The rise of online players in the life insurance market is set to transform the industry across Asia Pacific.
Firms like Hong Kong’s Blue and Singapore’s SingLife are starting to make their mark on the sector.
With the pandemic forcing a significant proportion of our lives online, traditional firms that fail to keep up may find themselves struggling.
International Adviser has spoken to Quilter International, HSBC Life and Lombard International about the future of the life insurance industry in Apac.
Mark Christal, Hong Kong chief executive at Quilter International, said: “Technology has significantly transformed the way people live and behave and it is now not only wanted but expected from customers.
“As a result, we are in the early stages of seeing more new digital entrants into the life insurance market which are providing insurance solutions typically for travel, medical and investments.
“They tend to offer simple products which don’t require advice or technical and customer support as customers roughly understand what product they want and have the experience and time to manage it themselves.
“However, clients with more complicated circumstances are still looking to the traditional players as they offer more bespoke products, which can usually only be accessed through professional financial advice.”
Lee Sleight, head of business development for Asia at Lombard International, added: “As far as offering greater online capabilities, there is much room for improvement in our industry.
“We believe the winners will be the ones capable of having an integrated and consistent approach to digitalisation along with face-to-face interaction, that supports the company’s core purpose and enhances the service proposition to partners and clients.”
Edward Moncreiffe, chief executive of Hong Kong at HSBC Life, said: “Generally speaking, it is still early days to see major disruptions being brought by digital life insurers, a lot of which are still fairly new to the market.
“At the same time, we believe it will be difficult for mono-channel insurers to compete in the future outside of the very commoditised and transactional product space. Even for digital insurers, acquiring customers and building trust can cost a lot of money and take a lot of time.”
Pose a problem
The traditional players may have digital offerings but their whole business model is not set up for 100% online demand, which has become a trend in the region.
Christal said: “Naturally, any digital infrastructure that enables customers to get the product they want without the need for human interaction is going to be of use during a time when face-to-face contact is being curtailed.
“Similarly, digital life insurers have been able to profit from starting from a blank page opposed to traditional life insurers, which have needed to make their digital experience work for large legacy books.
“However, particularly when dealing with large sums of money, complex needs or the need for precision, we have found that customers still demand professional advice and technical knowledge on top of a digital platform and the pandemic has not impacted this.”
Sleight added: “The high net worth demographic that buys into our various life insurance and wealth structuring products require more than just different channels of access and distribution.
“Digital firms alone are unable to provide the tailored expertise and hands-on knowledge required when working with the wealth advisers, private bankers, asset managers and family officers of Asia’s affluent.”
There is an argument that traditional life insurers should not fear digital firms as they appeal to different demographics.
Therefore, the two types of business can work side-by-side without treading on each other’s toes.
HSBC’s Moncreiffe said: “While developing digital capabilities is important, we believe that human interaction is still key to the business.
“To truly meet customers’ insurance needs, it is important for insurers to build a trusted relationship with customers, identify their needs as they go through different life stages and provide the right products and services that can help meet their wealth, health and protection needs, all supported by a seamless digital experience.”
Lombard’s Sleight said: “We rely strongly on the expertise of brokers on the ground who have deep local knowledge and a strong rapport with clients to offer the best tailor-made wealth and succession planning solutions.
“Having both the digital infrastructure and a human touch is important for us to cater to the diverse needs of high and ultra-high net worth individuals, families and institutions.
“Digitalisation is essential to stay ahead of the competition, however it is anything but a silver bullet. To be successful in the current market, digitalisation needs to be a constant state of mind, not simply an add on – much more than plugging a digital-enabled platform on top of an existing rigid and inefficient infrastructure.”
Future of the life insurance market
There is no doubt that digitisation has change the life insurance market and this will impact how it looks in a few years’ time.
Moncreiffe said: “Going forward, we believe that the human plus digital blended approach combining human intelligence and digital intelligence is key for enabling customers to access personalised, need-based products and services anytime and anywhere.”
Quilter International’s Christal added: “Digital life insurers will no doubt give a segment of the population a convenient solution for their needs and provide some people, who may not have got protection before, a route to market.
“But, like in all walks of life, once someone’s needs become too complex, off the shelf products will no longer be enough. At this point, it is crucial to get professional advice and technology while still important becomes a supporting accessory to a product rather than its USP.
“Having multiple options for multiple customer types can only be a good thing for the life insurance market in the Apac region and this sector looks ripe for growth in the future.
“We may see deals between those traditional life insurers whose digital infrastructure and capability is way behind expectation and are looking to quickly improve their digital offering.”