1. A quantum leap to more
appropriate advice
With the emergence of
the global village and a high
dependence on information
derived from the Internet,
life insurance companies
will have to start making
provision for a more ho-
listic approach to financial
planning. Importantly, the
financial services sector will
have to begin adjusting their
value proposition from that
of product selling to one of
appropriate advice, based on a client’s actual needs and contingency
requirements.
Furthermore, the digital age and specifically the X, Y and Millennium
generations will augment what they hear with what they see, read and
importantly what they are exposed to virtually.
In all probability the same generations mentioned above will ac-
tively compare each product house’s recommendation via some form
of virtual platform or portal, with this emerging consumer inclination,
life insurance companies will have to ensure that the advice given is
not solely focused on the product but more on the actual needs of the
client.
This quantum shift will obligate life insurance companies to do more
financial-needs analysis-based selling and less product push backed by
limited advice. This type of selling will in fact enhance retention because
the product in question will sell well.
Aligned to a deep understanding of the client’s financial needs.
Further complicating this race for market share aligned to the digi-
tal age is the fact that life insurance companies will have to gear them-
selves to accommodate business in a more efficient and automated
manner.
Today’s market place dictates that unlike in the 1980s, 1990s or post
year 2000, business accumulation will be entirely influenced by the speed
at which life insurance companies convert proposed business into poli-
cies, rather than by the capacity they have to convert business in a tra-
ditional sense. A classic example of the fast eating the slow, not the big
eating the small.
Another fundamental within this digital revolution will require that
life insurance companies will in the future have to differentiate them-
selves through high levels of service and support of advice given. New
generation consumers will not only expect more appropriate advice
but will also demand that same advice be underpinned with service
excellence, robust product support and customer-centered under-
standing.
Forming the basis of this transition will be client intelligence and a fun-
damental understanding of their financial resources, how their money is
used and were the inherent opportunities lie for the company involved
to increase those funds. The virtual age not only provides for this type of
intelligence but to a large degree facilitates it.
Life insurance companies will have to learn to predict consumer
spending via business intelligence and other predictive modeling plat-
forms. This build up of intelligence will importantly allow for a much
richer ability to segment and individualize financial service product
offerings.
So in summary, here are some basic steps to ensure you receive
the most appropriate advice regarding your specific financial
needs.
Having the correct advice is not only extremely important but the ad-
vice needs to be relevant to your specific needs. While many insurance
products may look the same on paper or proposal, in reality they can be
definitively different.
There are certain features and variations within similar insurance
products that you need to properly evaluate before making a decision.
New-generation consumers must not mistakenly focus only on the pres-
ent, but they need to look to the future. Insurance is a product based
purely on future benefit. Paying attention to all the relevant details pays
dividends over time.
The complex nature of life insurance is always present and that is why
life insurance advice has to be carefully understood before decisions are
made. Most appropriate advice advocates a move away from a vested in-
terest by the agent and/or advisor in the particular product he is attempt-
ing to sell you, so ensure your agent is selling you the right product for the
right reasons rather than some more self-interested incentive. Without
appropriate advice, ordinary consumers may fail to address their finan-
cial needs appropriately.
Life insurance involves a specific choice
With the appropriate life insurance advice, you can make a spe-
cific choice regarding the insurance product that is most suitable for
your particular circumstances. With the sheer variety of products
available, selection may not only become convoluted but sometimes
confusing.
As a consumer you may want to ask the following questions:
1. Do I need term-life insurance?
2. If so, which type of life insurance is needed?
3. Do I need whole-life insurance?
4. If whole life, why and why not term-life insurance?
5. What is the cost implications of my preferred product type?
While the answers may be many, you need appropriate advice to
wade through all the possible answers that result in you making the
right decision for the right reasons. Every person has unique fiscal
needs and appropriate advice can greatly help in identifying these
specific needs and, very importantly, at the right price and peripheral
benefit.
Lastly, how important is appropriate life insurance advice? With the
appropriate financial advice, you will be on the right path to making an
informed choice regarding what type of life insurance product you re-
quire, how much cover and what additional features you will need to in-
clude in your insurance policy.
With proper and appropriate advice, you will not be wasting your time
and fiscal resources on something that won’t benefit you at the time when
you need it most.
The writers are co-founder & managing partners of Avatar Global
Consult Limited.
