InsurTech in the Asia Insurance Market

Raymond Lai, FSA, FASM, CFP, NLP, CBE, has experience across many Asian insurance markets, including Bahrain, Myanmar, Vietnam, Malaysia, Labuan and Indonesia. In this Q&A, he shares lessons learned during his 30-plus-year (and counting) career dedicated to insurance, answering why he became an actuary and more.

Tell us a bit about yourself.

I attained my Fellow of the Society of Actuaries (FSA) in 1997 and have over 30 years of actuarial, financial and risk management experience in life insurance, general insurance, family takaful insurance, medical insurance and InsurTech startups.

Previously, I held appointed actuary, chief actuary and chief risk officer roles in Malaysia and Vietnam. I am currently heading the risk management practice for Nicholas Actuarial Solutions, Malaysia. I also held appointed administrative roles for an international global reinsurer in Bahrain and Labuan and a local InsurTech startup company.

I was the Actuarial Society of Malaysia’s president from 2007-2008 and am currently a member of the SOA’s Greater Asia Committee.

Video Exclusive: Raymond Lai Discusses InsurTech in Asia

Why did you become an actuary?

After graduating from a local university (University of Science of Malaysia in Malaysia) with a first-class honor (Bachelor of Science, Education), having majored in mathematics and statistics with education, I looked for career opportunities where I could apply my knowledge and skills. After getting advice from friends and senior actuaries, I decided to challenge myself and pursue an FSA through self-study, which most local graduates found to be impossible. It took me seven years to be the first local university graduate to qualify as an FSA through self-study. I was the role model for the local university graduates at that time.

Why did you decide to join the SOA’s Greater Asia Committee? How do you benefit from being an SOA volunteer?

In the past, I actively promoted the actuarial profession through the Actuarial Society of Malaysia, career events and education fairs. I was invited to conduct career talks at colleges and universities for students and their parents. I was also an International Ambassador Volunteer for Malaysia for a number of years, but I was not particularly active due to a job commitment overseas in Vietnam. However, I continued to promote the actuarial profession in Vietnam.

After I came back from an overseas assignment, I continued to be actively involved as a speaker at actuarial conferences, promoting the actuarial profession at local universities and networking with actuarial colleagues locally and globally.

I decided to take the opportunity to volunteer with the SOA’s Greater Asia Committee to continue my contribution to and participation within the actuarial profession. The benefits of being an SOA volunteer are many. Here are six that stand out to me:

1. It’s an opportunity to represent the SOA and contribute to and promote the actuarial profession to students, their parents and universities.
2. It’s an opportunity to learn from other SOA members about the challenges other countries face in the actuarial profession, education and insurance industries.
3. It’s an opportunity to share my experiences, skills and knowledge.
4. It allows me to stay up to date on the developments happening at the SOA.
5. It provides networking opportunities for future collaborations, partnerships and connections.
6. I can take advantage of professional development and ongoing learning.

Tell us about your current and most recent roles. What motivates you to dive deeper into InsurTech in Asia?

Currently, I am the appointed actuary for a local InsurTech startup company that Bank Negara Malaysia approved under the Financial Technology Regulatory Sandbox Framework. This framework provides a regulatory environment conducive to the deployment of financial technology and facilitates meaningful innovation in the Malaysian financial sector.

There are exciting things about being involved in an InsurTech startup. I get to understand and learn about the requirements of the Financial Technology Regulatory Sandbox and how to leverage the different technologies involved in the front-end acquisition of customers. I also have the opportunity to learn more about proposals, “know your customer,” premium payments, risk selection, underwriting automation, immediate issuance of policies, administration and so on. But challenges are always there, such as how to grow the number of policies and control marketing costs effectively.

InsurTech was a new buzzword a few years ago. These startup technology companies are trying to disrupt the traditional insurance business model, but most still need to gain knowledge and expertise of the insurance business. I believe everyone should have insurance coverage, and insurance products should be simple and easy to understand. Customers should buy what they need, and the experience should be wonderful.

Claims should be paid within 24 hours, if not immediately. I see an opportunity to be involved in InsurTech in Asia because of my experience as an innovative actuary, product designer and risk manager, and I have a deep understanding of insurance companies’ overall operations.

How has InsurTech grown and affected the Asia insurance market? What trends have you observed lately?

The global COVID-19 pandemic significantly affected the adoption of InsurTech’s digital transformation in Asia, accelerating its growth and driving innovation in the insurance industry. There has been a surge in the demand for digital solutions and a shift to an online channel. The InsurTech companies capitalized on these demands and introduced their digital solutions, such as an online platform for buying insurance, product comparisons, auto underwriting, customer engagement for customer service, filing claims and more.

Because of changes in consumer behavior, customers’ expectations also have changed. Customers like to do research and compare options before buying. Customers expect better engagement and prompt and personalized service. These changes in customer behavior and expectations also have led some companies to use robotic process automation, personalized chatbots and generative AI (GenAI) to meet their needs.

