Asia Insurance Review, Singapore, Jan. 2003, -- The best thing regulators can do for the insurance software industry is to encourage more transparency and competitiveness in the market, said Mr Woody Mo, CEO of eBaoTech , a three-year-old insurance software powerhouse based in Shanghai.

Speaking to Asia Insurance Review in a recent interview, Mr Mo said: The more customers demand better services and lower costs, the more likely insurers will come to us seeking solutions. If the industry is not competitive, there is no will to innovate.

Calling on regulators to encourage more efficient distribution of insurance products and timely delivery in the market, Mr Mo said these issues are key drivers for his business. Trends show the insurance market in Asia is moving in that direction. Regulators have identified IT as a key driver in reducing the cost of business operations and helping to improve quality and efficiency.

Insurers Are Laggards In Technology
Mr Mo ranked the inertia of insurers as the current single greatest challenge in his business. Noting that insurers lacked urgency to change their way of doing things and to embrace technology, he said: Of all the financial services institutions, clearly insurance is the most inefficient and has the highest cost structure. As insurance is driven by sales and competition is based on agents and distribution, there is greater focus in motivating agents to get more sales, rather than improving the efficiency of operations. Insurers also have the mentality that as long as they have good agents, nothing else matters .

Dismissing security issues surrounding the safety of online insurance transactions as overblown compared to banks and security companies, where millions of dollars worth of funds are transferred daily, he said: Insurers tend not to have fund transfer capabilities onsite and tend to adopt more features such as filing claims and information gathering.

NTUC Income
Another challenge for eBaoTech is branding as many insurers still prefer to go with big multinational companies for their insurance software needs. However, the company's efforts at promoting its name in the region seems to have paid off with the recent appointment by NTUC Income, Singapore's leading insurer, to help revamp its legacy system starting with life and then non-life.

Mr Mo said the new Java web-based system with user interface is easy to use, maintain and replicate across markets. It helps create a lot of value for the company. One key feature is the paperless imaging function where every document that comes into the company will have a bar code and will be read automatically by the computer. This helps make the entire process automatic and paperless. It is a totally customer-centric design, he added.

Growth Of eBaoTech
eBaoTech , which literally translated in Chinese means insurance, is the brainchild of Mr Mo following his departure from McKinsey where he had worked very closely with big insurers and learned about the bottlenecks and inefficiencies of the industry. With that experience, he zeroed in on the gap in the market and set up eBaoTech.

The firm's competitive advantage aside from the management's expertise in insurance and consulting is its Java platform with better functionality. But more software houses are beginning to use Java now. eBaoTech is positioning itself as a cost-competitive player in the market, boasting rates that are one-third the price of its global competitors. We are a lot cheaper, and our systems have better functionality and are designed to be very customer-centric, he said, adding that being new, the company is more flexible .

With the international market being critical for further growth, Mr Mo has aggressive expansion plans into the Asean region in a step to be closer to his customers. eBaoTech is eyeing the markets of Japan, South Korea, Taiwan, Singapore, Malaysia and Indonesia. He said: We are aiming to double our revenue each year for the next three years, and we are confident in being able to achieve this. The company has over 100 staff across offices in Shanghai and Beijing, and plans to open a unit in Singapore in 2003.

But the immediate priority is to increase the customer base. Currently the business is mainly made up of clients comprising two types: insurers that have set up greenfield operations in China and established regional insurers seeking to replace their legacy systems. Although both businesses are currently balanced, Mr Mo expects legacy business to account for 80% in the long run.

Looking ahead, he feels that IT players can help insurers make the products more transparent, simpler and cheaper while providing better customer service.