June 14, 2018
FinTech firms in Asia raised close to $857.7 million across 33 disclosed financing deals, including two ICOs. The total number of FinTech financing deals in Asia in May 2018 was 40.
The largest number of deals were made in India (47.5%), followed by Singapore (20%), China (12.5%), Malaysia and Singapore – with 2.5% of deals each.
Lending was the most represented segment – 23% of all firms that raised funds in May 2018 in Asia were lending companies, followed by InsurTech (18%), Blockchain (13%), and Capital Markets Tech (8%).
The distribution of funds was slightly different from the representation: while InsurTech startups are representing 18% of all startups that were involved in financing deals in Asia in May 2018 (following only Lending startups), they topped the charts in terms of value raised.
Out of the approximate $858 million in disclosed financing, 28% went into the InsurTech segment (~$239 million), followed by 22% (~$191 million) of total funds going to Lending companies, and 16% ($133 million) to Payments firms.
Today’s investments trends are consistent with what George Kesselman, Co-founder & CEO of Anapi, shared at the end of 2016 on the emergence of the InsurTech ecosystem in Asia. He had stated that Asia is attractive from both an insurer and an InsurTech perspective due to the size of its significantly underinsured population.
The region has traditionally seen a large part of the risks self-insured through family and community networks. As the region experiences rapid growth in the affluence of its population, together with an aging population, the risk exposure is then becoming even more apparent and the need for alternative risk transfer mechanisms, including insurance, increase, Kesselman noted.
He also added that there are locations in Asia that have the greatest potential to drive a prolific InsurTech ecosystem – China, India, and Singapore, in particular.
It’s not only the market size that’s representing potential – funds poured into the insurance industry in Asia are quite impressive. In April 2015, – Manulife Financial reached a multiyear deal valued at more than $1 billion that allowed the Canadian firm to exclusively distribute its insurance products through Singaporean lender DBS Group Holdings Ltd.’s branches across Asia.
Singapore and Hong Kong are seen as profitable for insurers due to their status as Asia’s main wealth management centers and an aging population. In fact, citing Swiss Re research, Reuters had reported that Singapore is an under-penetrated market, with per capita life insurance premiums significantly lower than many other developed economies. The edition also reported that AIA Group struck a 15-year exclusive deal with Citibank in Asia in 2013, for which AIA said it paid an $800 million upfront payment. Prudential plc also struck an agreement last year with Standard Chartered, agreeing to pay $1.25 billion in fees, to extend its current agreement for 15 years.
Given the scale of the market and other estimates, more than 60% of the adults in Asia do not have a bank account in some regions; many more do not have basic healthcare and insurance protection in life, health, property, and accident. The region represents a goldmine for InsurTech to bank on as well as an unprecedented opportunity for institutional insurers to expand.