Garth Ibbetson Eddy K A Berutu
Avatar Global Ltd is a financial services consulting and advisory entity,
with the implementation intent of creating massive strategic advantages
for clients being part of its fundamental strengths.
Keeping up with technology and
not losing ground
Eddy KA. Berutu
“Beware of upstarts putting in-
surers out of business”
This was the glaring headline on
the Oct.30 edition of the e-daily,
Asia Insurance Review, the official
media partner of the 26th
Pacific
Insurance Conference (PIC) held
from Oct. 28-30 in Hong Kong.
The idea of the PIC was mooted
at an informal gathering in Tokyo in
1958. The first PIC was held at the
University of Hawaii in 1963, and
attended by 47 life insurance execu-
tives and university professors from
six countries. The PIC mission is to
share the free exchange of ideas and
experiences concerning manage-
ment, marketing and customer ser-
vice in a spirit of international broth-
erhood in the insurance industry.
Many issues were raised during
the proceedings, which I attended
representing Avatar Global Con-
sult. However, the one that grabbed
my attention most was the above
statement. Something that I believe
ought to be seriously addressed in
our own backyard.
To some, this may have been a
shocking statement, to others per-
haps a wake-up call. It was the result
of a panel discussion on the second
day of the conference on the topic of
“Responding to Change”.
Maria Ferrante-Schepis, man-
aging principal of insurance and
financial services at Maddock
Douglas Inc., brought up the
question: “In what would be a
‘Napster Moment’ for the indus-
try, insurers could be removed
from their own turf by others
who are able to reinvent their
business to better meet the needs
of today’s customers”.
She reiterated that the reason
the industry continued to face the
same problems was due to its lack
of relevance to customers.
What is actually happening?
Harry Beckwith, in his book Sell-
ing the Invisible, stated that tech-
nology created the adopter age. The
adopter became more proficient
sooner and quickly recognized the
benefits that newer and more ad-
vanced technology brings to busi-
nesses and industries. But the real
adapters learn even more quickly
and apply it to their own competi-
tive advantage.
Today, dozens of service com-
panies are sleeping. But smart
marketers early in the game have
already recognized the many ways
that technology can be applied to
create customer service excellence
in many competitive landscapes.
Every service company should
embrace technology to their own
competitive advantage. In addi-
tion, management should continu-
ally ask questions on how newer
and more advanced technology
can be used to improve their ser-
vices and grow their businesses,
by making technology a key com-
ponent of their marketing strategy
and business model.
As mobile technology, smart-
phone apps and social media have
not only dramatically changed the
way we interact, but how products
and services are being marketed,
social networking applications, and
their seemingly unlimited usage will
continue to skyrocket in the foresee-
able future. Furthermore, the phe-
nomena have also changed the way
people make buying decisions.
What are industry leaders and
practitioners’ perceptions and
thoughts on this phenomenon?
Jason Sadler, president of Cigna
Global Individual, said that the
digital age was truly changing the
playing field for the business and it
was something that had to be con-
sidered extremely seriously. It is
providing a new level of customer
empowerment, where customers
can have access to real-time unfil-
tered opinions and recommenda-
tions on brands and products. “It is
not just the digital age, it is also the
age of transparency.”
NirmalaMenon,headofdesignat-
ed markets and health Asia, MetLife
Asia Pacific, who chaired the panel,
quoted Sir Winston Churchill as
saying: “ ‘To improve is to change, to
be perfect is to change often’. So let’s
all go out and try to get closer to per-
fection as we go about our business,”
she concluded.
Embracing new technology is
the key for life insurers to succeed
in the future, be it in marketing or
product distribution. Key trends
identified as imperatives for suc-
cess included social media, huge
data and analytics, as well as mobile
and multiple customer touch points
– all of which contribute to creating
new ways of engaging and profiling
customers.
Ross Mayne, CEO of Munich Re
Automation Solutions, said there
was a global move toward automat-
ing new business and the value pro-
cess in life companies. The primary
driver is usually the need to increase
sales in the face of competition; a
secondary driver is when an insurer
wants to grow its business without
having the proportional increase in
operating overheads. And automa-
tion had become the key enabler to-
ward that objective, he added.
“As consumers become more af-
fluent and sophisticated, simply
selling product will not win their
business and their hearts. Insur-
ance companies need to be more
customer-centric, be able to un-
derstand their customers’ needs
and provide personalized solutions.
