Actuaries Questioning the Status Quo

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Can you tell us about your actuarial journey?

I first learned about the actuarial profession while I was an undergraduate student at the University of California, Los Angeles (UCLA). Not knowing much about what an actuary does, my professors inspired me to explore this profession that applies mathematics and statistics to solve real-world business challenges, and I fell in love with it. Like any college student in their senior year, I was busy with the recruiting process, getting career insights from alumni, and securing and deciding on a full-time position. At the end of that process, I joined Deloitte Consulting in the United States to start my actuarial career, and it was one of the best decisions I made.

During my time at Deloitte, I was blessed to have several great mentors who were personally invested in my growth and success. They not only helped pave my actuarial foundation, but they also challenged me to go beyond expectations, opening my mind and pushing my boundaries to be adventurous.

I was also a bit of a troublemaker who was always looking to develop and work on a new project that hadn’t been done at the firm. Unlike other organizations, Deloitte was in a unique position in the market and offered me access to many nontraditional opportunities for an actuary—from working with large enterprises on organization design and change management to implementing predictive analytics and go-to-market strategy at health care companies.

Aside from my years at Deloitte, I was a consultant at the World Bank and a pricing actuary at Blue Shield of California. All of these experiences have proven to be tremendously helpful in my current startup journey.

Outside of work, I have a passion for learning new things, making new connections and contributing to the actuarial community. I have been an active volunteer with the American Academy of Actuaries’ Health Practice International Committee, the Society of Actuaries (SOA) Health Section and the SOA Group & Health Exam Committee. Since I relocated to Asia from the United States more than five years ago, I have become more active with the International Actuarial Association (IAA) and am currently serving as vice chair of the IAA Health Section.

What prompted you to step outside of your comfort zone to launch your startup?

I first had the startup bug during my junior year of high school in the late 1990s, when we were on dial-up internet and Web 1.0. I started a company with my high school friend to help businesses in the San Francisco Bay Area build their web presence. We went by the book, literally spending countless hours combing through every book on starting a business in the library and local bookstore. We had fun for about a year, exhausted our savings and failed miserably.

In the later days of my career at Deloitte, the firm sponsored me to attend the evening and weekend MBA program at the University of California, Berkeley. It was during the first year of my MBA program that I caught the startup bug the second time. In particular, I was inspired by the entrepreneurship among the Berkeley Haas community (faculty, students and alumni) and their goal to make a positive impact in the world. The culture to question the status quo and go beyond yourself was contagious and prompted me to resign from a good career that paid well to start from scratch, living on my savings and learning to embrace the unknown.

I have been working in startups in the United States and Asia since 2013. Through serendipity, my co-founder, Alvin Kwock, and I first met in Taipei in 2016, and we hit it off right away discussing pains in the insurance industry and sharing our crazily ambitious dream to start a full-stack digital insurance company. Our vision was simple: With our own insurance company, we could accelerate the speed of product innovation and technology adoption and create a ripple effect for the insurance industry in Asia.

What should readers know about your company?

OneDegree has grown into a diversified group of InsurTech companies, including our own insurance company OneDegree Hong Kong, our technology company OneDegree Global that partners with insurers to accelerate digital transformation with modern InsurTech and cybersecurity solutions, and other investments and joint ventures in the region.

We are one of the first batch of licensed virtual insurers in Hong Kong. Unlike the other three virtual insurers, OneDegree is a technology startup without an incumbent insurer control. With our own insurance company, we can rapidly iterate our products, test new ideas and showcase possibilities with technology.

Why did you decide on pet insurance as the market entry product?

Ahead of our insurance company launch in April 2020, we had carried out a significant amount of market and customer research. Pet parents have been an underserved market with growing demand. In Hong Kong, other large insurers have offered pet insurance for more than a decade. Still, it never reached the masses. Most pet parents remained unaware of the availability of pet insurance. One of the key reasons for that was the lack of focus and investment to grow a market that the incumbents considered small and unprofitable. Another key reason was that insurance agents did not have sufficient incentives to sell pet insurance since the premiums are small and commissions are low. Hence, the pet business is a blue-ocean market and the perfect entry product for digital distribution and servicing in Hong Kong.

