Hong Kong just welcomed its first virtual general insurance player Avo
TRADITIONAL insurance companies have struggled to connect and engage with customers in a meaningful way for the longest time now — and the industry needs to change.
Incumbents understand that and are looking for ways to transform their business model, while pureplay insurance companies are popping up to take advantage of the existing opportunity in a market that is quickly going digital.
Pureplay or virtual insurers have a lot of power and hold the key to transforming the industry and setting new standards in terms of how customers are sold to, served, and supported during their lifetime.
With millennials and Gen Z customers demanding digital-first services, incumbents are looking to move fast, and regulators are sifting through existing laws to remove barriers and facilitate the revolution to support residents.
In Hong Kong, the Insurance Authority recently granted the first virtual general insurance license (the first virtual life insurance license was issued last year) to Avo Insurance — co-owned by Asia Insurance and Hillhouse Capital CEO Zhang Lei.
Being a pureplay firm, Avo (whose logo indicates the name is short for Avocado) Insurance will sell its products online without the use of agents or brokers.
The new company is headed by Winnie Wong, who also holds the position of Asia Insurance CEO.
“Avo is a younger brand and more appealing to millennials and young professionals, while Asia Insurance is an established brand. The two will have different market positioning,” Wong told the South China Morning Post.
“The above factors gave us strong reasons to establish a different company and brand to achieve the most desired outcome.”
Insurance Authority, the local regulator, introduced a ‘Fast Track’ scheme to provide a dedicated queue for newcomers seeking to operate solely through digital distribution channels back in September 2017. Avo’s launch two years later is an indication that the market in Hong Kong is preparing for a wider digital revolution.
“The authorization of new virtual insurers under Fast Track encourages and facilitates wider applications of Insurtech in Hong Kong,” said (Hong Kong) Insurance Authority CEO Clement Cheung.
“Insurtech provides the opportunity for both consumers and the industry to improve the customer experience, enhance inclusiveness, build a sustainable fintech ecosystem, reduce the compliance burden, and induce greater supervisory efficiency.”
While life insurance seems to have gone digital a while ago, non-life insurance products, especially general insurance products have a lot of room to breathe when it comes to serving customers in a digital world.
Avo Insurance and other upcoming virtual general insurance companies in Hong Kong are expected to set the expectations of customers, providing more transparency in terms of pricing and agent commissions, and more clarity around duties, rights, and liabilities of policyholders.
“We will continue to work with the relevant stakeholders to maximize the value of Insurtech for the betterment of society,” said Cheung, indicating that the country hopes to continue working on bringing in more digital initiatives to support the insurance industry.
What Hong Kong is doing is neither new nor novel, but shines a light on an important trend in the region and across the globe.
The message is loud and clear: The insurance industry is changing quickly, and there’s an urgent need to go digital, driven by a deeper need for better engagement and more intelligent service.
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