new technologies within the industry. Lastly, strategic acquisitions can help insurers streamline operations and increase efficiency. 
 
Could you discuss some strategies that insurers in Southeast Asia adopt to stay competitive in an increasingly dynamic market?

Insurers need to evolve and adapt in order to better serve the industry, consumers, and society as a whole to stay competitive. 
 
Whilst there have been efforts to evolve, the insurance industry is often perceived as one that is difficult to transform. Insurers should therefore leverage the advent of artificial intelligence (AI) to take bigger steps in their transformation efforts by developing personalised products and services and offering seamless omnichannel experiences. This will also enable them to place greater emphasis on customer-centricity.

From automation to cloud-based solutions, these technologies will not only streamline processes and reduce costs but also enable data integration and scalability. This can potentially improve customer experiences and free up resources for value-added activities.
 
For example, technology can automate repetitive tasks such as claims processing and policy administration, leading to increased efficiency, faster turnaround times, and improved customer service. Cloud computing offers scalability to handle fluctuating data demands, improved data integration and accessibility, and the potential for enhanced customer experiences through easy access to readily available information.
 
Another area insurers can tap into is developing talent and closing the skills gap. By upskilling and reskilling the existing workforce, employees can gain skills in new technologies and customer-centric approaches. This will also enable companies to attract new talent as they create a work environment focussing on innovation and digital expertise, thus creating greater appeal for the younger generation and ensuring that there is a pipeline of talent joining the industry. 

How do you see technology, such as AI and blockchain, impacting the insurance sector in Southeast Asia, and what opportunities do these advancements present for insurers?

The adoption of technology can help insurers achieve their operational and financial goals in the short-term and visionary goals in the longer-term. This will accelerate the transformation of the insurance industry to become more customer-centric, data-driven, and adaptable amidst a rapidly changing landscape.
 
Insurers are already adopting or experimenting with AI to enable better distributor and customer engagement and interaction. As such technologies are increasingly adopted, insurers can become even more customer-centric and innovative insurance solutions can be developed and customised for consumers.

The use of capabilities in AI and advanced analytics can also empower proactive risk prevention and mitigation. It can augment data collected from multiple sources with data-driven insights that can improve risk modelling for more accurate pricing and underwriting. This allows insurers to better predict potential disasters, such as fraud, cyber threats, or climate-related events, and prompts policyholders to take preventative actions where possible. 
 
Technological shifts will also enhance insurers’ core operational processes and may result in a modification of company culture. In this context, insurers should broaden their view of the value that technology brings. Rather than focussing on quantitative benefits like sales figures or turnaround times, the value that technology brings may lie in less tangible outcomes like staff engagement and retention, enhanced collaboration amongst employees, and increased accessibility of customer data. 

In your opinion, what are some of the key factors driving the growth of the insurance industry in Southeast Asia, and how can insurers leverage these opportunities whilst mitigating associated risks?
 
There are three key factors that can potentially drive the growth of the insurance industry that insurers need to adapt to maximise growth in these areas. 
 
Firstly, the demographic shift in Southeast Asia. An ageing population in many regions will likely increase demand for long-term care and health insurance products. This may also bring about an increased focus on healthcare needs, which may drive the demand for health insurance and spur the development of innovative products that cater to the needs of the ageing population. 

Secondly, there are opportunities that can be harnessed in the untapped markets. A significant portion of the Asian population, particularly in developing economies, remains unserved by insurance. Therefore, insurers can focus on reaching these underserved segments through strategic partnerships or tailored offerings. 

Lastly, emerging risks and threats such as climate change and cybercrime have become more prominent. This may create a rise in demand for new insurance products to mitigate these risks. Insurers can place more focus on risk prevention by helping policyholders avoid such risks through wearables, smart homes, or safety training programmes, which can reduce the overall amount spent on claims. Insurers can then reinvest these savings into growth initiatives.
 
As a judge at the Insurance Asia Awards, what criteria do you consider when evaluating insurance companies for recognition?
 
The insurance industry is highly competitive, and reliability and customer satisfaction are paramount. In view of this, I value a company's influence and impact on the insurance industry through factors like its readiness to respond to global risks. Its ability to embrace technology for innovation and customer-centricity are also key. 
 
For instance, the company should demonstrate leadership within the insurance market, with innovative products and strategic initiatives that set it apart from its competitors. The company should also be widely recognised and appreciated by its customers for excellent service, reliability, and responsiveness. To achieve this, partnerships with stakeholders in the insurance ecosystem to develop personalised, innovative insurance products and services will be essential.