Regulatory ‘Sandbox Express’ programme will be a key driver.
In recent years, the Monetary Authority of Singapore (MAS), Singapore's insurance regulator, has been a strong advocate of technological innovation as a means by which to both grow and transform its insurance sector. It was one of the first regional regulators to establish a Fintech Regulatory Sandbox, aimed at providing businesses with opportunities to market test new technologies within a more flexible regulatory environment and it has been extremely successful in attracting worldwide attention to its fintech initiatives – a fact evidenced by the almost 40,000 people that participated in the recent 2018 Singapore Fintech Festival.
How does this relate to insurance broking?
Back in mid-2017 Singapore saw its first insurance broker – local business PolicyPal, graduate from the Fintech Regulatory Sandbox, utilising an application that relies on artificial intelligence to simplify and digitise insurance, enabling both customers and organisations to simplify the management of their insurance policies. After conducting a six month trial in the sandbox, PolicyPal was granted a licence by the MAS to conduct insurance broking activities in Singapore. However since that date, whilst broad interest in digital broking activities has remained high, there has not been a significant increase in the number of technology based brokers obtaining formal recognition within Singapore.
We predict that this will change in 2019. In a Consultation Paper issued by the MAS in November 2018, the regulator has proposed the creation of 'Sandbox Express', enabling certain types of businesses to go through an expedited application and approval process when seeking to trial their business proposals. Insurance broking activities (covering direct general insurance broking and general and life reinsurance broking) have been identified as one of three business categories that would be eligible for registration through the Sandbox Express program.
In practical terms (and if implemented), this means that businesses with an innovative insurance broking product or platform would be able to apply to enter the Fintech Regulatory Sandbox within a much shorter timeframe and can develop their proposal with a clear understanding of the likely regulatory arrangements that would apply to them during the trial. The inclusion of insurance broking as one of the recognised categories also flags the fact that the Singapore regulator is increasingly confident in its assessment of the risks and opportunities attaching to digital innovation in the broking space.
As a result, we expect that 2019 will see the emergence of new insurance brokers, having graduated from the Fintech Regulatory Sandbox on an expedited path, and challenging the existing incumbent players with new and innovative business solutions.
You can read the rest of our insurance predictions here.