In conversation with Stephen Goldstein, US Country Director, Pivot Ventures
Stephen is a global insurance executive with over 10 years’ experience across the US, Europe and Asia in Distribution, Operations, Audit, Market Entry and Corporate Strategy. Now serving as the US Country Director for Pivot Ventures, Stephen is bringing the knowledge of both sides to help focus high potential North American start-ups on the area of biggest potential disruptions for the Asian insurance industry.
As the US Director of Singapore-based start-up, Pivot Ventures, why do you feel that collaboration between the US and Asia is key to progressing the InsurTech movement? The US has become the centre of gravity for innovative technology, and that extends into InsurTech space. While there are InsurTech companies all over the world, we found that the US InsurTech ecosystem has reached an early maturity stage. With US InsurTech start-ups absorbing the vast majority of global InsurTech VC funding, they’ve had more resources to scale and validate their solutions with big insurers domestically.
With the domestic market going through a period of political and economic instability, many start-ups have started to actively look at earlier international expansion plans. For Pivot, it goes beyond connecting the InsurTech ecosystems in the US and Asia. We have also found a number of impactful InsurTech startups in Europe, Israel and within Asia itself, with relevant solutions to accelerate disruption and enhance Asia’s insurance industry.
From our experience, cross-border collaboration and best practice sharing across different cultures, when done properly, can help to build a stronger business/industry. Insurance is prime for this change and InsurTech is the transformation catalyst.
What are the most important opportunities and challenges facing InsurTechs like Pivot Ventures in Asia? We see countless opportunities in the Asian insurance market. Insurance in Asia is still primarily distributed through tied agents and/or banks with exclusive agreements with big insurers. The concept of an ‘independent’ financial advisor is only beginning to catch on in the region, primarily only in Hong Kong and Singapore, and while many countries are beginning to offer ‘direct to consumer’ products, the offerings are still limited and cover is small. Further, there are many manual back- office processes from underwriting to claims, to everything in between.
Because of these traditional distribution channels and manual processes, there are many opportunities to operationalise processes, expand distribution channels and provide more tools to give to both customers and distributors. However, with so many opportunities, there are equal challenges that come along with it.
The main challenges are:
- Culture. Due to traditional processes/distribution, many insurers are not willing, equipped and/or ready for change.
- Prioritisation. Even if an insurer is willing and ready for change, sometimes it can be tough for them to prioritise innovation. Or, if they do prioritize innovation, they may have difficulty prioritising the area of the business they want to change. Do we give tools to our agents? Do we operationalise our claims processes? Do we build a new customer portal for customers to manage payments and policy changes? Because of these questions, as well as the need to run day-to-day business, many InsurTech start-ups can get caught up waiting for insurers just to make a decision on what they want to do.
- Time, risk and cost. Implementing new processes/tools/distribution channels takes time, money and approvals from within an insurance company. As many InsurTechs may be a start-up or small company that are used to more nimble processes, they may find it challenging when working with a big multinational insurer that says they want to do something, and then take 6-9 months just for approvals to come through.
- Regulatory. As there are different regulatory bodies in each country across Asia, an InsurTech may have to change its core solution many times if they want to implement in different markets.
In your view, what are the opportunities for Australia to grow the local InsurTech ecosystem by expanding regionally into Asia? Australia is a large and mature insurance market in the region. Combine it together with healthy supply of entrepreneurial and technology talent, and there’s a real opportunity to become an InsurTech hub. Australia is especially likely to have InsurTech solutions in the commercial insurance space. Those solutions could be incubated and validated in Australia and scaled across South East Asia via Singapore.
How do you think incumbent insurers can benefit from partnering with InsurTechs – especially across borders? Our premise is this: the Asian insurance industry is ready for a change and needs some help, both from the inside and the outside. This means learning more from outside of their geography (US, Europe, etc) as well as working outside of their comfort zone (with smaller, more nimble companies like start-ups). By doing this, insurers will get a chance to change their current thought processes, as well as learn from other markets that may be more advanced in terms of insurance/financial services than areas of Asia.
However, the learning also goes both ways. InsurTech start-ups can gain opportunities to learn more about corporate infrastructure and risk/compliance processes, as well as how to better work with local regulators (relationships that rest with the local insurers). Further, there are things happening in Asia that InsurTechs may be able to learn from local insurers and bring back to their home countries.
Cross-border collaboration is two-way, and through Pivot, we see a huge opportunity to disrupt insurance in Asia, and potentially further in the future!