Distributors have to be knowledge-
able and resourceful to provide
tailor-made advice. To succeed, we
are also required to invest heavily
in technology and staff training so
that customers can have a wonder-
ful experience when they interact
with us”, said Michael Huddart,
EVP & general manager of Manu-
life, Greater China.
RonaldArculli,chairmanof FWD
Group, said that Consumers were
much more connected than before,
and they would increasingly use
multiple sources that they can trust
to receive information, without the
pressures of being sold. Studies have
shown that customers’ trust is shift-
ing toward Internet sources (from
22 percent in 2011 to 28 percent in
2012), and social media (almost dou-
bling from 9 percent in 2011 to 17
percent in 2012).
Itwasamyththatinsurancecould
not be sold online, he said. While the
actual touch-points by buyers of in-
surance are 32 percent agents, 20
percent independent financial ad-
visers (IFAs), and 17 percent online;
the preferred touch-points were 43
percent agents, 35 percent IFAs and
45 percent online. So key to a com-
pany’s success will include answer-
ing the questions: How well do we
understand the next generation, and
how do you leverage technology and
touch-points to impress customers?
“We need to embrace a digital
mind, in order to catch up and make
a great impression on the customers
of the next generation” he said.
The writer is co-founder &
managing partners of Avatar
Global Consult Limited
More parents aware of need to invest in
child education policy
Hanna Nabila
THE JAKARTA POST/JAKARTA
Even though insurance penetra-
tion remains low in Indonesia, more
discerning parents are aware of the
need to invest in their child’s educa-
tion, which has prompted banks and
insurance companies to aggressively
market their products.
“I have bought an education in-
surance policy for my six-year-old.
It assures me of the certainty of her
education, not only today but also
for college-entry level. I plan to send
her to study overseas,” said Erni
Liswati, a housewife.
She said that apart from educa-
tion coverage, she had also pur-
chased health coverage.
Marco Ciabatti, another policy
holder, said that he had benefited
from an insurance product that cov-
ered education and health.
Initially, he purchased a product,
with only education coverage, but
“accepted an offer from an insur-
ance company for a package that in-
cluded a health plan, especially after
my son was hospitalized some time
ago,” he said.
“The health plan is valid in many
hospitals. Besides, it is flexible in
terms of payment,” he said.
Erni and Marco are among the
many parents who wish to do their
best for their children by purchasing
insurance policies for education and
health.
Indonesia’s penetration for gross
written premiums account for only
1.3 percent of Indonesia’s GDP in
2012, compared to 3.90 percent for
Malaysia and more than 4.30 per-
cent for Singapore.
According to the Indonesian Life
Insurance Association (AAJI) chair-
man Hendrisman Rahim, there was a
large untapped market in Indonesia.
Based on AAJI data, the number
of individuals with life insurance is
43.7 million people or 18 percent of
the total population, of which only
11 million have individual life insur-
ance or 4.5 percent of the total popu-
lation.
Meanwhile, banks and insurance
companies acknowledged the in-
creased awareness of insurance edu-
cation among discerning parents.
“They want to feel secure. Now,
more parents are planning to invest
to pay for education abroad,” said
HSBC Indonesia’s senior vice presi-
dent and the bank’s wealth manage-
ment head.
“Almost every parent in Indone-
sia wants to provide their children
with the best education,”
Allianz Life Indonesia vice presi-
dent Handojo Kusuma said more
parents purchased child education
policies because they were aware of
the increased cost of higher educa-
tion, which was due to inflation or
other economic factors.
“The increasing cost can result in
financial strains when children be-
gin higher education,” he said, add-
ing “This is the reason why more
discerning parents try to plan early.”
With customers now depending
on smartphones and other digital
tools, banks and insurance compa-
nies have also taken advantage of
telecommunication technology.
Insured students studying abroad
can reap benefits from the advance
technology applied by banks that
have overseas networks. “Education
needs such as fees and living costs
can be easily controlled through In-
ternet banking,” said an executive at
a bank.
“Besides, Internet banking can
facilitate the withdrawal of money
in an emergency situation, such as a
lost credit card,” he said, adding that
a new card could be supplied within
two days.
WEDNESDAY November 20, 2013 | Supplement 9
LIFE INSURANCE