Insurance Asia (November 2017)

Display to 30 April 2018

AETNA’S MASS AFFLUENT STRATEGY MANAGING DIRECTOR FOR ASIA PACIFIC DEREK GOLDBERG OUTLINES OPPORTUNITIES IN THE $43.3T MARKET

THE SINGLIFE STORY: HOW TO LAUNCH A NEW DIGITAL INSURANCE BRAND WHY ARE INSURERS’ ANXIETY AT AN ALL-TIME HIGH? INSURANCE M&AS HEAT UP IN HONG KONG HOW CAN TECH CAUSE INSURERS’ PROFITS TO FALL?

FROM THE EDITOR Publisher & EDITOR-IN-CHIEF Tim Charlton production editor Roxanne Primo Uy GRAPHIC ARTIST Elizabeth Indoy ADVERTISING CONTACT Rochelle Romero rochelle@charltonmediamail.com

ADMINISTRATION ACCOUNTS DEPARTMENT accounts@charltonmediamail.com Advertising advertising@charltonmediamail.com Editorial abf@charltonmedia.com

SINGAPORE Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building Singapore 069533 +65 3158 1386 HONG KONG Charlton Media Group Hong Kong Ltd 19/F, Yat Chau Building, 262 Des Voeux Road Central Hong Kong. +852 3972 7166 www.charltonmedia.com Printing Sun Rise Printing & Supplies Pte ltd 10 Admiralty Street #02-20 North Link Building, Singapore - 757695

This issue of Insurance Asia features an exclusive interview with Derek Goldberg, managing director of Aetna International, who has been named as the CEO of the Year at the Insurance Asia Awards 2017. Goldberg revealed that one of his goals for 2018 is to tap into Asia’s growing mass affluent market, which is projected to hold $43.3t in assets by 2020. He also discussed his biggest achievements and how the company has progressed under his leadership these past few years.

We also delved deeper into Singapore’s insurance sector, which seems to be needing a spark to bring it back to life, with performance figures moving at an alarmingly slow pace. Total gross premiums only increased by 0.6% to S$3.7b (US$2.74b) in 2016 whilst underwriting profit fell 16.8% year on year. Whilst the sector’s growth figures have been slowing down, industry experts and sector players are confident that they can turn this slump around by investing in digitalisation efforts. Find out how Singapore insurers must play the digital catch up game.

If you want to find out how to launch a new insurance brand in Singapore and the challenges that go along with it, you should also check out our exclusive interview with Walter de Oude, CEO of SingLife, a 100% digital life insurance provider launched just this year.

In this issue, you will also find exclusive and insightful op-ed pieces where key leaders from PwC, EY, Bain, McKinsey, Norton Rose Fulbright, and Marsh discussed some of the most pertinent challenges insurers are facing, including digitalisation and customer loyalty.

Last but not the least, find out which companies emerged as winners at the Insurance Asia Awards 2017. This issue features some photos from the awards ceremony held in July in Singapore.

Enjoy!

Can we help?

Editorial Enquiries: If you have a story idea or just a press release, please email: abf@charltonmedia.com and our news editor will read it.

For a personal message to the editor, put the word “Tim” in the subject line.

For Media Partnerships, please email: abf@charltonmedia.com and put “partnership” in the subject line and it will forward to the right person.

Subscriptions email: subscriptions@charltonmedia.com Insurance Asia is published by Charlton Media Group. All editorial is copyright and may not be reproduced without consent. Contributions are invited but copies of all work should be kept as Singapore Business Review can accept no responsibility for loss. We will however take the gains.

Sold on newstands in Singapore, Malaysia, Hong Kong, London, and New York. Also out in sbr.com.sg with online readership of 215,000 monthly unique visitors*. *Source: Google Analytics **If you’re reading the small print you may be missing the big picture   



Tim Charlton

CONTENTS

10

CEO INTERVIEW Aetna’s Derek Goldberg set on tapping into Asia’s growing mass affluent

OPINION

FIRST 04 Emerging Asia to lead insurance sector growth

06 Why insurers’ anxiety is at

24 SBR Awards 2017 honours 22 outstanding firms

26 Disrupt or be disrupted

an all-time high

14

feature The SingLife story: How do you launch a new insurance brand in Singapore?

OPINION

22 Don’t get tripped up by banana skins

05 M&As heat up in HK insurance

12

Country Report How must insurance firms in Singapore play the game of digital catch up?

28 How insurers can get their customers to love them

30 Challenges for the insurance sector 32 Product liability coverage for SME exporters and manufacturers

08 How can technology cause insurers’ profits to fall precipitously?

Published bi-annually on the second week of the month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 2 INSURANCE SingaporeASIA 069533

For the online versions of the insurance stories, visit the website

insuranceasia.com

FIRST economic growth slowdown, China is still projected to account for almost 60% of expected emerging-market premium growth by 2020. This translates to roughly US$280b of the US$480b in projected additional premiums for the period.

Thai insurance in flux in 2017 thailand

With foreign shareholding now allowed at more than 49%, Thailand’s life and non-life companies stand to gain even more. KrungThai-AXA Life’s (KTAXA) annual growth of 23%, 13% above market growth, may increase further, as foreign investors and insurers look to Thailand as a springboard for regional expansion.

Other firms such as AIA, Muang Thai Life, and Thai Life Insurance have grown nearly as fast and are expected to reach new highs in 2017 due to the further strengthening of Thailand’s economy.

Whilst economic and political woes have made an impact on the industry over the past year, analysts at OIC project that the life insurance sector will expand approximately 7.63% from 2016, driven mainly by Thailand’s economy which is projected to grow by 3-4% in the coming year.

Leading insurance companies AIA continues to lead in the market, despite its share shrinking from 21.7% to 20.03% over the past year. It is closely followed by Muang Thai Life, Thai Life Insurance, KTAXA, Siam Commercial Life, Bangkok Life, and Allianz Ayudhya Assurance, with the top five players accounting for almost 72% of the market share.

Greater openness to digitalisation, Thailand’s relatively low life insurance penetration rate, and increased protection insurance policies are also major growth factors. However, as major changes sweep the industry, the short-term will not be much of an excitement. The challenges of technology, customer, and regulation continue to haunt the industry.

“Sustainable growth and increasing income levels will continue to increase demand for insurance products.

Advances in digital technology and the rise of millennials are raising customer expectations. However, the concern factors mentioned above could derail Thailand’s economy and insurance market,” analysts at Thai Re Group said.

4 INSURANCE ASIA

Allianz Indonesia is one of the key players in the country

Emerging Asia to lead insurance sector growth emerging markets

W

hen 2020 swings around, Asia will account for 90% of insurance premium growth in emerging markets, a forecast that is driven by China’s immense potential and by the region’s demographic momentum. China’s mammoth contribution to this EY forecast should not come as a surprise to insurers as the world’s second biggest economy promises the most lucrative opportunities, but analysts reckoned it would be wise not to overlook the strong growth fountains found in Indonesia, Malaysia, and India.

“The most attractive markets, which combine high potential growth with relatively lower risk, are mainly in Asia,” said Rohan Sachdev, global insurance emerging markets leader at EY, citing the firm’s latest riskopportunity ranking. “Whilst China is by far the biggest potential growth market, Malaysia, Indonesia and India also offer potentially attractive opportunities. Singapore, Hong Kong and South Korea offer low risk, but much smaller growth potential.”

Even after factoring in an expected

China alone, despite a likely near-term deceleration in GDP growth, remains the biggest opportunity of any emerging market.

Opportunities in Indonesia After China, Indonesia is next in line with the most promising opportunity in Asia, poised to experience annual premium growth of 16% from 2015 to 2020, but this will come with higher risk. Sachdev said the country offers global firms a huge market to develop sharia-compliant, takaful insurance programmes. Insurers yearning for growth will find Asia the perfect place to sate their thirst, if only for the sheer number of potential clients coming out of the region. In the case of Indonesia, an additional 40 million people are projected to join the country’s middle class by 2020, which has attracted the likes of AIG and Sun Life to expand their local presence.

“Favourable demographic trends and the ability of new technology to allow companies to leapfrog antiquated infrastructure help explain why Asia remains an important focus for companies looking to boost their investment in emerging markets,” reckoned Sachdev.

EY data suggested there is a correlation between robust middle class growth and insurance product appetite. The number of households earning more than US$20,000 per year in China, Indonesia, India, and Malaysia - the top four in the firm’s opportunity rankings in Asia - is expected to see a significant rise from 2016 to 2020.

Premium growth by country

Source: Oxford Economics, Swiss Re

FIRST The most widely cited single factor for value creation in M&A deals is customer retention.

A major concern The digitalisation trend is also a critical concern for acquirers.

“Insurers expect new technologies, such as financial technology, blockchain, artificial intelligence, and robotics to dominate future integrations and target operating model design, but the most impactful trend today and tomorrow is data analytics,” said Wada. But in making M&A insurance deals, companies reported two potential improvements, with 70% citing governance and decision-making as a potential area of focus, whilst 62% point to synergy realisation planning and tracking. The latter is the most commonly ranked as the important change that insurers could make during future integrations, said Wada.

He also said insurers are now acutely aware that in any given deal, uncertainty can prompt talented employees to leave the organisation and push customers away, and have made measures to prevent either from happening. Amongst the survey respondents, only 12% said more than a quarter of the target’s employees left during the first year following a transaction.

MassMutual is now 60% owned by Yunfeng Financial

M&As heat up in HK insurance

A

hong kong

n invasion is afoot in the Hong Kong insurance industry, and it is led by non-insurers entering the market to acquire established local players, as well as technology behemoths seeking synergies. In June 2016, mainland Chinese real estate company Fujian Thai Hot Investment agreed to purchase the life insurance operations of Dah Sing Financial Holdings for US$1.3b (HK$10.6b), whilst Jack Ma’s Alibaba-backed Yunfeng Financial agreed to buy the Asia unit of MassMutual for US$1.7b.

Analysts reckoned the former deal is an example of a non-insurer firm spending billions not merely to diversify, but to own a strategic enterprise that can fuel their other lines of business.

“The expansion of the insurance business can offer a long-term and low-cost channel to gain access to capital so that buyers can reinvest the premiums to feed their other business—such as real estate—which could yield higher investment returns,” said Kevin Angelini, head of strategy for the insurance consulting and technology business in Asia Pacific at Willis Towers Watson.

“That said, a future challenge will be effective asset-liability management of the insurance portfolio and

potentially also capital management.”

Meanwhile, he noted the Alibaba deal represents the growing ambitions of acquirers to be at the forefront of digital revolution in insurance. By integrating insurance technology, or insurtech, such as robo-advisory technology and advanced data analytics into the traditional insurance business model, Alibaba is hoping to create superior value and spur high growth.

Insurtech and digital tools “The most widely cited single factor for value creation in M&A deals is customer retention, and insurtech plays a significant role in that by improving customer engagement through the use of data and analytics,” said Angelini. “Digital tools are nowadays an important way to enhance the interaction between insurers and policyholders, and create engaging customer experiences.” He cited the rise of mobile apps that are used to report claims by submitting photographs of damage. This more convenient process helps increase customer satisfaction since claims can be processed faster.

Looking beyond the Hong Kong market, Michael Wada, partner, London EMEIA financial services, transaction advisory services at EY,

said a majority of companies involved in M&A insurance deals reported more value is being created. Around 75% said they now generate cost synergies of more than 30% of the target’s cost base, compared with only 22% in 2015. He also said the survey showed significant focus and attention is now being put to manage the customer experience or journeys, and protecting innovation levels in the business.

What percentage of employees in the target company left within the first year following the transaction?

