“The pandemic obviously came as a real shock to the insurance industry, whose business previously relied heavily on face-to-face sales. It was a real wake-up call for these companies who had to play catch-up to ensure that their profit margins were not severely affected,” says Miller in an interview with The Edge Singapore.
For many decades, the traditional insurance business model proved to be resilient. On the back of deep capital reserves and well-honed underwriting skills — built on many years of experience as well as proprietary data — the industry enjoyed more stability compared to other segments of the financial services industry that faced more intense competition.
The incumbents of the insurance industry are now seen to be closing the gap as it invests more heavily in new technologies — insurance technology, or insurtech — to avoid disruption by smaller, more agile upstarts. The momentum received a further boost amid the pandemic, as insurers joined many other traditional businesses and sectors to digitalise for the sake of business continuity, says Peter Miller, CEO of insurtech firm Fermion. This gave greater focus to the adoption of insurtech.
