Interview : Bryan Smith
Given Thailand’s ageing population, what life insurance products and services are required in order to extend the level of coverage?
BRYAN SMITH: Thailand is heavily underinsured; less than 30% of the population has life insurance and only 10% has health insurance. Estimates show that by 2020 Thailand’s population will have an older average age than that of China, and as a result we foresee at least 10% per annum growth in health products over the medium term. In addition, insurers are focused on developing health offerings – and unit linked offerings with protection riders – rather than traditional savings products due to Thailand’s low interest rates and significant medical inflation of 7-10% per year.
Recent scientific advances in genetics offer exciting benefits to customers, but they are expensive. To support paying for these new advancements, health coverage and medical services have become more sophisticated. However, given the increasingly complex environment – the result of changing demographic, economic and technological trends – customers will need to seek direct counselling and advice on the many options available from agents. As the penetration rate of health insurance products increases, market activities will become more holistic, with technological innovations such as artificial intelligence used to personalise services and offerings.
What distribution channels are insurers looking to use to increase market penetration rates?
SMITH: Around 90% of all direct premiums and policies were generated through two major distribution channels: agency and bancassurance. The agency model will remain in place as long as people feel the need to understand and discuss complex products and offerings; many people are still not ready to buy new protection products without human interaction.
That said, bancassurance is changing dramatically as branch traffic is dropping in light of digital innovation, and many banks are closing their branches or offering self-service. Previously, banks sold mainly deposit substitute offerings with little underwriting, but now they also offer health-related and underwritten products. There are likely to be more bancassurance sales if regulators allow bank staff to sell insurance products to customers outside the branch, an option which is currently being considered.
Telemarketing has a role to play too in the distribution of life insurance, especially in the low- and middle-income segments. Previous telemarketing successes were built on the sales of simple savings and accident products, but simple health-related offerings can also be distributed through this channel.
How would you assess the impact of digitalisation under Thailand 4.0 on the life insurance segment?
SMITH: The Thailand 4.0 economic development strategy is all about transforming the country into a regional leader of digital innovation. The Office of Insurance Commission has been looking to collaborate with the industry to develop ways of advancing digital platforms. At this time, our digital regulations are not as detailed as those in more developed markets. Data-security issues are of key concern for Thailand, as for the rest of the world. The current regulations are, in my view, designed as a general guideline to make the industry feel comfortable in investing in digital platforms, without being too prescriptive or inhibiting. The question remains: what role will insurance companies take in this new environment, and how will new and existing digital strategies be shifted towards a more holistic approach that equally benefits customers, employees and business partners? Thailand 4.0 will need to consider all three groups while it fosters its competitive edge. At the end of the day, the insurance industry cannot effectively incorporate innovative technologies within its sales and services without considering the impact of those digital tools on the customer experience.
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