In 2023, Southeast Asia’s InsurTech sector made a remarkable comeback, demonstrating a significant recovery not seen since 2020.
According to According to a new report from Ernst & Young (EY), insurtech deals in Southeast Asia will total US$2.4 billion across 27 deals, up significantly from the US$538 million raised across 39 deals in 2022. These figures nearly match the industry’s all-time high of US$2.6 billion and 32 deals recorded in 2020.
Megadeal drives Southeast Asia’s insurtech revival
The surge in insurtech deals in 2023 was driven by investments and deals involving established insurtech companies with proven track records.
This trend is highlighted by two major deals in 2023. SingLife Acquisition Sumitomo Life Insurance paid $3.5 billion and VoltTech paid $246 million. Series B round.
In contrast, high-risk early-stage companies received just two publicly disclosed Series A deals and raised just $2.3 million in 2023.
These deals highlight the fact that investors are becoming more selective, prioritizing and deploying capital to companies with profitable, innovative technologies and regional footprints.
It also signals that the region’s InsurTech sector is maturing, a trend evidenced by the increasing number of exits and expanding exit options in Southeast Asia.
One notable development was the initial public offering (IPO) of Blue Venture Group, which operates an insurance platform for the automotive and healthcare industries. Listed It was listed on the Stock Exchange of Thailand last year.
The listing pipeline looks promising and more are likely to follow. Silk Span Stock Exchange of Thailand, VoltTech Rumors of plans to list in the US.
Singapore dominates insurtech deal flows in Southeast Asia
While Singapore-based companies account for the majority of Insurtech deal volume and funding value, accounting for 85% of total deal value in 2023, there is a growing trend for countries such as Indonesia, Thailand and Malaysia to secure a larger share of funding.
These emerging markets are fertile ground for InsurTech growth, as companies in this space are predicted to not only capture a larger share of the insurance market but also experience exponential growth from their current nascent stage.
EY predicts that InsurTechs will see significant growth in gross written premiums (GWP) and surpass traditional insurers by 2026. In Indonesia, Vietnam and the Philippines, InsurTech GWP is projected to grow 34-49% annually, compared with 4-16% growth for traditional insurers.
Vietnam is expected to see the highest growth: by 2026, Vietnam’s InsurTech GWP is expected to grow to 4.5-6.5%, up from 1.3-1.7% in 2021, for an annual growth rate of 47-49%.
The rapid growth of InsurTech in Southeast Asia is driven by favorable demographic and structural developments.
With governments and businesses making concerted efforts to educate the public, consumers are becoming more aware of the importance of insurance. Furthermore, regulatory developments are creating opportunities for acquisitions and consolidation, fuelling InsurTech deals and transactions.
For example, in Indonesia, the Financial Services Authority (Otoritas Jasa Keuangan) Implemented In January, new regulations came into force requiring insurers to have at least 250 billion rupees (about $15 million) in capital by the end of 2026, 67% higher than the previous minimum. The FSA also said it plans to raise the minimum capital from 500 billion rupees ($32 million) to 1 trillion rupees ($64 million) by 2028.
According to These stringent minimum capital requirements will likely reduce the number of insurers and foster a more competitive and healthy market, according to Fitch Ratings. Insurers struggling to meet the new standards will be prompted to raise additional capital or consider merger and acquisition (M&A) options, the company said.
Insurtech Trends and Opportunities
Post-pandemic, consumer attitudes towards insurance in Southeast Asia have changed significantly, with insurance now being seen as a necessity rather than a luxury.
This has created growth potential in key markets across the region, particularly emerging customer segments such as millennials, emerging families, gig workers and small and medium-sized businesses.
Millennials and Gen Zers want products that fit their on-demand lifestyles. This demand has prompted insurtech companies to develop products that offer small-scale, usage-based, customizable coverage.
For example, GrabInsure Offers A telematics-based car insurance product in Thailand that adjusts premiums based on actual mileage to meet the needs of cost-conscious millennial drivers.
Similarly, Snacks by income In Singapore, we offer a micro-premium, allowing users to gradually build up compensation through small daily transactions starting from 30 cents.
New families, including single parents, step-families and cohabiting couples, create new opportunities.
These customers have specific insurance needs that traditional products cannot adequately address, prompting insurtech companies to develop products tailored to their needs. For example, WeSure offers critical illness insurance designed for single parents in the Philippines, offering flexible payment options and convenient policy management and claims filing.
The SME sector is seeing its insurance needs evolve rapidly with growing demand for digital insurance, customized products and effective risk management solutions.
Across the region, insurers are rising to the challenge by offering innovative products and services, including: Sunday Insurance Thailand’s Inc. is leveraging artificial intelligence (AI) to provide personalized insurance products tailored to the specific needs of small and medium-sized businesses.
In the Philippines and Indonesia, Una Insurance We offer a comprehensive range of products including auto insurance, personal accident insurance and travel insurance to meet the protection needs of small businesses and entrepreneurs.
Finally, the global expansion of digital platforms has ushered in a new era of flexible, on-demand employment, giving birth to the gig economy.
This shift has highlighted the need for specialized insurance solutions for gig workers and prompted insurers to introduce specialized services.
For example, Singapore’s Singlife Partnered with It has partnered with Outside, a recruitment platform with over 16,000 users, to offer insurance options directly to gig workers. Similarly, in Malaysia, FWD Takaful is Release The 2022 FWD ADD Rider is an additional coverage designed to provide gig workers with accidental death and dismemberment (ADD) benefits, including medical, financial and mental health coverage.
Featured Image Credit: Free Pick
