Asia held 43% of the world's population in 2016 but only accounted for 13% of insurance premiums, UBS analyst Dennis Lam noted in the company's Insurtech report.
The reason for this stems from the costly traditional distribution models that are inefficient in emerging Asia with its large populations and geographical spread, he said.
Life insurers share some of the lowest levels of market penetration in the region. In Indonesia, for example, penetration is below 2%.
However, growth in emerging Asian markets is expected to be driven by wearable technology and personalised customer tools and distribution.
Growing insurance appeal
Insurtech is expected to drive costs down across the board, further increasing the appeal of insurance in a region perhaps more cost aware when seeking financial advice.
Connected devices, advanced data analytics, artificial intelligence (AI), and digital distribution channels should result in accelerated market penetration, Lam said.
It also offers more accurate risk assessment and pricing, more personalised solutions, more efficient operations and processes, and most importantly, improved customer experience and satisfaction.
While this could be good news for potential consumers, advisers in the region may see their business models hit by a disruption that could conceivably write them out of the insurance advice process.
Opportunities for all
While some advisers may find themselves falling behind in the technology race, Val Yap, founder of Singapore based insurance dashboard provider PolicyPal, believes there are opportunities for the whole industry.
“What we provide is the empowerment of distribution both for insurance companies and insurance agents. In Singapore, we have a hybrid model,” she explains.
“Customers can transact general insurance products on our app and buy life insurance products from insurance agents through our platform."
Yap acknowledged that it would take time for all the generations to become comfortable transacting online, but added that her company works "with insurance agents to help educate the public about insurance before customers go online to search for insurance policies and purchase them".
“For life policies, we connect them to agents, so agents can get better leads with a higher conversion rate and better engagement with the end customers. Quite a few insurance companies wish to expand channels and explore different ways to engage the unserved customers.
"Agents will continue to support their markets. We are here to serve a market that is untapped or unserved, or the customers who prefer self-help services.”
Insurtech is also expected to trigger huge cost savings for insurers.
Competitive pressures should drive insurers to pass on a majority of the cost savings to customers, but UBS still expects the overall profits of Asian insurers to increase by around $55bn (£41.5bn, €46bn) a year.
The shift towards automation in operations is already happening.
Fukoku Mutual Life Insurance in Japan announced earlier this year that it will replace more than 30 employees in the payment assessment department with AI based on IBM’s Watson technology.
The company believes it could generate over $1m in savings per year.