More than a year since our launch, we are now the largest pet insurance provider in Hong Kong, and we have expanded our product offerings to home insurance, shipping insurance and cyber insurance.

Can you share your experience and any obstacles you faced while starting your company?

Finding market traction and getting funding are always critical challenges for any startup. Since we were determined to establish a new insurance company as part of our business, we faced multiple challenges due to the regulatory requirements related to capital, people and technology readiness. We were held to a much higher standard and couldn’t just build minimum viable products to test and launch the business like other startups.

Finding likeminded, experienced professionals from insurance, marketing, product, design and engineering to join our venture was the most difficult challenge without question. Alvin and I spent a significant amount of time researching on LinkedIn, making new connections and pitching our vision to prospective colleagues. Although we received more rejections than I can count, the persistence paid off, and we are blessed with more than 150 highly capable colleagues today and are going strong.

For our Series A, Alvin and I traveled all across Asia looking for funding. It took us more than a year and more than 100 investor meetings to close more than US$30 million while we were pre-revenue. Many investors called us crazy and did not take us seriously, but we were lucky to find a number of forward-thinking investors who shared our vision and decided to participate in our journey. I am a believer in creating your own luck by growing your options and being persistent!

What is InsurTech, and what are the differences between InsurTech firms and traditional insurance companies? How can InsurTech reshape the nature of the insurance industry?

Distribution is the low-hanging fruit for InsurTechs. Today’s customers have higher digital expectations and prefer a Big Tech-like experience that Amazon, Google and Facebook offer. For insurers, the focus is being online and offering real-time access to insurance through mobile and web experiences. With the expansion of new insurance distribution channels, the applications may be owned by insurance companies, such as direct-to-consumer and agents’ platforms, or they may be provided through a broker or e-commerce partner.

Although almost everyone is online these days, this is still largely the challenge for many insurers that are playing catch-up. A common pitfall that many insurers in Asia have is to simply put their existing product portfolio online without careful consideration of their target customers, value propositions and user experience.

The growing digital insurance trends are driving commoditization of the insurance market, with greater product and price transparency and reduced costs to switch. This is the same as what happened with the airline industry a couple of decades ago. As a result, this leads to increased customer price sensitivity, greater price competition and potentially industry consolidation with the lagging or smaller insurers being unable to sustain their operations.

COVID-19 has furthered digital insurance adoption and prompted many insurers to accelerate their digital transformation efforts, implementing InsurTechs that support virtual interactions in sales and claims, as well as reduce expenses. To thrive in the new environment, insurers must strive for cost advantage, product differentiation and new capabilities. For example, a fast and scalable automation solution can increase process efficiency, lower costs and redirect insurers’ resources to more high-impact activities, such as breaking into new markets, new product development and customer service.

With more digital insurance services coming online, there is a corresponding rise in cybersecurity exposure for the industry. Building cybersecurity expertise, raising cybersecurity awareness and adopting modern cybersecurity solutions will become the new imperative for insurers.

What can insurance companies do to prevent their technology from becoming outdated?

Adopting a more agile mindset, flexible solutions and scalable infrastructure are my recommendations for insurers. More important, it isn’t about chasing the next shiny new thing out there. It should be about whether a new technology can help you create value and be relevant to your customers.

The focus is on the customers: What aspirations and pain points do they have? How do they want to interact with you? Can we use technology to meet customer needs more effectively and efficiently?

What is your advice to aspiring and newly qualified actuaries?

As actuaries, we typically are wired to make decisions based on an assessment of risks and a forecast of the future, and we aren’t great with the unknowns. While I am still learning every day, I would advise others to learn to embrace risks and failures and grow from those opportunities. Also, question the status quo, and imagine what’s possible with your career beyond traditionally defined actuarial roles and boundaries.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.

Copyright © 2021 by the Society of Actuaries, Chicago, Illinois.