Source: EY

INSURANCE ASIA

5

FIRST Bridging protection gaps in Hong Kong hong kong

Why insurers’ anxiety is at an all-time high

Insurance Banana Skins Index

I

risk perception

More than half of Hong Kong’s workforce have experienced income loss due to illness or disability. Yet a survey by Zurich Insurance (Hong Kong) revealed that half of the local workforce lack sufficient savings to last six months without income.

The report also revealed that Hong Kongers feel they are most vulnerable to income loss. Only a quarter of respondents believe they have a less than 10% chance of lost earnings due to illness or disability, versus the more confident 38% average of the 11 markets surveyed.

Eric Hui, chief executive officer, Zurich Insurance (Hong Kong), said, “The study highlights a serious issue with income protection gaps in Hong Kong. Income protection is not a pleasant topic, and it’s complex, so people often need a trigger to motivate them to act. We hope the report will stimulate debate, and help more people in Hong Kong prioritise income protection, seek professional advice, and formulate a long-term plan.”

Significant gaps The findings from the second phase of the study reveal that Hong Kong workers are more likely (54%) to experience income loss in working life due to serious illness/disability than any of the respondents of the markets surveyed (average 44%).

The research also shows that 54% of those surveyed had personally experienced income loss due to sickness or accident. Of those that experienced income loss, over onethird (38%) suffered income loss for longer than six months. Of those without income protection insurance, less than half (45%) said they would consider investing in protection, with most citing price as the biggest barrier. Mr Hui, said, “The lack of protection, combined with Hong Kong’s increased longevity and rising healthcare costs, presents a significant protection gap challenge for the city.”

6 INSURANCE ASIA

f regulatory and macroeconomic risk were foremost amongst insurer worries two years ago, these have now been overtaken by anxieties on coping with change and cyber risk.

Change management has shot up to the top of the bi-annual 2017 Banana Skins survey, which reflects risk perception amongst insurers globally in the next two to three years, up from sixth place in the 2015 rankings. Similarly, cyber risk has risen to become the second most critical concern for insurers, up from fourth, due to the rising threat of cyberattacks and the steep costs of underwriting cybercrime.

Top concerns for insurers “For the first time in six editions of this survey, operating risks pose the greatest threat to insurers. Structural and technological changes to the industry could upend traditional business models,” said David Lascelles, survey editor at the Centre for the Study of Financial Innovation, which conducted the survey with support from PwC. “At the same time, insurers are grappling with a very difficult economic climate, which helps explain why anxiety is at an all-time high.”

Source: CSFI, PwC

For the first time in six editions of this survey, operating risks pose the greatest threat to insurers.

Regulatory risk has topped the last three editions of the survey, but has fallen out of the top five this year largely as insurers start to see it as a business-as-usual requirement, even as regulatory cost and complication remain sources of concern.

Technological risk still sits in third place, as new technologies such as driverless cars and artificial intelligence continue to pour into the industry and potentially upend it. Interest rates, investment performance and macroeconomic risk round out the top five list of key insurer risks for insurers.

“Both the challenges and opportunities presented by change underline the vital importance of being clear about where you’re best able to add value, and then being ruthless in targeting investment and management time at these priorities,” said Mark Train, global insurance risk leader, PwC.

people

Generali, Coface reveal newest appointees in Asia Neil Gardner has been appointed as Asia chief customer officer at Generali Asia in September 2017. He will report directly to Roberto Leonardi, regional officer for Asia. Based in Hong Kong, Generali’s regional hub, Gardner will be responsible for Marketing and Communication, Digital and Analytics, and integrating Operations as part of the overall customer experience. He brings over 25 years’ experience in the Banking and Insurance industries, in customer centric roles, having worked with GE Money, Citibank and AIG in Asia.

Coface named Samuel Jesuratnam as country manager for Singapore effective September 2017.

He joined Coface in 2002 as country manager in India. He and his team were instrumental in developing the various business lines of Coface in India starting with forging partnerships for the firm’s core credit insurance business.

Neil Gardner

Samuel Jesuratnam

FIRST

How can technology cause insurers’ profits to fall precipitously?

W

Number of innovations as % of total in the database1

digital technology

hen a top insurance company in the US found that its customers seeking an online insurance quote were finding it tedious to fill out numerous forms, it deployed Amelia - which is not a human agent, but rather a digital personal insurance assistant that would speed up the process. Amelia has since been guiding prospective clients through the smoother, faster process of getting a personalised quote for auto insurance.

Amelia is programmed to ask customers where they live, how many drivers will be on the policy and other pertinent details, all the while checking the customer conversation for information that has already been provided, so some questions may be skipped and the whole process ends faster than if a human were to walk through a predetermined list of questions. The extracted information is then automatically fed into the insurer’s system so it can make a sound underwriting decision.

Amelia, which was developed by IPsoft, makes the whole conversation far from awkward through the use of natural language, and is one example of a digital innovation transforming the industry. Insurers are indeed finding

Taiwan’s protection business growing slowly

greater efficiency and improved customer satisfaction by leveraging on the likes of artificial intelligence and automation. But some industry analysts warned that the digital wave sweeping the industry could also threaten to drown premium income in the long-term as technology-powered risk prevention rises. “In the next 12 months, it is our opinion that there will be an uptake in the implementation of all forms of artificial intelligence by insurers. We have already seen several use cases, and we expect insurers to roll out new use cases. Insurers who have not yet adopted this technology will be working to catch up,” said Colleen Risk, senior analyst, life annuity and health at Celent Research.

Double-edged But digital technology is not an absolute boon for insurance, as it also reduces potential future premium income for the industry as innovations enable a shift towards risk prevention. Digital technology may boost profits for an auto insurer in the short term but it may also lead to a longterm decline, according to Tanguy Catlin, senior partner in McKinsey’s Boston office who leads the firm’s North American P&C

Source: McKinsey Panorama Insurtech Database

insurance practice. “Better data will make pricing more accurate and help detect fraud, whilst automation could cut the cost of a claim by as much as 30%” Catlin said.

Thereafter, however, with forward-collision avoidance, blind-spot assist, and adaptive cruise control already common features in new cars, safer vehicles will reduce risk and lower premium income. Catlin pointed as an example the emergence of entirely selfdriving cars, which could force manufacturers to assume the risk for what was previously a personal liability.

“The result of these changes could be that over the course of a decade, insurers’ profits fall precipitously,” he said. “It is now possible to imagine a business model built not so much on the premiums consumers pay to protect themselves against damages they might or might not incur, but on gadgets or services that predict and help prevent risk.”

Traditional life growth driver, limited growth for accident and health Taiwan Life insurers’ product mix by FYPE 2010-16

taiwan

Taiwan life insurers expect continued demand for their savings-type products over the next 12-18 months, thanks to a high a high national saving rate of 34% of GDP in 2016, according to Moody’s. However, whilst continuing savingstype product growth will sustain the industry’s topline and profit momentum, Moody’s noted that this growth is credit negative as it reflects the industry’s slow progress in expanding its protection-type products.

As shown in the second chart, the average sum assured per in-force policy has been low at TWD470,000 ($15,000) and is slightly declining, which indicates protection elements have remained low in new insurance sales in recent years. In addition, the average annual premium growth rate of pure protection products, such as accident and health, has been subdued at 2% between 2012-16, as seen in the first chart.

“However, we expect continued improvement in the product features of savings products, driven by the regulator’s tightened guidance.”

8 INSURANCE ASIA

Sources: Taiwan Insurance Institute, Moody’s Investors Service

Protection elements remained low in new insurance policy sales Average sum assured per in-force insurance policy

Source: Taiwan Insurance Institute, Moody’s Investors Service

In Asia, we’ve expanded our presence from three countries to eight over the past five years.

Our regional expansion allows us to provide highly localised services, matched with the expertise of our global network.

Derek Goldberg Managing Director Aetna International 10 INSURANCE ASIA

INTERVIEW

Aetna’s Derek Goldberg set on tapping into Asia’s growing mass affluent The Asian mass affluent consumer is expected to hold $43.3t in assets by 2020, and Goldberg eyes leveraging this opportunity. Find out more about him as he reveals his goals, achievements, and business philosophies.

D

erek Goldberg is managing director, Asia Pacific for Aetna International, based in Singapore. In this role he serves as chief executive of Aetna Insurance (Singapore) Pte. Ltd., chief executive of Aetna Insurance Company Limited Singapore Branch, and president commissioner of Aetna Global Benefits Indonesia. He is responsible for developing Aetna’s business throughout the Asia Pacific region and has recently been named the CEO of the Year at the 2017 Insurance Asia Awards.

Goldberg joined Aetna in 2006, and during his career with the company, he has led a number of international development initiatives, including the acquisition of an insurance license for Aetna Health Insurance Company of Europe Limited (AHICE) and the implementation of strategic partnerships in various locations throughout the world. He is a graduate of the University of Virginia and is conversant in Japanese. Find out more about Goldberg in this exclusive interview with Insurance Asia.

What do you consider as your biggest achievements so far as the managing director, Asia Pacific of Aetna International? How has the company progressed under your leadership?

One key area of focus for me has been employee development for the people at Aetna. All employees are encouraged to maintain a development plan with the support of their managers. We have also increased training and development opportunities year-over-year. One of the metrics that points to success is that at least 20% of our team members have benefitted from internal transfer or promotion opportunities within the past two years.

We have numerous examples of employees transferring across international borders to take on new roles. This has allowed the talent in Aetna to advance their skills and careers. We intend to build on this going forward.

In terms of business results, I am most proud of our geographic expansion. In Asia, we’ve expanded our presence from three countries to eight over the past five years. Our regional expansion allows us to provide highly localised services, matched with the expertise of our global network. One recent example of expansion is our acquisition in July this year of Bupa Health Insurance (Thailand) Public Company Limited, a large specialty health insurer in Thailand. Adding 300,000 members and over 400 health care providers to our network there is a significant demonstration of our commitment to investing in the Asia Pacific region.

What are your key business philosophies?

This is a people business and there are two groups of people we must never lose sight of, our customers and our

employees. With respect to customers, if we look at every business decision through the lens of what is the impact on the customer, we will make better decisions. It sounds obvious, but it is too easy to focus exclusively on process or product and lose sight of the customer. Our strong local presence throughout the Asia region is also key to understanding our customers, as needs vary country-tocountry.

With respect to employees, we’re focused on fostering an environment which allows our employees to grow. With a strong commitment to employee development and skills advancement, we seek to equip our team members to provide Aetna’s members with the best possible healthcare services. By ensuring our employees’ needs are met in addition to considering how better health services can be provided to our customers, everyone wins.

What three goals are you focused on for the next 12 months?

Tapping into Asia’s growing mass affluent market: One of the largest and fastest growing wealth segments, the Asian mass affluent, is projected to hold $43.3 trillion in assets by 2020, according to PwC. There’s certainly opportunity to further expand our health insurance offering to target a greater share of the disposable income and medical spending of this mass affluent segment.

Growing our brand: Aetna will be working hard to increase brand awareness in the Asia Pacific region. As we invest further in this region, we also need to invest in getting our story out there, ensuring that we have the recognition required for companies and individuals to benefit from our health solutions.

Putting our people at the centre of our strategy: Talent and team development will remain as one of our key priorities. To cultivate and retain top talent, we will continue to invest and re-invest in our employees, presenting new opportunities for learning and career advancements as well as nurturing the diverse and inclusive workplace we are so proud of.

What is the significance of your win as the CEO of the Year at the Insurance Asia Awards to you and to Aetna International?

