Mr Winston Churchill, former UK Prime Minister and statesman, understood the role of life insurance in alleviating suffering which could happen to every family, should unforeseen events occur. Ms Wimolwan Pattamarat of Muang Thai Life Assurance PCL says as a life insurer, it is necessary to develop the organisation, products, and services that continues to satisfy the ever-changing customer needs in today’s dynamic world. She shares five approaches that insurers in Asia can focus on to achieve this.
Thailand’s life insurance industry has to face numerous critical changes, both local and international, including a growing “senior society” or ageing population, technological advancement, transition into the digital era, regulatory changes and preparing for the commencement of ASEAN Economic Community (AEC) this year.
Therefore, life insurance companies have to adapt, through the following approaches, in order to continue running their business securely and strongly.
1. Focus on Health Insurance and Annuity product
With technological advancement, this brings continual revolution in medicine. Today, modern treatments have emerged while diagnosis are delivered promptly and accurately. This results in rising medical cost year-on-year, evident from health expenditure figures which showed average growth from the past six years at 8% or US$16 billion.
To relieve customer’s medical expense burden, life insurance business should develop health insurance product that is diverse, easy to understand, and provides coverage that includes medical treatment and life protection, where the insurance plan can be modified to fit the lifestyles of all age groups. Customers should be able to receive convenient services when making premium payment, processing claims, and other related services.
Yearend 2014 data from the Institute for Population and Social Research, Mahidol University, indicates that Thailand has a population of 64.98 million people, those aged over 60 years account for 10.13 million or 15.6%, and those over 65 years account for 6.77 million or 10.4% of the country’s population. Accordingly, Thailand is entering into the senior society. Once the social structure changes, people will have increasing needs for health services, economic guarantee, and security for life and family.
This represents an opportunity for life insurance businesses to develop the best financial tool for retirement savings, ie annuity product that provides long-term coverage, requires no health check, and has variety, which suits every target customer group. It is an alternative for customers making financial preparations to cover expenses during retirement and a means for reducing expense burden on children. Meanwhile, premiums can be used for tax deduction based on specified conditions.
2. Add more value through digital platform
From a PwC survey report named “Insurance 2020: The Digital Prize – Taking Customer Connection to A New Level”, it was revealed that over 71% of insurance buyers worldwide use digital platform to search information before deciding to buy insurance and services, while almost 70% like to download and use insurer’s applications.
Evidently, digital media would play an increasing role in the consumer’s decision-making process. Life insurers should prepare to support the digital trend, by creating updated systems for data management and processing, and customer data storage, and applying various technology to match customers’ increased preference for technology and social media uses.
3. Develop insurance agent to become financial adviser
Consumer awareness has evolved and consumers today receive more information and knowledge about financial management than before. So they would expect to receive increased forms of services from experts. Agents have to adapt to such needs and acquire more knowledge on insurance and financial products to respond to customer’s requirements as “Financial Adviser”. Besides the sales role, agents have to recognise their role of providing correct information and knowledge on portfolio management as financial advisers, suggesting proper products fitting customer needs, and performing good after-sales service.
Life insurance companies should develop agents’ skills in selling, recommending financial products, and managing customers’ investment portfolio to be able to engage with customers confidently.
4. AEC: Great opportunity for market expansion
The introduction of AEC in 2015 serves as another important opportunity for the life insurance industry to open new markets and expand customer base while developing more diverse products, especially in CLMV countries (Cambodia, Laos, Myanmar and Vietnam), where benefits expected to be gained from AEC opening are commerce and foreign investment.
Life insurers should look for opportunities in these countries by studying the markets, analysing customers, and reviewing regulations to adapt accordingly. This includes applying best practices to the company’s operation such as in terms of product design and service offering through application of technology.
5. Regulatory change: The challenges of life insurance companies
Currently, the state sector and the life insurance supervisory authority have issued regulations beneficial to life insurance industry in expanding markets and for customer financial planning, ie the collection of inheritance tax, Deposit Protection Act, or tax deduction benefit from life and health insurance premiums of parents.
Life insurers will have to adapt to the regulatory changes by analysing the potential impacts on the organisation, capital management, product pricing and marketing strategies to maintain or increase the organisation’s sales volumes.
Focus on sales promotion strategy in distribution channels
From the above-mentioned trends, Muang Thai Life Assurance Public Co Ltd has changed its organisation’s structure to focus on sales promotion strategy in distribution channels such as the agency channel which the company would emphasise on increasing the number of agents and enhancing their capability through effective trainings and preparing them to be professional financial planners.
For the bancassurance channel, the company works with strong partners to jointly develop efficient work process, while for Direct Marketing, the company would develop customer data analysis system in order to present products suitable to customer needs.
Technology innovations
Muang Thai Life continues to design need-based products and services to enhance customers’ experience from pre-purchase to after-sales service. To support this behaviour, ie creating applications and using social media like LINE and Facebook to increase channels to reach every customer group, particularly the Generation Y and Z who will be instrumental to the country’s future development, the company has invested in technology innovations.
To become the industry’s digital life insurer, this is not limited to just focusing on digital marketing. It implies changes in the organisation’s work process, from the angles of customer, partner, sales agents, and employees. For instance, the company has developed Smart Proposal sales illustration to facilitate agents when presenting products and filling in application form.
The company also created the “Employee Portal” to support employees’ work and processes so that they are modern, concise, and quick, as well as developing human resources quality so that they can catch up with digital changes.
AEC opportunities, particularly in CLMV group
Muang Thai Life also sees opportunities from AEC in expanding customer base overseas. The company has set up a Representative Office in the Republic of the Union of Myanmar in 2014. Today, the Representative Office’s role is to provide information to people in Myanmar and building the brand of Muang Thai Life Assurance. In addition, the company is currently studying the markets of other countries especially in the CLMV group to explore opportunities and new markets for doing business.
Besides increasing the company’s competitiveness, Muang Thai Life aspires to become a leading life insurance company in Asia.
Ms Wimolwan Pattamarat is Vice President, Competitive Intelligence Department at Muang Thai Life Assurance PCL.
Muang Thai Life Assurance PCL is the 2014 winner for Life Insurance Company of the Year at the 18th Asia Insurance Industry Awards.