Asian insurers to see huge gains from embedded market – report
Asian insurers to see huge gains from embedded market – report | Insurance Business Asia
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Asian insurers to see huge gains from embedded market – report
The sector is projected to become a $270 billion market in terms of GWP in 2030
Insurance News
By
Kenneth Araullo
The embedded insurance market is set for huge gains in the coming years, fuelling the next wave of growth and driving further penetration in the Asian insurance markets, according to a new McKinsey report.
According to the paper, titled Why Asian insurers are ideally positioned for embedded market gains, the region is experiencing an inflection point as digital payments upended the state of the banking industry, resulting in an uptick of payment revenue of about 80%.
A McKinsey analysis further found that embedded insurance in Asia is expected to grow to become a $270 billion market in terms of GWP by 2030. Through product innovation and deeper integration with channel partners, 66% of this growth is projected to come from GWP transferred from traditional channels such as embedded channels and bancassurance.
Driving the growth for embedded insurance
McKinsey listed four key shifts in the insurance landscape in Asia that have coincided to allow embedded insurance to grow as a business model. The first of this is the regulatory support for digitalization, with some regulators and government institutions in Asia recognizing the potential utility of a digital ecosystem to boost insurance availability. In addition, more regulators in the region have begun developing road maps and frameworks to encourage the digitalization of insurance platforms and services.
Another shift is the competitive pressure, with an increasing number of players using embedded insurance to create their own ecosystems along the insurance value chain. New insurtech players, such as Cover Genius and Igloo, are also emerging and bypassing incumbents to launch in-house service offerings ranging from insurance distribution to claims processing.
The rise of digital-focused consumers has also contributed to this shift. According to McKinsey analysis, 95% of Asian consumers used digital channels in 2021, indicating a preference for digital platforms over analogue options. The firm also found that active digital consumers are 37% more likely to purchase nonlife insurance products from digital platforms over the average consumer.
Finally, embedded insurance is also playing an important role in closing the underinsurance gap in the region. The mortality protection gap, for instance, was estimated to be at $83 trillion in 2019; in fact, average life insurance penetration in Asian markets besides Singapore, Taiwan, and Japan is estimated to be 2.5 times lower than the average in the United States.
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