A CEO is only as good as his or her team. Rather than a personal recognition, I consider this award to be a validation of the quality of the team we have built in Asia, as well as the progress made by Aetna. This award belongs to the hundreds of team members all around the region who support our customers every day, and continue to strive to do more. I hope they see this win as part of their achievements as well.

INSURANCE ASIA

11

cOUNTRY report: Singapore

Great Eastern is one of the top insurance companies in Singapore

How must insurance firms in Singapore play the game of digital catch up?

The “wait and see” attitude is holding back insurers from being early adopters of digital transformation.

W

hen NTUC Income launched Start.Sure in November 2017, its goal was to provide new startup companies in Singapore with a selfservice digital platform for insurance products so they can purchase and manage employee benefits conveniently. Many industry experts took notice and for some, these kinds of innovations and technological developments are what could spark Singapore’s underperforming general insurance sector back to life.

The performance figures of Singapore’s general insurance sector are moving at an alarmingly slow pace. Total gross premiums only increased by 0.6% to S$3.7b (US$2.74b) in 2016 whilst underwriting profit fell 16.8% year on year. Whilst the sector’s growth figures have been slowing down, industry experts and sector players are confident that they can turn 12 INSURANCE ASIA

this slump around by investing in digitalisation efforts.

“The insurance sector in Singapore has not kept pace with the transforming landscape that embraces digitalisation,” said Walter de Oude, chief executive officer of Singapore Life, adding that the current perception towards insurance purchasing is still very strongly adviser-led. “Digitalisation would definitely be the way to go—be it the way we communicate with our customers or the way we give them access to protection solutions that adapt to the digital way of life.”

Ryan Cheong, managing director, strategy and transformation, Great Eastern, echoed this sentiment, noting that the face of insurance has transformed drastically. “Our customers are driving change. Their expectations are being shaped by the digital changes they are experiencing in various aspects of their lives,”

Walter de Oude

Ryan Cheong

he said. The space for digital opportunities remains significant for Singapore’s general insurance sector. Management consulting firm Synpulse mentioned that only 4% of Singapore’s all new life insurance business premiums were sold through digital direct channels in 2015. This is a curious case given that Singapore has one of the best internet connection speeds in the world and has one of the highest mobile penetration and usage globally.

Digital catch up The rationale for the need to innovate and undergo digital transformation is simple: to be able to focus on the evolving needs of customers for a more convenient, hassle-free, effective, and efficient way to handle insurance policies. “We know that many people value the ease of access, efficiency, and flexibility when making purchases and these

cOUNTRY report: Singapore are the pain points,” de Oude said, adding that these are what drive the digitalisation efforts of Singapore Life.

This is also the case for Prudential Singapore, according to the company’s chief customer officer Angela Hunter, as they pivot to a new and better customer-focused strategy to create “awesome experiences anchored by digital innovation.” She said technological innovation not only helps insurance firms understand customers’ evolving needs better, but also provides a more effective and cost-efficient engagement and operational tool in the long run. “To refine the tailoring of our products and services, we’re engaging with our customers in real-time and mining online and social platforms for deeper insight into their lifestyle needs.”

Regulators like Life Insurance Association (LIA) Singapore have also been active in promoting and acknowledging the initiatives that players in the sector have been undertaking. Pauline Lim, executive director, LIA, said these are all contributing to the advancement and enhancement of the industry’s offerings to the customers. “Many insurers are implementing digital applications such as chatbots and IPOS systems. Increasingly, we see the introduction of apps that offer an enhanced customer experience,” she said, citing PolicyPal as an example, which helps policyholders keep track of their insurance plans and even allows them to file their claims on their mobile phones.

Complementary, not cannibalising Despite this sweeping digital transformation happening in Singapore’s insurance sector, Lim said that it is still important to offer options to customers and look at the increasing choices as complementary, rather than cannibalising. “The important point is that there should remain multiple channels of distribution, which appeal to and better serve different market segments,” she said, citing the example of life insurance products where customised advice from professional financial representatives is still highly relevant, with “digital applications enabling them to provide more

timely and more effective service to prospective buyers and existing clients.”

Digital initiatives Some of the digital initiatives in the insurance sector, according to Lim, include efforts from health insurers to be more proactive rather than reactive in terms of their policies.

This includes a move away from merely reimbursing medical bills, to also encouraging policyholders to adopt and maintain a healthy lifestyle.

“Prevention is better than cure, and it will help to lessen the amount of claims paid out,” she said.

This is echoed by Melita Teo, chief life officer at AIA Singapore, when she said that health and life insurance will continue to play a bigger role in the city-state’s insurance sector. Singapore’s life insurance subsector, for instance, continued its momentum of strong growth in the second quarter of 2017, with a 7% growth in weighted new sales of annual premium products to $605m.

“The insurance industry has a lot to gain by leveraging our government’s digital initiatives. There will also be heightened demand for quality healthcare and proactive lifestyle management,” she said.

Another noteworthy initiative is Singapore Life’s robo-underwriting service, allowing for real-time underwriting results to be generated during the application process, with customers potentially getting their policy issued and be covered in under 20 minutes, compared to traditional processes which usually take weeks.

Jeremy Lian, senior vicepresident – technical services, MSIG Insurance Singapore, said that digital transformation is not anymore only directly involving software and cloud applications, but also hardware like wearables as well as the integration of the two. “The insurance sector is dabbling with the concept of connected coverage where devices such as wearables, telematics devices, and IoT-enabled devices are used to fill the information gap between insurers and consumers,” he said.

However, Lian said that despite the progress in the insurance sector in terms of digital transformation,

Angela Hunter

Pauline Lim

Melita Teo

Jeremy Lian

Derek Goldberg

there remains very few early adopters amongst insurers and customers because of a “wait and see” attitude and an innate risk aversion. Whilst this is a normal occurrence in the push and pull of supply and demand, the catch up game should be fasttracked, otherwise insurance firms at the end of the curve will be left behind. “Many insurers are stuck playing ‘catch up’ with technology as they grapple with the imminent wave of disruptions,” Lian said. “For the early movers, however, they are gradually learning to integrate new technology and innovation into existing business and distribution, leaving the cautious further behind in the digital race.”

Outlook Moving forward, de Oude believes that movements from consumers will inevitably require the industry to adapt to the changes—or risk becoming the one biting the dust. He said the downtime for information process will become shorter very quickly over the next few years and if companies are able to provide the much-needed information and services quicker and more efficiently, the “outlook will certainly be optimistic for the industry.”

Derek Goldberg, managing director for Asia Pacific at Aetna International, noted that agility will be essential so firms can meet customer expectations for seamless crosschannel digital service and any-device access. Another trend that could shape Singapore’s insurance industry is the application of robotics to improve productivity and customer service, as well as data analytics to inform and enhance product delivery and client service and interaction.

Start.Sure is a self-service digital platform for insurance products

INSURANCE ASIA

13

feature: singapore life

Singapore Life launch event

The Singapore Life story: How to launch a new insurance brand in Singapore Following almost half a century of the same players in the industry, Singapore Life is breaking boundaries and stepping on new grounds in an attempt to breathe new life in Singapore’s evolving insurance industry.

W

hen Singapore Life officially started its digital operations in October 2017, there was both a sense of relief—and an enduring excitement and belief—permeating from the company’s chief executive officer Walter de Oude. His company’s origins story may sound like any other startup story— a narrative full of hardship, almost-failures, and determination. But according to the man who inspired the company’s rise from the ground up in about three years, it all started with a belief.

“The dream was to change the life insurance industry,” de Oude said in an exclusive interview with Insurance

Singapore Life families

14 INSURANCE ASIA

Singapore Life simplifies both the product and life insurance process to remove any deterrent for people to get the protection they need.

Asia. “For us, we absolutely believe that what we are building is good. We believe that what we are building is better than what customers currently have.”

Digital transformation strategies and adaptation of insurance companies in Singapore have been gradual.

There have been initiatives to use artificial technology and facial recognition in insurance transactions, yet the industry still heavily relies on agents and advisors to process these insurance products. This is where Singapore Life enters as an “insurtech.”

Singapore Life, being the newest kid on the block in Singapore’s fast-paced and competitive insurance industry, is trying to break that mold by offering technologyfocused and modern offerings of insurance products to millions of Singaporeans. The company is currently the first one to offer a complete end-to-end life insurance digital process, “from the time you’re getting a quote to actually buying a life insurance can all be done digitally with no human intervention at all.” de Oude is consistent in emphasising about the need to change and modernise the city-state’s insurance industry, so customers can receive better services and experiences.

He noted that, “Singapore Life simplifies both the product and life insurance process to remove any deterrent for

feature: singapore life

The Singapore Life team at the launch event in July 2017

people to get the protection they need. We take the efficiencies from technology to offer better value to the insurance journey—making it more efficient, transparent and flexible to their needs.”

But Singapore Life’s milestones didn’t start when the company’s doors opened for its first customers around two months ago. But over the three years of the group’s evolution as a reliable and trusted life insurance company.

In April 2017, Singapore Life announced that it has raised a sizeable funding of around US$50m for its series A round—considered the largest ever by a Singaporebased insurtech company. This is a highly significant development for a company who was struggling to meet eye to eye with prospective investors in the early days of its existence.

In June 2017, Singapore Life had also become the first fully licenced direct life insurer to be approved by the Monetary Authority of Singapore (MAS) over the last 47 years. During the interview, de Oude wittingly didn’t deny that pursuing the establishment of Singapore Life has, in one way or another, had other industry veterans describe him as a “certain kind of crazy.”

“Building a life insurance business is not an easy thing.

It’s complicated. If it was easy, lots of people would do it and the fact that Singapore Life is the first life insurance company to be given a licence in 47 years is a testament to the fact that it is not easy,” he said adding that dealing with the regulator—in this case, MAS—sort of keeps a company on its toes as the regulator wants to know that the company has the ability to execute the business operations in a meaningful and dependable way.

Banking on technology Whilst the company has been partially operating in a direct manner since June for its high net worth customer segment and private banks, Singapore Life’s crown jewel is its reliance and championing of the use of technology to provide better products, services, and experience to customers. “Technology is move so fast that you have to be incredibly nimble in order to do that. Within our own architecture, we take the best technologies that are available in the market and put them together,” he said.

Singapore Life’s number one selling point is the convenience it provides to its customers through its online platform and the utilisation of other cutting-edge

In April 2017, Singapore Life announced that it has raised a sizeable funding of around US$50m for its series A round— considered the largest ever by a Singaporebased insurtech company.

technologies to ease the insurance process for customers.

Starting with its products and services for the high net worth and private banks segments, Singapore Life now offer life insurance plans including term insurance and critical insurance available for application and sale online.

This is on top of products that consist of universal life policies and variable universal life for the HNW sector.

“The change in customer behaviour towards digital execution, the digital life, the digital way of doing things.

Life insurance is no different. The whole industry will move in a digital direction and what we’ve done is to empower that change,” he said. de Oude noted that Singapore life don’t do agency work where an agent represents one company to sell one product although they do work with a lot of independent financial advisers, and they are helping them execute those sales or to manage the advisers’ clients’ insurance needs completely digitally and efficiently. “Whether you want to go to an independent financial adviser or by online, it should be completely your choice as a customer,” he said. Currently, Singapore Life’s products and business consist of 80% direct and 20% still coming through advise, although given the company’s early operations, the numbers are still bound to change.

This insistence to push the boundaries of the citystate’s insurance industry status quo was not a walk in the park. But this difficulty has made Singapore Life an increasingly respected player in the industry—all within the span of a few months. This belief goes through all the levels of the company’s operations. de Oude said that this determination is rooted on the belief that they can build a much better life insurance company than what is currently existing in the market; to be able to build a good platform to deliver good insurance products and services to millions of Singaporeans.

