Insurers must embrace digitalisation to succeed in China and India, two huge markets with vast untapped potential, according to an EY report.

“Many insurers are struggling to understand what it takes to remain relevant in these markets, unsure of whether to invest in innovation or adopt the solutions of new players,” the professional services giant says.

“The growth potential in the next decade makes it imperative for the industry to develop customer-centric risk management solutions for a future based on next-generation technology.”

Insurers need technology to create new business models, and improve efficiency and operating performance. They must also use it to expand their product offerings in the two economies, where mobile commerce is growing faster than e-commerce.

“Economic, social and environmental factors in India and China are driving technology adoption,” the report says.

“The advent of payment wallets, web aggregators, tablet-based selling and self-service through mobile apps are just a few examples of this transformation.”

China has an insurance penetration rate of 3.57% and India 3.44%, well below the world average of 6.23%.

The penetration rate in the two countries is expected to rise to 5% by 2020, and China should pass Japan to become the world’s second-biggest insurance market in the same timeframe.