In the Asia insurance market—especially in Singapore, Hong Kong and Vietnam—my observations are that all insurance companies are accelerating their digital transformations. Some are starting to leverage technologies like GenAI through personalized chatbots in customer engagement and servicing, managing internal queries on policy and procedures related to human resources, compliance on anti-money laundering and countering financing of terrorism (AML/CFT), and so on. Robotic process automation has streamlined backend processing to reduce operational costs and improve efficiency. Few companies have used AI and machine learning to analyze vast amounts of data to understand consumer behavior and assess their risks more accurately.

Blockchain technology has been explored, but not many companies have been successful in finding good use cases for it. The reasons could be inadequate infrastructure, regulation and high implementation costs.

There are some observable trends for partnerships and collaborations among technology startups, insurance companies and popular customer-based platforms. Bolttech, an international InsurTech company, has partnered with Viettel Telecom, one of Vietnam’s largest telecommunications operators, to offer a range of insurance products including health, travel, home, car and motorbike insurance. Popular apps like Grab, a ride-hailing startup tech company, have started offering financial products to leverage their large user base.

How have you seen InsurTech initiatives evolve? What is your view on how actuaries could ride the waves of the InsurTech evolution?

Currently, InsurTech initiatives focus on customer engagement, research, comparing product platforms and sales collaboration as broker platforms. They have started to evolve into a fully digital experience, from frontend sales to backend platforms. Claim submission can be done online.

Even though the focus of InsurTech in Asia is on customer engagement, such as in sales, underwriting and claims, I believe that the evolution of new technology will indirectly affect the role of the actuary. Traditionally, an actuary used statistical models for data analysis to price products. With the availability of quantum and cloud computing power, vast data from consumer behavior and engagement, and advanced analytical tools, actuaries will need to adapt their roles and acquire new skills to add value.

Actuaries could embrace data analytics to identify market trends and customer segments and develop innovative, customer-centric insurance products that meet their needs and preferences. They could incorporate customer preferences and behavior to enhance their modeling techniques, assess risk and develop more personalized product pricing models. Those customer engagement and behavior data can be incorporated into the valuation, business and risk assessment models.

Actuaries could collaborate with company data scientists to apply advanced data analytics techniques and machine learning algorithms to gain insights into datasets based on customer engagement and behavior. These insights would be helpful for actuaries and management.

I hope that actuaries can be trendsetters.

What do you predict will happen with InsurTech in the next few years, and how will changes in technology affect actuaries? What are the challenges the market currently faces?

I anticipate that InsurTech in Asia will continue to experience rapid growth, especially with the use of GenAI and machine learning. The current trend is applying GenAI, and this technology is in high demand from business units as well as from boards of directors in the insurance industry. I believe that GenAI will change the way we run the insurance business—it can make the industry more cost-effective and efficient and put more focus on consumer expectations and needs.

With GenAI, machine learning and big data available from all digital devices through the Internet of Things, actuaries could understand and use data analytics techniques or tools and machine learning algorithms to analyze the vast volume of data to assess risks and obtain insights for enhancing customer expectations and developing personalized products.

However, despite InsurTech’s potential to disrupt the insurance industry in the near future, the market always faces challenges. The main challenge is regulatory compliance with current policies and guidelines. I expect that the guidelines and policies need to be reviewed quickly to accommodate innovation.

Cybersecurity and privacy concerns related to data collection and storage and the use of sensitive data need to be addressed. Failure to handle these concerns will result in reputational risks and regulatory penalties. I believe these concerns can be mitigated through an effective risk management framework.

The high cost of implementation involving initial upfront capital for technology infrastructure, talent acquisition and training would be difficult to justify if a company only considers the short term. I believe that companies should consider the long term to justify the return on investment in technology infrastructure. A mindset shift from the board and top management is also critical in adopting new technology.

There are a lot of data available in many forms within a company. The issue is the lack of available high-quality data. Poor data will impact the accuracy and reliability of actuarial analysis. I believe that before implementing an AI strategy and using analytics, a company should have a data strategy in place.

With your extensive experience in the actuarial profession and exposure to different markets like Malaysia and Vietnam, can you share some skills actuaries could cultivate to assist in career advancement, regardless of their field and geographical location?

The ability to continue learning and adapt to changes or trends are some of the most important skills for career advancement. Most actuaries have strong analytical skills but poor communication skills. These skills are important, especially when we want to collaborate with others.

A strong understanding of the insurance industry, including key trends affecting distribution, new technology, operations, emerging risks, regulatory changes and competitive dynamics, would be great to have. Also, be innovative and willing to experiment.

Looking at your career to date, what is the most important lesson you have learned?

The most important lessons I have learned are the value of continuous learning, having a growth mindset in seeking new knowledge and being adaptable. Professionalism, integrity and ethics are important, especially in the actuarial profession.

Do you have any general advice for actuaries or others interested in InsurTech who want to start applying it to their work but need help knowing where to start?

The first thing you could do is educate yourself about InsurTech and understand its potential applications. Then, network and connect with others by attending and joining InsurTech communities and events, and work with InsurTech professionals whenever you have the opportunity.

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.

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