The life insurance industry is pivoting east. McKinsey estimates that the APAC market will account for nearly 50 percent of top-line gross written premium growth in the coming years, with China making up 50 percent of that growth. This is largely thanks to a significant emerging middle class with more buying power and financial literacy than any generation before it.
As APAC markets expand and mature, and those markets become more accessible to global insurers, life insurers will turn east in search of new value, growth, and opportunity. However, they’re not the only ones.
While hubs like Hong Kong and Singapore boast growing and innovative insurtechs markets, the broader APAC insurtech scene is still relatively new. This is especially true compared to the more robust insurtech scenes in markets like the US, UK, and Europe. For young insurance technology companies based in these other markets, and looking to expand to APAC, there’s a lot to consider.
While there’s tremendous opportunity, especially given the immaturity of the insurance market, there’s also substantial differences when it comes to establishing a presence and building relationships. Montoux has been operating in a number of APAC markets, including New Zealand, our native market, Australia, Japan, and Hong Kong, where we’ve just opened our third international office.
Speaking with Co-CEO Geoff Keast about Montoux’s approach to the APAC market provides insights into some of the key differences and strategies that make this part of the insurance world an exciting and valuable place to do business.
What makes this such an exciting time to enter the APAC market, particularly in Asia?
GK: There’s significant momentum right now, with a number of our customers having a substantial presence in many markets in APAC. The life insurance industry is already established in many of these markets, but it’s becoming more sophisticated and competitive as a larger portion of the population becomes accessible. Because our value proposition helps our customers compete in the market, we can offer customers an edge as the market heats up.
Did Montoux’s homebase in Wellington, New Zealand, provide an advantage when first entering the larger APAC markets?
GK: It certainly factors in. We’ve found that many large markets in Asia are quite comfortable with, and used to importing technology solutions from New Zealand and Australia. The longstanding trade relationships, and reputation that comes with it, makes it easier for us to approach targets in these markets. In this sense, we owe a lot to the work other technology companies have done before us, which gives us a wonderful platform to build on.
What are some of the key things Montoux has learned about doing business in Asia?
GK: The way business is conducted is definitely more formal and traditional than in many western markets. Hierarchy is very important and chances are the relationship building process will take a good deal more time than one might be used to markets like the US, UK, or even in some APAC markets, like Australia. One thing that’s helped us is partnering with the New Zealand Trade and Enterprise, which helps us understand more about the market dynamics and culture as well as how we should be operating in each market.
One thing that I’ve found interesting in markets like Hong Kong and Japan is the interest on the tech side of our product. Montoux has focused a lot of our proposition around the value we can provide insurers, especially since we’re a technical company with a robust data analytics tool that requires a high degree of technical aptitude and knowledge to fully understand it. However, we’ve found that many of our conversations with clients in APAC become very technical, whereas many customers in the US strictly want to know the outcome we can provide them with. It changes the conversation significantly. They have an innate desire to understand how things actually work.
What about Montoux’s unique value proposition positions it to work well with APAC insurers at this time?
GK: Most significantly, the competition that’s going to emerge in these big markets in the coming years is going to be fierce. Many of these life insurance products are slightly less complicated than those offered in western markets, and as the emerging middle class becomes increasingly technically and financially literate, it’s going to be quite simple for consumers to compare their options.
If the consumer can easily compare life insurance products, the idea of positioning and pricing your product becomes very important. How do you ensure you’re providing a product at a price that enables you to win the amount of business you want, but also the profitability level that you can. We’ve consistently proven this capability doesn’t exist within most life insurers today, and Montoux provides that solution. We believe the insurers that are earlier to adopt Montoux will get a larger share of the market as the middle class emerges and the percentage of the population looking to buy life insurance grows.
Why was Hong Kong Montoux’s top choice to set up an office in this region?
GK: Many of our customers have their regional headquarters for the APAC region in Hong Kong. Thanks to our strong relationships and reputation with our existing customers, we’ve been introduced to the head office in Hong Kong either to provide our software for the Hong Kong market or to see how it could work regionally in other nearby markets, like Taiwan or South Korea.
Hong Kong also provides an obvious gateway to mainland China, which we’re interested in approaching in the coming years. With 19 of the 20 top insurers in China being domestic only, you really need a partner or direct presence to effectively explore those opportunities. Initiatives like the Greater Bay Development are working to connect these two markets are efficiently, and fintech plays a huge part in that process and growth.
What role do partnerships play in Montoux’s approach to APAC markets?
GK: They play a huge role. We’ve spoken with a number of different companies in Hong Kong, Japan, Taiwan, and a little bit in China as well, and there haven’t been many companies that have been truly successful going into these new market on their own. Exceptions would be companies, like Dell, IBM, or Tata Consultancy Services that have hundreds of thousands of employees and established global brands.
One thing that’s interesting is that the type of partnership we end up with might be different in APAC than in other markets. In markets like Australia, Hong Kong, and the US, we focus on consultants as our primary partners. But in markets like Japan and China, we’re going to be looking for more of a systems integrator, someone who already understands the operating environment of these life insurers, has a solid understanding of the products and services they’re interested in, and generally understands buyer behaviour in the market.
What are Montoux’s top goals and objectives in these markets going forwards?
GK: Definitely ensuring we have product/market fit. We have to understand what it is about our product that’s going to provide the most value to customers in a particular market.
We came to the US with the hypothesis that what we were providing in AUS/NZ was going to help us win business here as well, and it took us some time to realize that wouldn’t be the case. For Hong Kong and Japan, the question is how do we get to the point where we know we have product/market fit so that our solution is attractive to most of our target market, provides them with significant value, and addresses their key pain points.
We also want to establish Montoux’s brand and reputation in these markets. We entered the US market when insurtech was reaching its maturity. In Hong Kong, we feel as if we’re quite early and have a good chance to create a meaningful presence for ourselves before the market gets really hot.