THE year ahead is expected to be one where insurers will find ways to marry technology and adjust to the new unions in the face of familiar headwinds such as low interest rates that depress investment returns and the constant struggle to match liabilities.
Already, the wheels of new partnerships were in motion in 2015 with several insurers seeking ways to adopt technology to improve service deliveries and customer experiences.
As DJ de Villiers, chief information technology & programmes officer of AXA Singapore, put it: "Insurance technology in the past has been focused largely on internal automation and simplifying internal workflows."
Now, AXA has taken a customer-centric approach and is spending time on tools and technology to get insurance closer to customers by making it simpler to buy and enabling more things to be insurable, he said, adding that the insurer was also "sparing no effort" in investments in data security.
This tech-driven transformation will continue to spread in the new year, as digitalisation becomes increasingly seen as a way to reach out to consumers and to expand beyond traditional distribution channels of agency force and financial advisers, especially for the life business.
Within Singapore, the immediate concern of insurers and financial advisory firms is compliance with the balanced scorecard (BSC) framework, which will come into force on Jan 1.
It assesses a financial sales representative's performance every quarter and can affect their remuneration. The assessment takes into account non-sales factors including whether the representative took steps to understand the customer's needs, recommend suitable products and make adequate disclosures.
The BSC is one of the Financial Advisory Industry Review's (Fair's) recommendations, aimed at raising the quality of advice dispensed and to mitigate the risks of product pushing and aggressive selling.
While the life industry had 2015 to test the waters, observers said that some industry players are struggling to comply with the new framework and others are frantically trying to iron out the kinks.
Insurers with a large agency force typically build their own systems for their agents. This leaves financial advisory (FA) firms out in the cold.
Most financial advisory (FA) firms here are still largely paper-based and many, particularly the small firms, find it difficult to carry out compliance of the BSC.
While automation of the various steps in sales of a policy could go towards accountability and makes monitoring easier for the different parties, the cost of implementing such a system that can carry out pre-transaction checks is considered costly for FA firms.
It remains to be seen if the FA industry will be able to overcome this challenge.
Separately, consumers can perhaps look forward to more disclosure when it comes to buying a life policy now that the Life Insurance Association Singapore (LIA Singapore) has said that it was looking into this.
The move ties in with efforts by the Monetary Authority of Singapore (MAS) to bring about greater transparency and to restore consumers' confidence in the financial services sector.
On a global level, Shaun Crawford, EY's global insurance leader, expects more partnerships and greater connectivity across sectors to continue into the new year.
"We're starting to see it in the health industry globally where you've seen pharmaceutical companies working with retailers, technology companies, telcos and also insurers."
The global insurance landscape is also changing in other ways.
"In the past," he said, "what we've had is actuaries who've put together data from tables that may go back 30 or 40 years and work things out and say that this is the price. The underwriter of the future won't just be sitting in there pushing paper and actuarial tables, there's going to be someone who's bringing in scientists from around the world, different types of knowledge - geometrics, physics, all sorts of people bringing things here to understand climate change and different data around the world and connecting things together."
Despite familiar headwinds, a Swiss Re report on the 2016/2017 outlook of the global insurance industry expects premium growth and profits to continue to improve in general.
"In advanced markets, real premium income is forecast to rise by about 2.5 per cent in 2016 and 2017, up from about 2 per cent this year. In emerging markets, life premiums are forecast to grow by 10.7 per cent in both 2016 and 2017. This gain will in part be attributable to improved use of digital technologies and the adoption of more customer-centric business models."
Meanwhile, more new players continue to join the non-life market in Singapore and the trend shows no signs of slowing.
Chee Keng Koon, chief executive of Great American Insurance Company Singapore, believes that the non-life sector would still be profitable despite a slowing economy growth and stiffer competition.
"As long as the general insurers who come here put up a business plan to look at offshore markets, they will bring benefits to this economy, particularly in terms of jobs prospects."
Capacity risk still attracts decent rates while the small and medium sized risks are the ones that are more competitive, noted Mr Chee.
Goh Chye Huat, chief executive of insurance broking group Howden Singapore, described the non-life sector here as "subdued", given the excess capacity as non-traditional capital seeking higher yields acquires insurance companies.
Even as the excess capacity has driven premium rates down, he noted that the non-life business still generated decent underwriting results.
Insurance brokers on the other hand, are hit by what Mr Goh calls "double whammy", due to rate erosion. Brokers are remunerated largely on a commission basis so if the rates are eroded, the commissions fall.
"For the larger institutional clients, brokers are prepared to reduce their commission rates. The standard commission rate is about 15 per cent and brokers are prepared to give away a lot of rebates. Thus, you've a double whammy because the rates are coming down and you're giving rebates."
In the highly fragmented intermediary space, Mr Goh said that local players are feeling more heat. "There is pressure on revenues brought on by a very soft market environment and sluggish economy. On the real estate side, there's a lot less construction spending and that's supplemented by government infrastructure spending but that goes to the big boys so the local players are suffering."
The shortage of talent also remains a critical concern within the intermediary space, thereby driving up costs for intermediaries, he said.
A global trend expected to continue in 2016 will be that of "Eastern money buying Western businesses in the life and non-life markets" as well as mergers and acquisitions within the industry, said Mr Crawford.
For example, China's Anbang Insurance Group has agreed to buy United States annuities and life insurer Fidelity & Guaranty Life. In the US, general insurer ACE Ltd is acquiring Chubb Corp, while third-largest insurance broker Willis Group Holdings Plc said that it would merge with consulting group Towers Watson & Co.
"All that's leading to is a change in the value chain - so different people moving to different parts of it to make money. You're also seeing potentially some of the big reinsurers looking at where they may get closer to customers rather than acting as a reinsurance product provider."
* For more of BT's year-in-review stories, visit bt.sg/review_15