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Getting ahead in the life insurance game

Released at: 08:53, 02/09/2019

Getting ahead in the life insurance game

Photos: Viet Tuan

Life insurers are making strategic moves to benefit from digital transformation.

by Khanh Chi

Technology and innovation are having a major transformative impact on Vietnam’s life insurance industry, as more and more life insurers are applying or planning to apply new technologies in management systems and customer services, while others have been renovating their products to meet market demand and diversifying their sales channels. Major life insurance players in Vietnam have been launching a slew of new products applying digital technologies in the recent past that can help them, new and old alike, to keep up with the insurtech revolution.

Digital transformation

The global insurance industry, Vietnam’s included, is going through rapid changes thanks to the development of digital technologies and the so-called insurtech revolution. As technology development proceeds at a remarkable pace, consumers’ lifestyles are also changing. Online shopping is increasingly popular and a habit for the majority of local consumers, especially young city-dwellers. Modern consumers also better understand their needs and have greater requirements in terms of financial solutions.

Traditional insurance products are often designed from the seller’s perspective, not the buyer’s. Insurtech is being pushed as a solution to this and other issues, by improving their business efficiency. Some insurers, like AIA, Generali, and FWD, have already digitalized their business operations and made the move to paperless transactions.

Eliminating paper insurance policies and issuing electronic policies to customers, FWD Vietnam has been creating an entirely paperless sales experience, leading to savings in workload and creating a better experience for all. The entire customer journey with the company has been completely digitized, from demand analysis, consulting, and illustration to e-claims.

To follow the technology trend, other life insurers have also changed. “At Prudential, we aim to continue delivering seamless end-to-end digital solutions to our customers, particularly tech-savvy urban customers, and help further improve their lives,” said Mr. Clive Baker, CEO of Prudential Vietnam. “Since announcing an e-commerce website in 2016, marking a strong move towards the target, we have continuously introduced products and services on our digital base to guarantee customer excellence at every touchpoint.”

Its insurance consultation chatbots (PRUbot) and Matchbook tools help customers book an appointment with a Prudential financial agent. In addition to bancassurance and the wholesale distribution channel, it is the first and only life insurance company in the market with an e-commerce website - ePrudential. The company has also introduced a cancer insurance product, Pru-iProtect, which is completely online and has a single underwriting question.

Most recently, Prudential introduced a channel on the Zalo app for 24/7 insurance claim requests. Simply by logging in and opening their Prudential accounts on Zalo, policyholders can submit an insurance claim and be updated on the process and results. As of last May, 30 per cent of claims were made through Zalo; one of a number of improvements that helps customers minimize procedures and waiting times and proving that the digital path Prudential and other life insurance companies are taking is the right one.

Competitive advantages

In the insurance industry, insurtech, big data, AI, digital technologies, and telematics are bringing rapid changes around the world and Vietnam is no exception, according to Ms. Tina Nguyen, CEO of Generali Vietnam. Digital technologies are truly transforming the domestic life insurance industry. “Nowadays, consumers’ demands for innovative, convenient, and personalized solutions are more pressing,” she said. “Investments in digital technologies will help insurers understand consumers’ needs and behavior much better, therefore improving their chances of satisfying their demands.” 

Technology is being adopted in all stages of the insurance supply chain, from market research, product development, and risk assessment to sales, after-sales, and customer service. With the help of cutting-edge technologies, these innovations promise to improve efficiency in business and in service quality.

New life insurance products and new approaches to insurance are becoming increasingly available. New forms of insurance go-betweens will also emerge in the near future, including website aggregators and online trading platforms. These compare and contrast products or services from different insurers, and publish information on premiums, coverage, and rights - everything to help potential customers decide which product is right for them.

Also likely to appear in Vietnam on a wider basis are new sales channels, such as cooperative arrangements with e-commerce sites or smartphone apps. Thus, FWD Vietnam struck a partnership with Vietnamese e-commerce platform Tiki in its early days to boost its online channels. Most recently, in mid-July, it announced the launch of FWD Online Medicare, an online health protection product sold exclusively on Tiki.

Vietnamese consumers are very open-minded and quick to pick up new trends, including using technology in their everyday life. This has brought about both challenges and opportunities to many businesses, including life insurers. Organizations that are late in applying technologies in their business operations will definitely lag behind or perhaps even go out of business. Conversely, those who know how to use technologies effectively improve their chances of differentiating themselves from the competition.

As Vietnam’s middle class is growing quickly and getting wealthier, they expect a higher quality of life and growing assets. Prudential’s main target is therefore to help customers protect their finance and increase their assets, so the assistance of digital technology will increasingly promote their targets. The era of IoT has created an environment where customers approach various sources of information and have a great deal of options. “It is the preparation of contact tools, including PRUbot, Matchbook, blogs, and user-friendly and smart websites for customers that have them believing in our name, quality, and services,” Mr. Baker said.

Digital is the trend leading consumer shopping behavior, from consumer goods to home appliances. Users spend more time online and are familiar with online shopping, gaining more knowledge when purchasing. This indirectly raises familiarity and acceptance of online shopping for financial products, especially online insurance.

Early stages

In the context of Industry 4.0 and the movement towards e-commerce, life insurance companies cannot afford to stay out of the technology game. Investment in online insurance services is a long-term project and for those with strong resources and consistency in their strategies to promote digital solutions, improving customer excellence and making long-term commitments to customer excellence.

Amid a new battle for market share in Vietnam’s life insurance industry, success will come to players who can utilize the power of technology as well as grasp and transform themselves best in following that trend, Mr. Patrick Hanna, Partner, Financial Services, at EY Singapore told the Annual Insurance Industry 2018 seminar co-organized by the Insurance Research & Training Center and EY Vietnam. “Insurance businesses will face opportunities in promoting growth, cutting costs, and increasing their distinctions in the market,” he said.

But there are also challenges awaiting, as profit pressure rises, competition becomes fiercer, and meeting customers’ expectations and demands becomes more important, which all require life insurers build a private ecosystem and create cohesion in changing from the traditional brokerage model, according to Mr. Hanna.

Mr. Saman Bandara, Partner, Head of Insurance, Forensics, IT Risks & Assurance at EY Vietnam, recommended insurance businesses thoroughly understand and grasp insurtech trends, and also clearly and specifically identify potential areas to develop insurtech. There must also be internal preparation, from technology and processes to business culture, to tackle those changes. “Any change needs to be based on two important factors: putting yourself in the customer’s position and reviewing your brand, in order to drive the company’s strategies,” he said. “Change must really involve customers’ needs and the brand positioning a business wishes to pursue.” 

However, revenue from the online insurance business is still only a small proportion of the total of life insurance companies, according to Mr. Baker. This originates from the nature of the insurance business, where many products require comprehensive consultation and support from agents. Some customers prefer this support instead of researching information themselves, while others hesitate to purchase insurance online due to a lack of knowledge about technology-based operational processes.

Online products must therefore be designed to provide simplicity and ease of understanding in purchasing. It’s also necessary for life insurers to develop online tools for customer support and approach their needs for more insurance products, and provide them with comprehensive consultation and fast and timely support. 

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