Making a difference de Oude’s persistence to establish Singapore Life came with a question that lingered in his mind: how can I make a real difference? “As the previous chief executive officer of HSBC Singapore’s insurance business, I was faced with a choice in my career whether I’m going to be the CEO of big companies like HSBC—and in fact, I had a very strong career ahead of me. I had a fantastic job with

The Singapore Life team

INSURANCE ASIA

15

feature: singapore life HSBC and highly regarded,” he said.

“But you get to a point in your life where you think to yourself, it must be more than just this. Surely the world needs something better. When I’m old and looking back at my life, and looking at what I’ve been able to achieve, am I happy to say I ran the world’s biggest life insurance company as CEO or did I really make a difference by creating something new, something aspirational, something that I can be proud of, something that will last longer than me,” de Oude explained.

It also helps that the whole management team, not just de Oude, has been embracing technology and forwardthinking innovations with open arms. The thought processes in the firm, according to Singapore Life’s CEO is not how easy it is to implement technology. The view, instead, is the other way around, or how easy it is to rip out technology because of how fast and easy current technologies become obsolete and get replaced by newer, fancier, and more powerful ones in a matter of months.

“Now I want to be in a position where we’re staying at the cutting edge of technological advancement,” he said.

“When something better comes along, I can just replace it as we go and be able to add new things.” de Oude’s commitment to making a difference is also deeply rooted on his commitment and passion to Asia as a region—where he moved to at the turn of the millennium—and particularly to Singapore, the place he currently calls home. He explained that the existence of Singapore Life is mutual—Singapore as a brand has helped his company gain trust and credibility points, and in turn, his firm aims to provide Singaporeans a life insurance alternative that is more convenient and provides a better service and experience.

“Everyone believes in the Singapore brand and in the regulatory framework of Singapore,” he said. “Therefore, the existence of a company like Singapore Life within the broad framework of Singapore’s regulatory environment and MAS, people get comfortable with the brand immediately,” de Oude said.

Singapore Life currently offers a much more convenient life insurance alternative for Singaporeans, with products generally cheaper at the moment than most other industry competitors. This is possible, according to the Singapore Life CEO, because of the implementation of technological efficiency which turns a better value for customers. “We

Singapore Life brand campaign

16 INSURANCE ASIA

Singapore Life office

Singapore Life currently offers a much cheaper and more convenient life insurance alternative for Singaporeans, with products 3% cheaper at the moment than most other industry competitors.

can run a life insurance company with a fraction of a number of people,” he noted.

A story of marriage Singapore Life’s US$50 million initial fundraising was a record breaker for the insurtech company in the city-state, but getting investors at first was no easy task. “Starting a new life insurance company is a difficult thing to do, and to find investors that back you in a way that you want to run the business is difficult,” de Oude said.

He said the company, particularly the management team, approached about 200 different investors over two to three years, with various degrees of successes and failures.

De Oude said that the initial thinking and strategy was to get a big, established life insurance company that wants to do digital operations in their portfolio, and actually got good initial feedback and discussions with a number of these sizeable firms. However, things didn’t end smoothly.

“What happened was, by the time we got to the end of the road, it’s deal-making time. The decision makers in these big insurance companies all said that they can do it themselves and that they don’t need to invest in a new business to do it,” he said, adding that the deals often fell apart for that reason. Some other investors promised the world but couldn’t deliver, but most felt that early stage investment was a challenge.

Throughout Singapore Life’s early days, there were also some instances when after six months of negotiating and coming into terms, the investors suddenly wanted to insert certain clauses that weren’t discussed before or is not exactly aligned with the vision of the management and the whole business. From Singapore Life’s experiences, de Oude shared two valuable insights on finding investors and the relationship that will come out of that transaction: treat the relationship as marriage and don’t compromise your original plans with the investors, especially if you don’t think it’s for the best of the company.

“Have absolute alignment with the interest of the founders and the interest of the investors. You’re not just accepting money from an investor, you’re actually getting married. And that marriage has to be long-term, and there can’t be avenues for either one party to take advantage of the other,” he noted.

This principle, according to de Oude, has led him and some of the original brains behind Singapore Life to walk

feature: singapore life brand & marketing

Singapore Life reinforces new life

Singapore Life office

away from investors who, after 6 months of efforts, don’t have the same goals and aspirations as the business itself.

Singapore Life’s current shareholders include Chong Sing Fintech Group Ltd—a Hong Kong Stock Exchangelisted integrated fintech group with a focus on 24/7 online financial services to small and medium-sized enterprises, merchants, and individuals in China and Asia through internet and mobile solutions—and IPGL Limited, a private holding company which focuses on partnering with experienced management teams in the financial services sector.

“We have investors who are absolutely committed to the growth of this business … and who support the direction of the management,” he said. “If you don’t have that kind of investor in the business, things don’t go smoothly.

Singapore Life has that.”

Road ahead Whilst the road just virtually started for Singapore Life, having been in full operations only a couple of months, de Oude have set goals and targets for the road ahead. First, is the $100 million life coverage in the first 100 days of operations or about 1,000 policies, particularly on its early product offerings on high net worth clients and private banks as well as life insurance policies.

The company is also looking to be a 5% share player in the market in the next 5 years. Singapore’s total market size is about $2.8 to $3 billion premium. “In the Singaporean context, 5% of that would be $150 million in annual premium so that’s the target,” he said.

Singapore Life will also stick to the retail protection business, which can be executed digitally, and the high net worth market which focuses on Singapore as a hub for financial services, which gives an attractive proposition not only to Singaporeans but Indonesians, Chinese, and Asian customers.

“They value Singapore as the destination for their wealth and that’s proving to be a very strong position,” he said, while adding that there is also a possibility of expanding the company’s operations to other countries in the Southeast Asian region like Thailand, Malaysia, Indonesia, and the Philippines because of the replicability of Singapore Life’s business structure.

For de Oude, “Singapore Life is evidence that the life insurance industry is undergoing change.”

People are looking for a better life insurance experience and are looking for better value.

Apart from making a name for itself as the insurtech in Singapore with the largest fundraising to date, the first life insurance company to be licenced by MAS in 47 years, and the first life insurance firm to offer end-to-end life insurance digital products and services, Singapore Life has also captured the emotions of people in its first ever brand awareness campaign in the city-state.

In October 2017, Singapore Life released a new advertising campaign featuring six women—four Chinese, one Indian, and one Malay, showing Singapore’s ethnic diversity—giving live birth on camera to highlight the “rawness and reality” of childbirth and the importance of protecting life. The monochromatic short film shows the struggles of mothers in rearing and delivering a child to this world, highlighting the importance of protecting them by protecting yourself. The video is 2 minutes 45 seconds long and ends with the line that goes, “The moment in life when you realise you need Life,” and then pans to Singapore Life as the brand.

“We believe that life is worth celebrating and life is worth protecting and that miracle of birth and all the emotions that are so familiar to us, parents, and all the love and dedication and joy that we get from that family we create is a momentous, important occasion, and it reminds us of how priceless life is,” de Oude said. “Singapore Life wants to be associated with the good part of celebrating life, of celebrating birth, being part of people’s lives,” the Singapore Life CEO said. “We don’t buy life insurance for ourselves, we buy it for others, for those that would struggle if we were no longer there.”

A successful campaign de Oude said that the brand and marketing campaign has been a roaring success for the company in terms of letting people know who they are as a company and what they’re offering, as well as what they value most as their core principle in serving the people. “That is translating into activity and sales, which we’re thrilled with.”

“What we’re finding, and this is a critical thing, is that people are looking for better life insurance experience and are looking for better value. We have been absolutely true to deliver that aspiration for clients and we’re seeing that traction coming through in the early days of activity that we’ve seen,” he noted.

“We feel empowered. We feel well-accepted by customers and the market. We will grow strength to strength,” de Oude concluded.

INSURANCE ASIA

17

event coverage: Insurance Asia Awards 2017

Meet the winners of the Insurance Asia Awards 2017

A

lmost 100 outstanding banks and insurance companies from 30 countries were recognised at the 2017 Retail Banking Awards, Wholesale Banking Awards, and Insurance Asia Awards held at the Shangri-La Singapore on 13 July. The event drew over 260 banking and insurance executives, beating last year’s record.

This year’s nominations were judged by representatives from the Big Four accounting firms: Mohit Mehrotra, regional head of financial services, strategy & operation at Deloitte; Richard Holloway, managing director Southeast Asia& India, life, Milliman; Sumit Narayanan, Asean insurance leader, Ernst & Young; and Lau Kam Yuen, head of insurance, KPMG Singapore.

“This night proves that there is still a lot of life in the banking, financial services, and insurance industry. We have very good winners who are deserving of their awards tonight. We’d also like to thank all our judges for the Insurance Asia Awards,” said Tim Charlton, publisher of the Asian Banking and Finance and Insurance Asia magazines.

Below is a list of all the winning companies:

WINNERS OF THE INSURANCE ASIA AWARDS 2017 Aetna International Derek Goldberg, CEO of the Year International General Insurer of the Year - Singapore AIA Singapore Domestic Life Insurer of the Year - Singapore New Insurance Product of the Year - Singapore

FWD Life Insurance Corporation New Insurance Product of the Year - Philippines Marketing Initiative of the Year - Philippines Guardian Life Insurance Ltd. New Insurance Product of the Year - Bangladesh Hong Leong Assurance Berhad Domestic Life Insurer of the Year - Malaysia IKBZ Insurance Domestic General Insurer of the Year - Myanmar Domestic Life Insurer of the Year - Myanmar Infinity General Insurance Plc. CSR Initiative of the Year - Cambodia Domestic General Insurer of the Year - Cambodia The Insular Life Assurance Company, Ltd. Domestic Life Insurer of the Year - Philippines Digital Insurance Initiative of the Year - Philippines Krungthai-AXA Life Insurance Public Company Limited Digital Insurance Initiative of the Year - Thailand CSR Initiative of the Year - Thailand Max Life Insurance Digital Insurance Initiative of the Year - India NTUC Income Insurance Co-operative Ltd CSR Initiative of the Year - Singapore Digital Insurance Initiative of the Year - Singapore Marketing Initiative of the Year - Singapore Peak Reinsurance Company Limited Asian Reinsurer of the Year PT AXA Life Indonesia New Insurance Product of the Year - Indonesia Digital Insurance Initiative of the Year - Indonesia Qatar General Insurance & Reinsurance Co. PJSC Domestic Life Insurer of the Year - Qatar Sun Life of Canada (Philippines), Inc. CSR Initiative of the Year - Philippines Taiwan Life Insurance Co., Ltd. CSR Initiative of the Year - Taiwan Transamerica Life (Bermuda) Ltd. International Life Insurer of the Year - Hong Kong

AIA Company Limited International Life Insurer of the Year - Thailand AXA Affin General Insurance Berhad International General Insurer of the Year - Malaysia New Insurance Product of the Year - Malaysia AXA AFFIN Life Insurance Berhad Marketing Initiative of the Year - Malaysia AYA Myanmar Insurance Company Limited Digital Insurance Initiative of the Year - Myanmar Bajaj Allianz General Insurance Domestic General Insurer of the Year - India Claims Initiative of the Year - India New Insurance Product of the Year - India

Representatives from AYA Myanmar Insurance and IKBZ Insurance

Cathay Life Insurance Domestic Life Insurer of the Year - Taiwan New Insurance Product of the Year - Taiwan Claims Initiative of the Year - Taiwan Expat Insurance Domestic Broker of the Year - Singapore FWD Insurance Direct Insurer of the Year - Singapore Insurance Start-up of the Year - Singapore 18 INSURANCE ASIA

Guardian Life Insurance Team

Peak Re Company representatives

Monirul Alam of Guardian Life Insurance Ltd.

