Growth of Digital Insurance Platforms Due to COVID-19... "Fair Competitive Environment Must Be Established"

Hana Financial Research Institute 'Insurance Market Led by Big Tech Companies Based on Big Data Analysis'

[Asia Economy Reporter Ki Ha-young] Amid expectations for growth in the global digital insurance platform market due to the impact of COVID-19, it is forecasted that big tech companies will lead the market by leveraging their big data analytics capabilities.

According to the report "Insurance Market, Big Tech Companies Leading Based on Big Data Analytics" recently released by Hana Financial Management Research Institute on the 25th, the operating environment of insurance companies has rapidly shifted to a digital, contactless environment after COVID-19. Accordingly, the ability to analyze accumulated data and efforts to combine external data to create new business models are becoming increasingly important.

In fact, the digitalization of insurance companies and the entry of big tech into the insurance market are accelerating the growth of digital insurance platforms. In the digital insurance market, existing insurers are building new digital platform ecosystems, while big tech companies are seeking growth strategies by adding new insurance services to existing platform ecosystems.

In particular, big tech is emerging as a threatening presence to traditional insurers by providing products and services based on big data. For example, the U.S. insurer Aetna is partnering with Apple to utilize overall health and habit data from smartwatch users in developing health insurance.

Additionally, automobile manufacturer Tesla has launched more affordable car insurance by utilizing driving data accumulated and artificial intelligence (AI) models. Tesla’s insurance, which uses vast data from in-car sensors and cameras along with algorithms, is characterized by superior accident prediction capabilities compared to traditional insurers. After acquiring the Managing General Agent (MGA), Tesla launched electric vehicle insurance in the U.S. in 2019 that is 20-30% cheaper than internal combustion engine vehicle insurance and plans to expand globally in the future.

Domestically, the digitalization of the insurance industry is also being promoted. Korean insurers are pursuing consumer-centric strategies based on data by launching products with high consumer benefits through big data analysis and developing various service models. Accordingly, the report advised, "Financial authorities need to support innovation and growth in the insurance industry and create an environment where collaboration and fair competition between existing insurers and new market entrants can take place."