The impact of COVID-19 continues to accelerate the development of InsurTech in Taiwan’s insurance industry as can be seen in the increasing variety of circumstances where InsurTech is applied, says the law firm Lee and Li Attorneys-at-Law which is a member of the Global Insurance Law Connect (GILC), an alliance of insurance law firms spanning four continents.

In a commentary on Taiwan in the fourth edition of the GILC’s Risk RADAR Report, Lee & Li notes that in 2020, InsurTech was mainly applied within businesses to improve operational efficiency. In 2021, inspired by prolonged COVID-related lockdowns, insurance firms have focused more on expanding the digital channels through which they reach out to clients.

A wave of digitalisation has meant that insurance firms have not only developed new InsurTechs on their own but have also worked with technology companies, including startups, to form an eco-system through which they can provide value-added services other than traditional insurance products. The major fields of the “insurance eco system” include Internet of Vehicles, Smart Home and Big Health.

Internet of Vehicles (IOV)

The rise of self-driving cars and carpooling has reduced the number of car accidents and claims, and affected demand for traditional car insurance, meaning insurance companies have had to redesign their products and services to meet their customers’ expectations. In response to this, UBI (User Based Insurance) car insurance has been developing for a few years in the Taiwanese insurance market, which can collect data such as mileage, driving hours, and driving habits through in-car devices and applications and customise premiums and discounts accordingly.

However, in Taiwan, UBI car insurance still faces the challenge of insufficient incentives for the public to use it, and therefore there is not sufficient information for accurate pricing.

Looking forward, if the “vehicle-to-everything (V2X)” ecosystem, connecting cars with peripheral services such as parking and roadside assistance, can be established, it would enhance the added value of car insurance. This would then be an opportunity for insurers to sell more UBI car insurance, and for the market to grow further.

Smart Home

The growing ‘smart home’ market, has seen more and more insurers cooperate with smart device companies to collect data on home safety and residents’ health, allowing them to accurately assess risk in advance and respond to accidents after they occur.

Examples of this type of cooperation include that between AXA and Philips, which has resulted in a mobile application allowing policyholders to control energy use and lighting anytime and anywhere to avoid theft and other dangerous situations. Another example is the collaboration between SCOR Global Life and Garmin, which developed a wearable device that collects insureds’ biometrics data and thus effectively helps the insurer to more accurately access risk and price their products more competitively. While traditional insurance is designed to compensate for risk, now insurance can effectively eliminate it.

Similar to UBI car insurance, the penetration of smart homes in Taiwan has been relatively low. Therefore, Lee & Li sees a lot more potential for insurers to work with smart technology companies to develop specialised products.

Health spillover policies

The onset of an increasingly aging population, the rise of public awareness of healthcare, and the advancement of smart medical technologies have boosted a new type of insurance product: health spillover policies. In such products, policyholders are granted a premium reduction or bonus after improving their health through activities such as walking.

Insurance companies can cooperate with gyms and hospitals to collect exercise data on their customers and then provide incentives, feedback, or medical consultations to encourage people to better manage their health conditions, thereby reducing the risk of claims.

There are several life insurance companies in Taiwan currently offering spillover policies, and amongst them, “walking” spillover policies accounted for the majority.

Lee & Li expects that the insurance industry will find new opportunities in this big health ecosystem, along with changes in the insurer-insured relationship from the customer as a payer to a partner who works with the insurer to prevent risks, thereby transforming the role of insurers from being passive to active.