Rebecca Tan of AXA Affin General Insurance Berhad

Wang Li-Chiu Tsai Ping Chieh of Cathay Life Insurance

Yong Hong-Sen of AIA Singapore

Marc Lieberman of Transamerica Life (Bermuda) Ltd.

Nina Aguas, Mona Lisa de la Cruz, & Ana Maria Soriano of Insular Life

Nataya Vincentius Wilianto, Sukhum Imeldawati Suwandi, of AIA Thailand & Adithya Pratama of PT AXA Life Indonesia

Pithan Rojanawon & Nyo Mint, Prettaya of Sutchasila Than Zaw, and Khin of Krungthai-AXA Life Maung Toe of IKBZ Insurance

Rochelle Than Zaw Vandenberghe and Myo Min Thu and Rolan Lagura of of AYA Myanmar Insurance FWD Life Insurance Corporation

Danielle Warner Representatives of Expat Insurance from Insular Life

Fiona Lee of Aetna International

Franz-Josef Hahn of Peak Reinsurance Company Limited

FWD Philippines Representatives INSURANCE ASIA

19

Co-published corporate profile

China’s drive for food self-sufficiency: The role of agricultural insurance Find out how China’s agricultural insurance market has evolved over the years and where it stands today.

H

aving previously focused on narrowing about 10% of the total crop cultivated area insurance protection gaps in urban in 2007 to 75% in 2016. areas, Peak Re launches the second From a premium growth and covered area edition of Peak Insights, an annual research perspective, the subsidy scheme can be paper, which touches on rural areas, where regarded as a success story. the inhabitants are generally less wealthy However, despite its rapid growth, the than their city dwelling counterparts. scheme only covers 16% of the total value Specifically, Peak Re looks at agricultural of China’s agricultural production. Clearly, insurance in China. For a country of over much remains to be done to narrow the 1.4 billion inhabitants, where premiums agricultural insurance protection gap in have grown substantially in the past ten China. years to become the world’s second largest agricultural insurance market after the Narrowing the gap United States (source: Aon Benfield); For example, the insurance limit does not despite the sector’s relatively long history in currently cover the total cost of production China, it has only recently and premium attained this impressive subsidies do not apply “Since the introduction to all agricultural status. of premium subsidies, the outputs. Whilst the China’s agricultural agricultural insurance Central government insurance market recognises that market has grown The rapid transformation farmers would like exponentially to USD of the agricultural to see higher limits 6.3 billion in 2016. Also, and a larger scope of insurance market in the area insured has China can be traced subsidies, pricing is back to the introduction expanded from about naturally linked to the of premium subsidies 10% of the total crop coverage limit. in 2007. The Central An increase in limit cultivated area government had started would necessarily in 2007 to 75% in 2016.” translate into higher to view insurance as a financial tool to help premium subsidies stabilise farmers’ incomes, as well as a way which local governments may find difficult to achieve its goal of food self-sufficiency. to fund due to their limited budgets.

Under the government subsidy scheme, Therefore, making agricultural insurance farmers pay only 20% of the premium, more attractive to Chinese farmers is a making agricultural insurance feasible for difficult task as it needs to strike a balance insurers and affordable for farmers. between the buyers’ needs and the reality of Until subsidies were introduced, government budgets. agricultural insurance was viewed as The task is further complicated by prohibitively expensive by farmers. distribution and administration issues (with Agricultural premium income at this a lack of transparency in premium payment time was disappointing and amounted to a and loss assessment) and a negative image mere USD 100 million in the two decades of insurers amongst buyers (due to slow leading up the scheme’s introduction. Given claims processes, low sums insured and a the small market size and the catastrophelack of transparency in coverage). prone nature of agricultural output, the Small and mid-scale farms participate in market loss ratio averaged 105% between the insurance scheme through group policies 1982 and 1993 (source: PICC). issued to counties and villages. Each county Since the introduction of premium or village has established a committee which subsidies, the agricultural insurance market plays the role of an intermediary handling has grown exponentially to USD 6.3 billion in administration and claims.

2016 (source: Agroinsurance International).

This type of distribution can complicate Also, the area insured has expanded from matters and adversely impact the

20 INSURANCE ASIA

A large scale farm equipment

attractiveness of insurance with buyers.

The Central government is well aware of the challenges associated with narrowing the protection gap in rural areas.

There are a number of ways in which the appeal of agricultural insurance can be increased, including the push for higher sums insured and the development of revenue insurance.

The Central government may also steadily increase its share of the total subsidy, which would relieve the financial pressure for local governments and facilitate a meaningful reduction of the agricultural insurance protection gap in China.

Closing the insurance protection gap goes to the heart of Peak Re’s mission to support its clients in offering effective risk transfer and financing solutions for sustainable economic growth.

For the full report of Peak Insights, a copy will be available for download on Peak Re’s website (http://www.peak-re.com/ourpublications/peak_insight/).

OPINION

woo and ying Don’t get tripped up by banana skins

K

eeping pace with changing demographics, changing customer expectations, as well as technological advances are some of the major challenges that insurers face, and is likely to continue to be a major concern in the next 2-3 years. The recent 2017 Insurance Banana Skins survey launched by CSFI and PwC looked at the top risks that the insurers are facing. In Singapore, the top 3 risks to the insurers are all interconnected: change management, technology, and quality of management. Here’s the reason why: Technology Let’s start with the biggest buzzword over the last few years— technology. It is not surprising to many that advances in technology are already challenging the traditional way of doing business, and to a larger extent, the existing business model. Digital first-movers have set new standards for speed, convenience, and ease of use through leveraging technological advancements. In China, for example, an internet service provider, an online retailer, and an insurance player has come together to launch a fully digital insurance company that sells products and even processes claims settlements online. This makes it more apparent to incumbents that if they don’t keep up with technological advancements, they will face stronger competition from new players who leverage digital to provide a seamless customer experience and possibly even lighten the costs on the backend.

Additionally, customer expectations are now no longer confined to a generic suite of products that insurance companies offer, but whether the insurance products offered are customised to suit their needs and risk profile. This raises the next question—how much do insurance companies know about their customers when the current business model depends largely on the agency channel, and insurers therefore have little direct contact with their customers?

Across the board, there is increasing use of Artificial Intelligence (AI) to digitise service offerings. But incorporating AI effectively requires data. Incumbents are often burdened by legacy systems that may be fragmented and therefore makes it difficult to take full advantage of AI and big data. Instead, insurers are taking small steps in digitalising their offerings rather than overhauling and modernising the entire architecture. The industry has historically been slower to react than their counterparts in banking and the key here is whether the pace of change is keeping up with the disruptions driven by technology and changing customer expectations. Is the industry ready for the change and has what it takes to handle it?

Change management Consequently, survival and success demands a fundamental overhaul of technological capabilities coupled with a strong innovative mindset, and ineffective change management can potentially lead to disastrous consequences.

22 INSURANCE ASIA

Woo Shea Leen Insurance Leader PwC Singapore

Penny Ying Insurance Director PwC Singapore

2017 top 3 Insurance Banana Skins

Source: PwC

How do we accelerate change in an industry that is known for an innate aversion to change? There is a pressing need to have a mindset shift in the way things are done. Effective change management requires the use of the right strategy, talent management, and mindset to drive change. There should be a vision that makes it perfectly clear what the future state will look like, have that communicated clearly, and make people understand why change is absolutely necessary, and a leadership that assembles and aligns a group with enough empowerment to lead change.

To make the changes stick, the change has to be embedded within the insurers’ everyday activities, not just at the C-suite level but cascading down to even the administrators who process the claims payments. What is needed is people with the right mindset and ability to make it happen, which then leads us to the other interrelated risk—quality of management.

Quality of management Effective change management must come at all levels of the organisation and there must be a shift in management’s skills and mindset. Existing skillsets that were relevant five years ago may not be the right skills for the organisation to navigate through the increasingly complex environment. This is even more pronounced when it comes to those in management.

Having a digital-ready workforce seems to be the way to go, especially with the Monetary Authority of Singapore paving the way through tech-friendly regulatory developments which prioritises digital innovation to grow the ecosystem. There is a pressing need to have fresh thinking and an innovative approach to management.

But there is also a need to strike a balance between importing new talent who may be totally new to the industry and recycling veterans to drive the change agenda. “Ultimately, one thing is clear – insurers can no longer continue status quo. If insurers want to not just survive, but to succeed they must be adaptable to change, embrace digital technologies, and ensure they have the right talent to drive and manage the change.”

Co-published corporate profile

Krungthai-AXA Life soars in Thailand

Find out which programmes and initiatives drove the company to grow by 23% annually in the last decade, which is 13% above the average market growth.

E

stablished in 2007, Krungthai-AXA Life (KTAXA) is a joint venture between Krungthai Bank PCL and the AXA Group, global financial protection and assetmanagement specialists. The company is a leading life insurance solutions provider in Thailand, offering a range of individual and group insurance solutions that meet various customer needs including Protection, Savings, Investment and Health.

KTAXA started in Thailand with modest resources, yet, in the last decade alone, it has grown by 23% annually, 13% above the average market growth. Furthermore, its market share has increased from 2.8% percent to 12% today, and the company is now number 4 in the industry in terms of total premium income. Our presence in Thailand has grown to nearly 1,000 employees and just last year the company moved to a new state-of-the-art, Leedsstandard gold building in Bangkok’s new CBD area.

that is committed to creating a sustainable society through providing jobs, increasing income and improving livelihoods for Thai communities. We will continue to support our communities and all our stakeholders in a sustainable way. Life Insurance must be an industry that is built-to-last, as we are making promises to our customers sometimes for 40 or 50 years or more.

As a company we are also extremely committed to Diversity and Inclusion, not because of some corporate policy, but because it is our human instinct and responsibility to treat all equally regardless of disability, age, gender, culture or race.

Furthermore diversity breeds creativity, innovation and boosts staff morale. Today nearly 5% of our workforce has some form of disability and we are one of the leading companies in Thailand that provides spousal benefits for LGBT employees and we also provide leave entitlements for staff wishing to undergo gender realignment.

What’s behind the firm’s success?

We are very proud of these achievements and we owe our success to our 1.8 million clients who support and trust us to protect them during their time of need. The success is also attributed to the dedicated employees, excellent agency force and the company’s culture of always putting the customer first. Our aim is to be the most customer-centric organisation in Thailand by 2020. KTAXA’s ability to adapt to the turbulent economic climate and digital revolution has also been a considerable competitive advantage.

The company redesigned the website to make it more user-friendly and has recently developed applications such as My AXA Health, the first app in Thailand that allows customers to self-serve on policy and claims administration. We also introduced iConnect Life and iPro - convenient applications that support our 12,000+ agents, and implemented automated underwriting with the goal of allowing customers receive their policies within two minutes.

Although the business growth and development has been impressive, success over the years has been more than just about profit. It is about having a social purpose too. We have built a very impressive corporate responsibility program – one

Proof of excellence KTAXA’s success is reflected in our strong position and the number of awards we have received, including the UN Global Award for Management Practices in the Employment of People with Disabilities, The Disability Matters Award, recognised by the Journal in Diversity in the United States as one of the top 25 companies in the world working on diversity. More recently the company won the CSR initiative of the Year and Digital Initiative of the Year awards from the Insurance Asia Awards 2017. Moreover, in 2016 Our Net Promoter Score (NPS) indicated KTAXA as the most preferred brand amongst competitors in Thailand.

