Jacqueline Loh: Technology and innovation as the next phase of growth
Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority
of Singapore, at the Opening of Metlife LumenLab, Singapore, 16 July 2015.
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Mr Blair Hall, Deputy Chief of Mission of US Embassy of Singapore
Her Excellency, Ms Heather Grant, High Commissioner at the High Commission of Canada
Mr Chris Townsend
Mr Zia Zaman
Distinguished guests, ladies and gentlemen,
I am very pleased to join you this afternoon at this wonderful location for the official opening
of MetLife's LumenLab.
MetLife and LumenLab
Lumenlab represents a significant milestone for MetLife and Singapore. As MetLife's first and
only global innovation centre established in Singapore, LumenLab will shine the light forward
on innovative and impactful solutions in health, wealth and longevity that are developed in
Asia, for Asia, and for the rest of the world.
Technology and innovation trends in the global insurance industry
Technology and innovation is fundamentally changing the game for many industry verticals.
The insurance sector is no exception. Specifically, new innovation and disruptive
technologies are expected to transform the insurance industry in three areas: Distribution,
Data Analytics, and Dynamic Products.
Firstly, distribution. Today, the agent-broker paradigm is being challenged by the digital
consumer, who is empowered by technology to conduct research and purchase directly from
the product provider online. Here in Singapore, MAS started this journey ourselves with
CompareFirst, which allows consumers to compare and purchase simple life insurance
products over the internet. But, more than this, the digital consumer also demands choice
and personalisation, transacts with a swipe of their fingers at any time of the day 24/7, and
judges products based on peer reviews. Digital consumers are set to grow in significance,
especially in Asia. In China, the online insurance market doubled in 2014 to US$14 billion,
representing over 4% of total insurance premiums.1 The Boston Consulting Group estimates
that the online insurance market in India will grow by more than 20 times to hit US$2.4 billion
by 2020.2
Second, data analytics. Advancements in technology have allowed insurers to unlock new
data and greatly improve their ability to assess and price risks. Motor insurance is a
case-inpoint. In the past, insurers have traditionally relied on historical accidents and claims data to
establish premiums and policy conditions. Today, telematics3 technology has allowed
insurers to use real-time data to differentiate between drivers' behaviours and better price
risks. However, even as we shift from using historical data to using real-time data today,
driverless vehicles are already under trial in Singapore4 and elsewhere, with the help of
environmental sensors and navigation systems. This implies that in the future, behaviour
may no longer be sufficient indicators of risk, and motor insurance may well shift to become
liability insurance bought by car manufacturers.
Third, dynamic products. The global insurance industry today, has shrunk in terms of its
percentage of global economic activity insured; some estimates put the figure at as little as
10% of global corporate risks covered by insurance. Clearly, risks landscapes are rapidly
changing and insurers must look beyond traditional products, and innovate to address new
and emerging risks. Yet, innovation eschews the traditional, and thus one of the most
significant challenges of established insurers in this area comes from small challengers with
big ideas: start-ups. Start-ups are nimble, hungry, and more often than not, represent the
very consumers they seek to solve problems for. In the insurance space, these players are
moving to directly address the consumer's problem, which at its core, is one of managing
risk, and not simply monetary coverage. We already see this happening in health insurance,
where start-up insurers are creating new tools such as doctor and drug research, fitness
tracking, and telemedicine5 tools6 that can interface with each other. In return, policyholders
are rewarded with an effective, convenient and holistic healthcare package alongside their
health insurance policy.
Seizing opportunities using technology and innovation
With the digital revolution rapidly underway, insurers must adapt quickly to transform their
mind-sets and business models. More often than not, established players run the risks of
being too focused inwards, on issues such as process efficiency, scalability; and miss such
opportunities that start-ups can quickly exploit. The challenge now is for the incumbents to
show that they are fully capable of developing solutions to meet the needs of tomorrow's
consumers. They need to do this by looking both inwards and outwards, and seize new
opportunities using technology and innovation.
(Inwards) Insurers must look inwards to transform themselves, to embrace innovation at all
levels, and create an environment where staff are empowered to be like start-ups: nimble,
flexible, and creative. This is necessary to allow incumbents to compete on an equal footing
with new challengers who are not bogged down by pre-conceived notions. Moreover, the
very notion of an innovation lab signifies the value of experimentation. It should be
recognised that every success will likely be accompanied by several failures, and lessons
learnt from failed projects must contribute to a blueprint that ultimately diagrams how
success will look like.
(Outwards) Insurers must also look outwards to seek collaboration. Collaboration will be the
crux to unlock new and non-traditional sources of talent and partnership outside of the
financial sector. Through collaboration, insurers can gain access to potentially disruptive
ideas and new technologies. Meanwhile, start-ups gain access to the scale of established
players to accelerate the development of solutions and test them in a commercial
environment. I understand LumenLab already has an existing relationship with NUS, and
aims to seek more partnerships across industry sectors such as data analytics, market
research, pharmaceutical, and technology, to explore new business opportunities. LumenLab
is a prime example of how a large enterprise can create an environment like this within its
structure, to foster a culture of innovation and entrepreneurship, and partner with
organisations across industry sectors and academia in Singapore to identify opportunities for
innovation and growth.
Singapore as a smart financial centre
Singapore, too, needs to position ourselves for this new future. We had set our vision to
become a Smart Nation that harnesses technology to discover breakthrough solutions in the
areas of ageing, mobility and transportation, and importantly, develop a safe and secure data
marketplace.7 Likewise, MAS seeks to create a Smart Financial Centre, where technology is
used pervasively in the financial industry to increase efficiency, create opportunities, allow for
better management of risks, and improve lives.
To that end, the MAS will pursue a holistic developmental path that is underpinned by smart
regulatory and developmental policies that are conducive to innovation. A balanced
regulatory approach must encourage financial institutions to thrive on innovation, yet keep
risks in check, to maintain the safety and stability of our financial system.
Our development strategy will entail close partnership between MAS and industry, to
promote a culture of innovation in our financial sector. We have embarked on a number of
key initiatives to develop new capabilities, infrastructure and talent in technology and
innovation. Financial services will feature strongly in our national SkillsFuture effort, and MAS
will work with industry, the Institute of Banking and Finance, as well as educational institutes
to build capabilities in financial technology and innovation. MAS also recently launched the
Financial Sector Technology & Innovation (FSTI) scheme, to support the creation of a vibrant
innovation ecosystem in Singapore.
The opening of LumenLab today bears testimony to MetLife's confidence in Singapore's
proposition as a leading insurance market and our vision to be an innovation hub for new and
emerging insurance risks. LumenLab is an enlightened response to Asia's healthcare and
retirement needs in the next decade, and is well aligned with MAS' strategy to have
innovation-led growth drive our next phase of development as a global insurance market.
Conclusion
Congratulations to MetLife and LumenLab. I look forward to continued partnership with you in
Singapore.
Thank you.