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|Traditional life insurance models face uncertainty as changes gather pace, source: Internet|
As a result of rapid urbanisation, the pull of major cities is stronger than ever with people continuing to flow into them. Additionally, the use of digital technology is peaking in Vietnam as people of all ages are getting used to easily accessible digital applications. However the percentage of people owning life insurance in Vietnam is deemed rather small, which presents a great deal of opportunities for the insurance industry as a whole.
According to Clive Baker, CEO of Prudential Vietnam, favourable circumstances exist for growth in the sector, with young, urban based customers who are the most familiar with digital applications being the prime growth market. This demographic in particular also shows an increasing interest in bolstering their assets through investments.
Being the first foreign life insurance company to venture into the Vietnamese market, after 19 years of operations, Prudential has stepped up to become an innovator in the life insurance industry. It is currently making the most of the development of disruptive technologies through the implementation of a range of digital solutions that caters to the changing needs of its customers.
Baker said that over 80 per cent of Prudential insurance claims are filled online. The application of digital technology has allowed the company to enhance customer experience in insurance services, as well as improve communication with customers.
For Anil Wadhwani, president and CEO of Manulife Asia, the prospect of growth within Asia is considered a major part of growth for the enterprise, and Vietnam has been identified as an important nation in its development plan. Wadhwani believes it is also the right time for the sector to modernise through digitalisation.
One of the projects that has helped Manulife achieve its goals is Manulife Move, which provides an opportunity for the business to interact with customers in a meaningful manner. Through the use of technology, the Canadian insurer can encourage clients to pursue a healthy lifestyle and provide them with relevant tools.
The insurance industry, in Wadhwani’s opinion, is not traditionally regarded as a fast-growing sector that provides quality customer care solutions. This aspect of the sector would need to be changed if companies want to strengthen their positions. Now is the right time for the industry to change and adopt new solutions and innovations that provide products to consumers.
Manulife now focuses on digitising the customer experience, creating a lasting impression for customers on their journey from the moment they search for a product to actually using the service.
According to Wadhwani, Manulife will focus on providing customers with real-life experiences that give them confidence in their insurance claims. Given its Net Promoter app that gauges customer demand, the insurer wants to continuously accumulate experience to further improve products and services.
According to Patrick Hanna, partner in Financial Services and Transaction Advisory Services at EY Singapore, there are four main factors that will play a part in the future of the insurance market.
The rapid change of technologies with an increased use of Artificial Intelligence, blockchain, and smartphone devices will be a major factor, and will have an effect on the whole value chain of insurance companies in the market.
The second factor boils down to the expectations of customers who tend to seek a personalised customer service experience.
Thirdly, the ever-changing global economy will have a significant impact on the financial situation of insurance companies. For example, low interest rates seen across the world are putting pressure on the financial performance of many businesses. Consumers tend to be reluctant to buy insurance if interest rates are low, and it remains the main factor in the decline in sales and the profits of insurance companies.
Finally, companies within the industry will have to compete for high-quality personnel in an ever-shrinking pool of talent. The current workforce is not yet prepared for the rapid changes being brought about by disruptive technologies. There is an impending human resources shortage for jobs in new fields such as data science, user experience design, and digital marketing.
According to experts, the use of disruptive technologies in the insurance industry will increase savings and efficiency from the current insurance industry model. Indeed the name Insurtech refers to the desire to implement new technology into the business. Insurtech is set to completely change the experience of customer services. From rigid, paper-based systems and procedures, the enterprise provides a better, faster, and cheaper experience through technology applications in sales, customer care, and settlement procedures.
In addition, the company has also created a platform that provides superior and innovative products, with two typical models being employed, including pay-as-you-go insurance and pay-as-you-drive insurance, in which customers are insured based on their actual activities.
Both models are auto insurance programmes that adjust rates based on the number of miles a customer drives and their driving patterns. They award those who drive less with substantial savings on their premiums.
Insurtech helps improve the product distribution model at insurance companies as it provides personalised experiences for customers based on their actual demands. In particular, the company supports the development of a new business model based on the peer-to-peer network, which in turn helps reduce costs for customers and insurance companies. The insurance firm is also improving their own products through the development, appraisal, and risk compensation processes whilst helping to prevent fraud and errors.
According to Saman Bandara, partner and head of Insurance, Forensics and IT Risk & Analytics at EY Vietnam, any change needs to be based around putting oneself in the customer’s shoes, and revising the brand. Any future developments must revolve around the needs of the customer in order to brand the company in a way that fits in with its cutting-edge image in the sector.