At KTAXA we are aware of our responsibilities to partner with our customers to build their long-term financial security and wellbeing and we are taking an active role in narrowing the protection gap in Thailand. As a risk manager, the company has initiated a number of micro insurance products to help support and protect low-income communities and

Mr. David Korunic, CEO Krungthai-AXA Life

emerging customer segments in Thailand.

We also provide financial education to underprivileged communities and aim to educate the Thai people about the value and importance of insurance through our free Caravan Health Check mobile clinic that serves over 40,000 Thais every year.

CONTACT Company name: Krungthai-AXA Life Insurance Public Company Limited Address: Krungthai-AXA Life Insurance Public Company Limited 9, G Tower Grand Rama 9, Floor 19, Rama 9 Road, Huai Khwang, Huai Khwang, Bangkok 10310, Thailand Phone number: +66-2-044-4000 Website: https://www.krungthai-axa.co.th/en/ Facebook: https://www.facebook.com/ KrungthaiAXALife

“As a company we are also extremely committed to Diversity and Inclusion, not because of some corporate policy, but because it is our human instinct and responsibility to treat all equally.”

INSURANCE ASIA

23

OPINION

Liew Nam Soon Disrupt or be disrupted

T

he diverse insurance market in Asia-Pacific sees plenty of growth opportunities and challenges pertaining to distribution and regulation. Insurers are increasingly aware of the importance of customer centricity, product and service innovation, as well as alternative business models to drive growth.

More pan-Asian mergers and acquisitions (M&A) are anticipated.

Life insurers are refocusing on customer-centric products that offer more consumer protection. Property and casualty businesses are catering to increased demand for motor and liability insurance due to changing regulation and disruption. Infrastructure investments are increasing demand for industrial insurance. Demand for catastrophic insurance is also increasing. Going forward, health insurance growth will be driven by ageing populations, greater public awareness, and insufficient healthcare systems.

Insurers are driving growth through M&A which is ideal for foreign insurers seeking access to new markets. Thailand, Malaysia and Philippines are hot targets due to market potential and low penetration rates. Strong domestic players are also looking at overseas markets.

Insurers are also seeking opportunities in cross-sector partnerships with providers in ride-hailing and logistics service, parking solutions and emergency assistance, to expand the product and service offering. Life insurers are partnering asset managers to better respond to the growing needs of wealth management services.

Simultaneously, general insurers and life insurers are partnering to leverage a shared customer network.

As part of their efforts to improve customer experience, insurers are offering multi-channel distribution, bancassurance and leveraging digital channels, and data analytics. This is to facilitate interaction between agents and clients, and deepen the customer share of wallet. Some insurers are also partnering with large eCommerce FinTechs to cross-sell to their customers.

It is clear that digital with data and analytics will be a key strategy enabler for insurers, to create value through innovation. The winners are the ones that are stepping up on product and service innovation According to the EY FinTech Adoption Index 2017, insurance innovation adoption has increased from 8% in 2015 to 24% in 2017. Insurance tech startups have raised US$1.7b across 173 deals in 2016. Insurtech is showing rapid adoption, with a number of insurance innovations developed for this market. Examples include usage-based commercial car insurance products.

Technology and Insurtech as a new enabler for growth Technology and Insurtech is disrupting three main parties: customers, insurers and the agents. Customers are getting more tech-savvy and demanding, expecting customisable products and convenience around the clock, alongside an omnichannel experience and real-time access to policies.

Insurers are leveraging technologies like mobile apps to issue 24 INSURANCE ASIA

Liew Nam Soon Asean Managing Partner, Financial Services, EY Comparison of FinTech categories ranked by adoption rate

Source: EY

policies and automate and claims.They are redefining customer segments and creating needs-based value propositions. The digitalisation of claims management is seen as critical to achieving cost and operational efficiency.

Agents are improving customer engagement through lead management solutions, data-driven insights, and l leveraging mobile devices for quotes and financial tools to develop needsbased propositions. They need to think of new ways to engage, communicate and satisfy their customers that goes beyond a transactional type of relationship to one that is consultative.

The areas seeing the most disruption include: • Product design through digitally enabled, insights-based, customised solutions that can better serve the customers • Marketing and sales through the adoption of lead management solutions and behavioral targeting • Underwriting and competitive pricing, e.g., Comparison platforms and partnering with ecommerce merchants to enable faster onboarding and processing • Customer service touchpoints for customers to provide feedback, make enquiries and submit claims • Claims management to enable self-service, multiple touchpoints for claims submission. E.g. an insurer leveraging a social chat application to offer one-click renewal and claims status tracking • Leveraging data analytics for fraud detection and prevention Future of the insurance ecosystem More InsurTechs will rise a to join the insurance ecosystem alongside regulators, established insurance companies, large social eCommerce, and onDemand merchants, including telcos, online retailers, and established banks, for more bancassurance joint offerings. Everyone will need to co-exist and find common ground.

Customers will demand the best of choice. Agents will need to evolve and be reskilled to adapt and work with new technologies to better target, serve, engage and retain their customers as their role may shift fundamentally in light of innovations around robo advice.

Co-published corporate profile

Expat insurance company profile Insurance Asia

Winner of ‘Broker of the Year’ at the Asia Banking and Finance awards for the second consecutive time.

I

n August of this year, Expat Insurance turned an auspicious eight. Since its beginnings eight years ago, the rise has been meteoric compared with most global markets. For its Founder and CEO Danielle Warner, this has seemed like a lifetime in Singapore’s dynamic and ever changing corporate landscape. This last year has been ‘So exciting!’ says Danielle.

‘I look back on how far we have come and I get so energized at the prospect of how far we have to go. When we moved here eleven years ago, no one knew where to get insured and when they found that I came from an insurance background, naturally they asked me. I recognized that there was a specific market here for protection that was underrepresented then.’

Consequently, Expat Insurance was founded by Warner in 2009. They are a company that specializes in providing professional insurance advice and services to expatriates in Singapore. They are a multi-line, independent brokerage that is focused on delivering insurance protection to the expatriate and globally mobile workforce markets in Singapore. In its early days, Expat Insurance exclusively serviced personal clients, and the business is enjoying sustained growth in this space by continuing to offer bespoke, professional client services for expats by expats. Medical insurance is still the team’s predominant product offering. The Private Client medical team boasts a diverse group of international consultants who are experts in recommending the most effective coverage for individuals and families in this unique globally mobile culture. They understand the complexities and nuances of living in a country that is not your own and will work with you to tailor your policies to best suit your needs as an expat living in Singapore.

With a solid understanding of the transient nature of expat life, the team at Expat Insurance offer comprehensive travel protection that covers popular recreational pursuits within the expat community such as diving and snowboarding. Responding to a gap in the market for active tourism, a unique product was developed in conjunction with one of their partners that provides a policy that can protect those who wish to participate in international sporting events like marathons and triathlons.

Insurance for Expats by Expats

“We are proactive with adjusting what we can offer to the Our international team provides professional insurance advice changing expectations of the expat community.” on a complete portfolio of products coverage for the globally mobile. ‘This This responsive approach to the expat definitely gives us an edge in this space. market has seen the growth of a dedicated Home and Contents team. These consultants We understand that people will begin their journey with us here in Singapore, but our are able to provide professional and BUSINESS INSURANCE TRAVEL INSURANCE MEDICAL INSURANCE partnership with Siaci allows us to make practical advice on insuring the belongings sure that they will be protected everywhere of the globally mobile. These product they go.’ offerings extend specifically to cover Moving forward, Expat Insurance is jewelry and art and will continue to provide poised to continue expanding to serve converge if and when the policy holder LIFE INSURANCE EMPLOYEE BENEFITS HOME INSURANCE more clients in Singapore’s evolving expat leaves Singapore.

The last 18 months have seen Danielle and demographic. ‘We are going to keep being the best at what we do by working with our her team making significant headway within both domestically the employee benefits space and Contact usNovember today forpartners your free review. and overseas to offer our clients more. Our partnership with of 2016 saw a dedicated life insurance team 6401 9201 | www.expatinsurance.com.sg Siaci will help with this enormously. We’ve take its place in the Expat Insurance stable. gone global. Things are changing here and ‘We’ve rounded out our service offerings we are aware of that. It’s our job to make quite nicely in the last 12 months,’ she says. sure that we recognize what our clients ‘Being an expat in Singapore is different to want and to continue to offer the best range what it was even five years ago. We listen to of products to suit their needs.’ what our clients are asking for and we are proactive with adjusting what we can offer CONTACT with the changing expectations of the expat community.’

Danielle’s innovative response to these Company name: Expat Insurance lifestyle developments within the expat Address: #B1 – 51/52 The Riverwalk collective coupled with the continual Singapore 058416 growth of Expat Insurance saw an exciting Phone number: +65 6401 9201 partnership brokered with French insurance Fax number: +65 6401 2143 giant Siaci St Honore in April of last year.

Email: info@expatinsurance.com.sg This partnership gives Expat Insurance Website: https://expatinsurance.com.sg/ unprecedented access to new insurance products as well as further opportunity to provide comprehensive international EI-2017-09-Expat Living.indd 1

10/8/17 5:04 PM

INSURANCE ASIA

25

OPINION

bi and yung

How Asia’s insurers can profit from the disruption wave

A

sian insurers are riding several positive trends, like the region’s growing middle class and their increasing demand for insurance. Over the past five years, Asian consumers contributed more than half of the global growth in life insurance premiums. Capital markets have certainly noticed: Insurance players with a significant Asian presence have an average price-to-earnings (P/E) ratio close to 20—compared to a P/E of 10 to 15 for those that don’t, according to Bloomberg. But insurance companies also face challenges. Government bond rates have fallen from more than 10% in the 1980s to 2% or less in many Asian countries, shrinking investment returns.

Competition has also intensified as more markets liberalize and open up to digital attackers and foreign competitors. A case in point is India, where international insurers, such as Swiss Re, SCOR SE, Hannover Re and Munich Re, have started to operate. The performance of individual companies illustrates these scenarios.

There is a significant spread between best and worst performers. In mature markets like Japan, adjusted annual growth in surplus ranges from minus 12-16%.

The spread is even bigger in developing markets like China, India, and Indonesia; the best players chalk up free surplus growth of more than 40% while the worst ones record negative annual free surplus growth of more than 100%. What will it take to prosper in this environment? Asian insurers will need to satisfy customer expectations for innovative insurance products and digitally-enabled services. Here are three priorities they should focus on: 1. Redesign the customer journey.

New technologies are reshaping the relationship with consumers, who are both increasingly comfortable with buying online, and also increasingly demanding. Three-quarters of Asian consumers have used apps to shop, and a similar percentage expects help within five minutes. For insurance companies, digital offerings have become the table stake—the price of being in the game at all. Companies need to combine high-tech with high-touch to create the simplest, fastest, and most useful online-offline customer experience.

Insurers should design this experience to reflect the entire journey their customers go through as they engage with them. From the day a customer meets with an agent, to the physical check-up, all the way through to the first time he makes a premium payment, insurers need to make sure this journey is seamless.

Doing so will require rethinking all of the underlying processes along the journey, and taking a fresh approach to each. Technology has come a long way, and insurers have a suite of powerful options they can select from as they redesign the way they sell and deliver insurance products to their customers.

