Asia is all set to be the star market when it comes to insurance technology (InsurTech) all over the world. There are a number of excellent reasons for this assumption: the continent has a substantial population and a quickly expanding technology proficient middle class. Orthodox insurance distribution is also found to be less effective. The addition of political populism into the mix makes the continent ideal for the entry of American and European companies specializing in InsurTech.
Weak Asian companies
The question in such a case is why Asian startup companies are not taking advantage of such a market. It is surprising as both funding and opportunity exists. The probable reason is a blend of few factors. One of them is a weak entrepreneurial ecosystem incapable of effectively supporting startups. There is also the cultural intolerance of failure. The good news is that both of these factors are slowly becoming a thing of the past. A few Asian companies are beginning to test brand new and path breaking InsurTech solutions. Chinese companies like Connexions Asia and Zhong An have already surpassed Series A funding. Other than China, Cover Fox and Policybazaar have made a name for themselves as big insurance aggregators operating in India.
Experts, however, believe that Asian startups will not dominate the market. There are good reasons for this line of thinking. The number of Asian startups has not yet reached critical mass. It means they will lack the high quality filters and the support network of much larger entrepreneurial ecosystems present in Europe and the United States.
The American and European startups must survive a Darwinian economic environment to reach sufficient scale in home markets. A startup in Asia, in contrast, would get support only as there are not too many companies to invest in. Weaker companies in the European Union or in the United States have to survive strong competition. The survivors then attract premium talent from entrepreneurial ecosystems, thus strengthening the successful American or European startups.
Success in home markets provides much needed confidence to any startup. Cash flow and credibility allows them to indulge in aggressive expansion. A startup thus gets the required flexibility to develop necessary adjustments to the business model so that they are successful in Asia. The deep level of insurance expertise permits the US or EU startup to tap the best local expertise for further knowledge enhancement and market domination to guarantee success.