2. Embrace the digital revolution.

In Asia, the digital revolution is well underway. Of the top 20 digital

26 INSURANCE ASIA

Arthur Bi Partner McKinsey & Company

Winston Yung Partner McKinsey & Company

Asia will significantly outgrow all other regions Gross Life premium1 by region, USD billion 2,472 +17% 2,116 +74% 2025E

1,339

771

1,422 254

2015

1,132

1,345

1,168

294 174 120 Asia

North America

Europe

80

180 100

Latin America

includes accident and health Source: McKinsey Global Insurance Pools 1

companies in the world, 10 are in Asia, according to McKinsey research. And digital technologies are reshaping how insurance is sold and delivered in the region. In China, for example, Gross Written Premiums generated through digital channels have grown by 200% in just the past few years.

The use of digital technologies is expected to help insurers remove significant cost across the value chain and achieve higher customer satisfaction. Today, however, most carriers spend too much time and resources on assessing their vulnerability rather than identifying opportunities and investing in the technologies that will help them get ahead of the coming wave of disruption. Asian insurers will need to pursue bold strategies and embrace entirely new business models.

3. Focus on value.

Asia continues to be a huge growth opportunity. An aging population, coupled with the relatively low penetration of insurance products among them, translate into enormous upside for the region’s insurers. In China and India alone, Swiss Re estimates that there will be a gap of $116 billion in health insurance protection.

And in a recent survey, 59% of Asian insurance customers said the most important reason for buying insurance was protection, compared to 24% who answered “investment”.

As markets mature, and if interest rates remain low, Asia’s insurers will need to start creating more value from the liability side of their balance sheet by increasing underwriting profit. Launching innovative products that cover new types of risk, such as long-term care; creating new, analytics-driven approaches to underwriting; improving claims management; and automating back-office operations, are several ways insurers can boost underwriting profits.

Market and social trends are creating unique opportunities for Asia’s insurers. Consumers’ growing need to protect themselves and their families, along with their rapid adoption of digital channels, are creating enormous opportunities for Asia’s insurers.

Arthur Bi is a partner in McKinsey& Company based in Beijing and Winston Yung is a partner, based in Hong Kong.

Co-published corporate profile

Find out what makes IKBZ Insurance a trustworthy brand in Myanmar

IKBZ Insurance, the second largest business conglomerate within the KBZ group, gives us a glimpse of Myanmar’s insurance industry and how they plan to penetrate the market.

W

ith an opening to foreign investment expected to follow, the country offers plenty of opportunities to multinational insurers. The five decade long monopoly of state-owned Myanma Insurance was ended, with the establishment of twelve domestic private insurance companies, six life insurers and six composite insurers in 2013.

We take immense pride as IKBZ Insurance was the first private insurer in Myanmar to get registered as a company bearing the registration number (001) on the 25th of May 2013. The country is on the path of economic development and notable transformations have been witnessed in all sectors. IKBZ is proud to have been a part of this “metamorphosis.”

What is IKBZ Insurance?

Next to IKBZ bank, IKBZ is the second largest business conglomerate within the KBZ group which is one of the country’s largest private owned financial groups having Bank, Insurance, Stock exchange,

Microfinance and a Trust Channel catering capitalisation provide a stable market to to a wider customer base. The group also our business partners across all lines of diversifies its business by having its strong business. presence in the non-financial sector such as Mining, Aviation, Hospitality, Healthcare, IKBZ Insurance’s edge Manufacturing, Agriculture as well as IKBZ can relate to the mentality and Infrastructure and Logistics. sentiments of the citizens of Myanmar who, The philanthropic arm of the group given a choice, would still prefer face to Brighter Future Myanmar Foundation (BFM) face interaction than using digital platforms received many accolades for their needs. We will as the “Best Philanthropic make sure we are well “What make us a Organization” for its within the reach of the massive contribution both trustworthy brand majority of the population monetarily and in kind to across Myanmar with our are our efficient the Myanmar people and claim settlement, growing branch network. society at large.

We currently have more proactive We are the highest tax than 18 branches across customer support, the country. We also aim to payer in the country for and regular the last five consecutive utilise our sister company interactions with KBZ Bank, which currently years.

Being part of a group has over 465 branches, existing policy which stands uniquely as a Bancassurance holders.” unparalleled in Myanmar distribution channel makes us equally to reach out to our responsible to deliver and keep up to our customers. brand recognition.

Currently with no price competition Within this short span of time, we have existing in the insurance market in earned a good reputation for our excellent Myanmar, we insurance compete for the performance and services delivered. We, client’s acquisition and retention through as a company, dominate the largest market the efficient and excellent services we share in Myanmar with the highest amount provide. of premium income compared to those of With strong commitment to our all other private insurance companies in customers, IKBZ responds effectively to Myanmar. Our diverse platform and strong every claim intimation.

Nyo Myint Vice Chairman, IKBZ

INSURANCE ASIA

27

OPINION

naujoks and singh How insurers can get their customers to love them

R

etail insurers in Asia Pacific and around the world have a problem: their customers don’t love them, don’t appreciate them, and don’t stay with them. Because customers don’t discern much difference between insurers, companies end up competing largely on price, and that can lead to a downward spiral of cost-cutting, profit erosion, and customer churn. In a word, commoditisation.

But some leading insurers have figured out how to break out of this destructive cycle. In what may look like a paradox, these companies are winning in insurance by offering their customers services beyond insurance. They’re helping their customers live safer, healthier, and more productive lives by providing them with a constellation of non-insurance services known as an ecosystem.

These offerings include security sensors for customers’ homes, safedriving monitors for their cars, as well as fitness club discounts and doctor locator services for their well-being.

Ecosystem services Whilst insurance-led ecosystems are still relatively new, customers are already big fans. In major markets around the world, more than 80% of insurance customers are interested in, or open to, ecosystem services, according to Bain & Company’s survey of 172,000 property and casualty and life insurance customers in 20 countries, including Australia, China, Hong Kong, Indonesia, Japan, Malaysia, Singapore, and South Korea (Customer Behavior and Loyalty in Insurance: Global Edition 2017). Amongst customers interested in ecosystem services, a majority in all markets are open to having their insurers provide those services.

Insurers can use ecosystem services to confront one of their biggest challenges: connecting with their customers. Insurance is a low-touch business. Most consumers purchase an insurance product only every three to six years. In developed markets, just half of customers have had any contact with their insurers for any reason in the past 12 months. It’s hard to foster loyalty under such circumstances. And it’s no surprise that many customers are ready to defect to an insurer that offers lower prices.

When insurers offer ecosystem services, they increase the frequency of customer interactions. And engaged customers are much more likely to be loyal customers. In the US, for example, home insurance customers whose carriers offer three or more ecosystem services give their companies loyalty scores more than twice as high as customers whose carriers offer no ecosystem services. Loyalty is good for business. Carriers that win the loyalty of their customers find that they stay longer, buy more products, and recommend the company to their friends and colleagues. Higher loyalty means lower churn, and that can help companies reduce costs and expand margins.

Ecosystems are still in their infancy. In most of the countries surveyed, only a minority of customers use at least one or two

28 INSURANCE ASIA

harshveer singh Partner Bain & Company

henrik naujoks Partner Bain & Company

Ecosystems—insurers are beginning to deliver these kinds of value-added services to their customers Purchase and sale

Home security

Emergency support

Safe driving Emergency support

On the road

Healthy living

Auto

Home Insurer

Health

Energy Comfort

Life Senior citizen support Treatment

Financial planning

Source: Bain & Company

Source: Bain & Company

ecosystem services, and just a tiny fraction use three or more. Still, the results show that insurers that offer ecosystem services not only do better at keeping existing customers, they also have an edge in pulling in new ones.

One indication of how powerful a lure these services can be: In the US, 42% of home insurance customers who are interested in ecosystem services are willing to switch insurers if their own carrier doesn’t provide them. They’re willing to switch and they’re willing to pay. More than a third of US home insurance customers who use ecosystem services say they’re prepared to pay higher premiums for those services.

In addition to bringing in new revenues, ecosystem services have the potential to improve profit margins. Customers whose homes and autos are protected by sensors and monitors are likely to have fewer accidents and, when they do, less damage. That means fewer and smaller claims, which helps the insurer’s bottom line.

Insurers considering building an ecosystem face a series of strategic choices, not to mention some intense competition.

As the boundaries between industries blur, non-insurers are jostling with insurers for control of customer interactions. In automotive ecosystems, for example, Volkswagen, Tesla, and other manufacturers offer insurance to car buyers, a strategy for putting the auto companies in command of the critical customer interface.

Insurers that succeed in creating—and leading—an ecosystem make sure they deliver innovative services that are regularly updated and refreshed. They use technology to make it easy for customers to move seamlessly between insurance and noninsurance services.

They pick their ecosystem partners with care and drive for scale quickly.

Ecosystems, when done well, can become a virtuous circle—the very opposite of the downward spiral now besetting much of the insurance industry in Asia-Pacific and beyond. With a carefully crafted ecosystem strategy, insurers can expand their offerings, differentiate themselves in the marketplace, build and sustain loyalty, lift profits, and successfully fend off the threat of commoditisation.

Co-published corporate profile

Transamerica Life Bermuda: Planning for a comfortable retirement President and CEO Marc Lieberman shares why it is key to plan ahead for retirement.

A

lmost half of all High Net Worth (HNW) and Ultra High Net Worth (UHNW) individuals do not have a retirement plan in place. This was one of the findings from our annual survey conducted in collaboration with Asian Private Banker.

Titled ‘Exploring High Net Worth Retirement Solutions’, the report further revealed that among those who have planned for retirement, a significant 73% are not confident or only somewhat confident with their current plans.

This is despite what industry experts term the largest ongoing transition of wealth in history, as Asia’s first generation of billionaires and multi-millionaires prime themselves to pass on upwards of US$300 billion to their younger kin by 2040 (UBSPwC Billionaires Report, 2016).

As affluent families navigate today’s unpredictable financial markets, family wealth transfer and succession planning are the top two factors that keep them up at night, followed closely by immediate family crises. UHNW individuals in particular are concerned about potential legal complexities and bureaucratic barriers that may give rise to liquidity issues.

Life insurance for retirement Our survey also revealed that almost three out of five HNW and UHNW individuals surveyed are keen to purchase life insurance for retirement purposes. Among the three most important product benefits they look for when considering life insurance as a retirement solution are: a high coverage amount, regular income pay-out, and the death benefit.

With all the financial tools at their disposal, Asia’s wealthy have begun turning to life insurance as a potential retirement tool to achieve financial security and maintain one’s lifestyle, while maximising efficiency in legacy planning. Over the last few years, they have grown to appreciate its value as a low to moderate-risk wealth tool that can deliver both protection and potential returns. This is closely linked to the benefits that life insurance policies can offer, such as asset diversification, potential for additional leverage and long-term cash value that is accessible when needed.

Retirement planning is a process that

constantly evolves through one’s different phases in life, as one’s needs and priorities change over the years. We found that (U-) HNW individuals in their 30s are primarily concerned about their immediate family and rising education and healthcare costs for their dependents. Succession and inheritance planning then becomes a priority for those in their 40s as they look to ensure that their wealth is successfully transferred to the next generation.

Lifestyle preservation Moving into one’s 50s, the priorities of an (U-)HNW individual shift toward lifestyle preservation. They aim to secure viable sources of retirement income to maintain their lifestyle, participate in philanthropic activity and address their healthcare needs – the latter being the main concern for wealthy pre-retirees. Wealthy retirees who prefer to keep their assets liquid are able to do so with retirement-focused insurance.

Those who wish to secure lifetime income for retirement can also opt for retirementfocused insurance plans with guaranteed regular income pay-outs.

At present, retirement planning is not frequently seen as a reason to initiate a discussion with one’s relationship manager (RM). Many (U-)HNW individuals realise the need to start planning for retirement in the case of trigger events, for instance the passing of a family member, medical issues, childbirth or succession planning. In this light, retirement planning and life insurance are increasingly intertwined as both address the same concerns.

Banking on robust demand Demand for life insurance is expected to remain robust over the next 24-36 months, with particularly positive interest in retirement-focused insurance plans. With assets managed by Asia’s top 20 private banks climbing 6.1 percent to US$1.55 trillion in 2016 (Asian Private Banker, 2017), it is heartening that more than two out of three end-clients surveyed have been with

Marc Lieberman, President and CEO of Transamerica Life (Bermuda) Ltd.

their current RMs for more than five years.

76.5% of them also shared that they trust their RMs to present solutions that fit their needs and wants. As Asia continues to experience a wave of intergenerational wealth transfer in the coming years, it is key that (U-)HNW individuals actively engage their wealth managers around their changing needs and priorities.

The ‘Exploring High Net Worth Retirement Solutions 2017 Report’ was conducted by Transamerica Life Bermuda and Asian Private Banker. A total of 456 relationship managers, wealth managers, independent asset managers, brokers and end-clients across private banks, family offices and brokerage firms in Hong Kong and Singapore were surveyed between April and July 2017.

Transamerica Life (Bermuda) Ltd. (Transamerica Life Bermuda) is authorised to conduct business in Hong Kong, Singapore and Bermuda.

“Asia’s wealthy have begun turning to life insurance as a potential retirement tool to achieve financial security and maintain one’s lifestyle.”

INSURANCE ASIA

29

OPINION

anna tipping

Challenges for the insurance sector

A

sia is vast geographically, comprises more than 15 major jurisdictions and possesses extreme diversity in terms of the ethnicity of its population, its cultures and the varying stages of economic, social and technological development in each country, making it one of the most varied markets globally. Therefore, there are many different risks and challenges posed by the increased opportunities created by innovative and technological advances, not least in the insurance industry. A prime example of such growth is the emergence of insurtech in the Asian market.

Insurtech concerns the use of technological innovations to identify and fill gaps in the insurance industry and drive forward savings and efficiencies by automating the labour intensive traditional insurance model (think distribution (agents) through to claims payments (loss adjusters and claims handlers)). Insurtech companies focus on disrupting and innovating the insurance market, exploring opportunities for development which the major players have, until recently, had little incentive to pursue.

Modernisation of the insurance industry There are several examples of technology already altering traditional processes such as the introduction of health apps to generate data to calculate health insurance premiums or rebates; the integration of sales, premium collection and claim notification and settlement on one easily-accessible platform and the use of artificial intelligence to detect insurance fraud. Some companies already offer smart contracts which are essentially written in code and entered into and executed (including determination, calculation and payment of claims) without a human intermediary in lieu of traditional policies.

So whilst some technological developments in Asia, such as the recent emergence of price comparison websites long-used in Europe, may seem less ground-breaking than the use of blockchain to reduce costs and complexity and increase efficiency by improving the ability for multiple parties to share and update common information for example, it is nevertheless evident that the insurance market is evolving rapidly.

Though many would agree that a modernisation of the insurance industry is long overdue, the high levels of regulation and other legal restrictions are not particularly conducive to encouraging collaboration between start-ups and insurers, especially in circumstances where each party traditionally has a very different risk appetite. The strict regulation of the insurance industry, and regulation that does not contemplate or permit the automation of activities, is arguably in danger of stunting innovation. However, regulators are alive to this danger. The Monetary Authority of Singapore (MAS) has embarked on initiatives to promote Singapore as a financial technology hub; it introduced in 2016 Regulatory Sandbox Guidelines to provide innovative companies with more flexibility to experiment with new financial and technological products in an environment which ordinarily has a zero-tolerance

30 INSURANCE ASIA

anna tipping Partner Norton Rose Fulbright

policy towards failure. Companies can test their innovative financial products and services within a well-defined space and a limited duration. It is hoped that in doing so, the chance of products being adopted more widely without risking the stability and safety of the financial system is increased. The Sandbox has already been successful: PolicyPal, an app that utilises artificial intelligence to streamline the management of multiple insurance policies on one platform was the first direct insurer to graduate from the Sandbox and is now fully functional.

Aside from regulatory challenges, whilst technological innovation can result in accelerated performance and efficiency through greater connectivity and transacting, it also leads to increased risks and potential vulnerabilities. Despite investment in technological security being at an all-time high, companies remain vulnerable to countless risks including cyberattacks, hacking and remote control and given the devastating commercial consequences of such security breaches, prevention is the best solution. Consequently, the demand for cyber insurance has increased.

However, whether insurers are equipped to properly assess and underwrite these cyber risks, particularly given that the risks themselves are often unprecedented and constantly evolving, remains uncertain. Moreover, the lack of publicly available data on the scale and financial impact of attacks further increases the challenges of writing policies which are as yet, unstandardised.

The Cyber Risk Management Project (CyRiM), a public-private partnership between the insurance industry, academia and the Singapore government has been established to help Singapore become an industry centre of excellence on cyber risk and develop the cyber risk insurance market. Most other jurisdictions have similar initiatives in place.

For Asia, the enduring challenge is one of diversity and incompatibility of regulatory regimes. The answer is not a onesize-fits-all solution, yet increased collaboration amongst regulators to facilitate sharing of research and rapid and efficient adoption of technologies could result in exponential benefits for all.

Co-published corporate profile

Why AYA Myanmar Insurance is your best ‘Partner for Life’ AYA Myanmar Insurance (AMI) aims to play a pivotal role in driving social and economic development of Myanmar.

A

s your Partner for Life, AYA Myanmar Insurance (AMI) aims to play a pivotal role in driving social and economic development of Myanmar. Granted a composite insurer license in June 2013, AMI is committed to helping individuals and families in Myanmar to live in healthier and happier lives. As part of the AYA Financial Group which consists of AYA Bank and AYA Trust Securities, we aim to deliver high quality service and innovative products through internal and external distribution channels to assist both individual and corporate customers to protect their assets from the uncertainties of tomorrow.

We engage in talented workforce with both domestic and international exposure, and maintain human capital development as our utmost priority in order to ensure long term sustainable growth of the company and the industry for the benefit of all stakeholders. We are guided by our corporate values that describe our company as we want it to be. We want our decisions and actions to demonstrate our values and believe that putting our values into practice creates long-term benefits for shareholders, customers, employees and the communities we serve.

With the objective of promoting financial inclusion, AMI has progressed on three main pillars; Innovation- that pushes technological boundaries, Human Capital Development- that grooms a young workforce into future leaders, and

creates Insurance Awareness throughout the country. Founded only four years ago, AMI is one of the first local insurers to embark on Core Insurance System that enables efficient and effective operational processes which in turn result in a significant growth in both our customer base and annual gross written premium.

In July 2017, in recognition of AMI’s effort in moving towards an innovative edge, AMI was given the “Digital Insurance Initiative - Myanmar” award by Insurance Asia magazine. The 2017 Insurance Asia Awards aims to honour companies in each market within Asia which rise above challenges, and to recognise initiatives that make the most of the opportunities in the market. The evaluation was reviewed and judged by panel of judges including experts from Deloitte, Milliman, E&Y and KPMG Singapore.

We aim to create employment opportunities and develop young employees into future leaders across the country with the vision of playing a leadership role in driving social and economic development in Myanmar. At AMI, we believe people are our greatest asset and everyone should have the opportunity to succeed. No matter where you see yourself in the future, we want to help you get there.

We provide career mobility opportunities across our different business units, allowing

Mr. Than Zaw Vice Chairman, AYA Myanmar Insurance

our employees to understand and learn different set of skills across various functions. We are committed to creating a conducive work environment – one that is inclusive, welcomes innovation and encourages continual learning and development.

As a young company with big ambitions, AMI is committed to act fairly in dealing with customers, promote human capital development to enrich our employees, behave in socially responsible and environmentally conscious manner in our communities that we serve, and practice good corporate governance and ensure a sustainable growth of the company to enhance shareholders’ values.

CONTACT Company name: AYA Myanmar Insurance Address: No.23, Kan Yeik Thar Road, Mingalar Taung Nyunt Township, Yangon, Myanmar Phone number: 01 8619409, 8619410, 291797 Fax number: 01 8619406 Email: info@ami-insurance.com Website:www.ami-insurance.com

“At AMI, we believe people are our greatest asset and everyone should have the opportunity to succeed. ” INSURANCE ASIA

31

OPINION

lei yu

Product liability coverage for SME exporters and manufacturers

A

major US automaker was involved in three of the biggest product liability payouts of all time, the latest having been in February 2014, based on faulty ignition switches that could shut off vehicle engines during driving, disable power steering and brakes, and prevent airbags from inflating. Other large claims have been made against cigarette manufacturers for causing cancer; and medical equipment makers for leaky silicone breast implants. Whilst most of the largest product liability episodes involve public companies, and are filed in the US, claims can happen almost anywhere. In October 2017, a private US medical supply and healthcare company was hit with a product liability problem involving its disposable contact lenses shipped to Japan, Taiwan and Hong Kong, necessitating the recall of more than 31,000 boxes.

Whilst the most common large-scale product liability cases tend to be vehicle- and health-related cases aimed at large manufacturers, SMEs are not immune. In Asia, typical SME cases involve medical equipment, toys and electronic goods either manufactured or transshipped via Hong Kong to the US, Canada or Australia.

“There has been an increasing awareness of consumer rights and a strong trend towards product liability. There has also been an increasing awareness of, and emphasis on, product safety and the remedies available to consumers through legal actions,” says Satpal Gobindpuri, Partner at international law firm DLA Piper.

Product liability claims A 2014 US study revealed that product liability lawsuits typically receive higher personal injury jury awards than general liability or medical malpractice cases, with an average of $5,276,103 in funds vs an average award of $3,000,000 across all three categories.

Four out of 10 small businesses are likely to experience a property or general liability claim in the next 10 years, according to an analysis of The Hartford’s small business claims. If you are an exporter or manufacturer selling to the US, Canada or Australia, it is not a question of whether you will incur a product liability claim. It is a question of when.

“Product liability in any sector often involves high stakes. On top of the cost of product recalls, fines and compensation can be added the incalculable damage to reputations built over many years,” says Robert Clark, Partner, Deacon’s.

Sales or distribution contracts with large sellers in the US require the supplier to have Product Liability coverage. However, even without a contractual requirement, SMEs should recognise that the potential impact of not having the coverage is corporate suicide.

Consider when buying product

32 INSURANCE ASIA

lei yu Managing Director Marsh Hong Kong and Macau

liability insurance how much is needed; what markets are covered; the strength and reputation of provider; and what coverage is included.

Covered damages usually include bodily injury, accidental loss of or damage to third party property, design defects, improper instructions, manufacturing errors, and associated legal fees.

Finally, here are some tips to reduce premium costs: Review your safety compliance measures Product design, manufacturing processes, usage instructions and warning labels should be reviewed on a regular basis for compliance with the target export market requirements. This can lower the number of claims and the dollar amount you could potentially pay for safety-related claims. Good brokers can offer expertise, often at no additional charge.

Have insurance companies compete for the business Since product liability insurance is varied in its pricing, small business owners should work with a broker to have multiple insurance carriers compete to offer the best policy at the best price.

Go with international insurance companies with experience in the chosen export markets Local companies may offer cheaper premiums, but often do not have the knowhow or clout to help you with international claims investigations and settlement oversight.

Product liability claims can happen anywhere

Balance the deductible with the premiums Make sure you understand to what the deductible applies. If your deductible is set against legal fees, for example, you may find yourself paying out a lot to lawyers, before your insurance coverage ever kicks in.