Life insurers changing channels

Having three life insurance policies with three different life insurers, Ms. Pham Hoai Thu, a 42-year-old bank officer working in Ho Chi Minh City’s District 3, has never felt it was complicated to follow the policies’ information or pay the monthly premiums. “I’ve never had to contact consultants or insurance agents to ask about my policies over the last five years because almost all life insurers have linked with banks to develop premium payments via internet banking and have periodically sent online information to policy holders,” she said.

Many other customers in Vietnam with insurance policies have been actively taken care of thanks to facilities from fintechs (financial technology providers). Customers can readily go online to access data about policies and premiums or actually take out life insurance policies. Despite the model remaining in its early stages of development, with simple and low-value insurance products, online insurance is bound to become more popular in the near future, according to industry insiders.

Going online

Both local and foreign life insurance companies in Vietnam have been stepping up investment in online business models. Foreign life insurers transferring their transactions to digital platforms include Prudential, Manulife, FWD, Hanwha Life, Chubb Life, and Generali Vietnam.

Manulife Vietnam announced its EasyClaims service in late August, where customers receive support on its website in completing insurance claims. EasyClaims is one of Manulife’s first strategic moves in technology, to affirm its position in the country’s life insurance market. “Our AI efforts are mostly focused on servicing, in order to automate our back-end processes to boost efficiency,” said Mr. Kim Fleming, CEO of Manulife Vietnam.

Since last year, the company has deployed a number of online apps and services on preparing insurance documents or making periodic premium payments. In particular, it initiated online insurance trading services by launching three different types of flexible insurance products priced between $27 and $66, offering exclusive benefits on the online trading platform.

Hanwha Life Vietnam is also investing in technology and infrastructure. It recently launched JetClaims, an automated claims authorization program that allows customers to receive insurance benefits immediately. The unique feature of the program is “fast, simple and convenient”, as all procedures are completely automated, providing instant results, and customers can receive instant cash compensation in its customer service center. 

Previously, Generali Vietnam in April introduced its new application, GenClaims, which pares down the duration of the claim process and in turn reduces the notoriously long waiting time. Once claim requests are lodged, customers will receive a response from the insurer within 30 minutes. In most cases, insurance claims will be accepted and paid within a day. The Italian life insurer in early September launched a new cancer insurance product, Vita – La Chan Vang, and targets selling online soon. Customers need only answer some questions and the policy will be automatically issued rather than months later, as before.

Prior to selling insurance online, Generali prepared internal operational support platforms and improved its customer communications. It introduced a customer satisfaction survey system called GENPS last year, allowing it to provide the most hassle-free customer experience possible. At the same time, it also deployed the GENOVA system, supporting agencies to provide benefits to customers quickly. “More than 80 per cent of new insurance contracts have been signed via this system,” said Ms. Tina Nguyen, CEO of Generali Vietnam. “All these steps were prepared for the birth of Genvita in July, our most up-to-date and complete ecosystem integrating all previous technologies.”

A newcomer in Vietnam’s life insurance market, FWD is nonetheless one of the first life insurers to offer online sales and issue online contracts, cutting out insurance agents. “Our digital focus helps us be 100 per cent paperless and 100 per cent cashless,” said Mr. Anantharaman Sridharan, CEO of FWD Vietnam. It recently launched an online purchasing option for “FWD cancer care”, a life insurance package that promises customers are paid the entire sum for cancer diagnosis at any stage.

Strategies to adapt to the digital era

Source: Vietnam Report, June 2018

Hi-tech development strategies of insurers in Industry 4.0, by 2025

Source: Vietnam Report, June 2018

Technological adventure

A recent survey on life and non-life insurers in Vietnam conducted by Vietnam Report and released in June revealed that 82.4 per cent of insurance companies said they were building a Mobile Internet development strategy, and 67 per cent have adopted strategies based on two key factors in Industry 4.0: the Internet of Things (IoT) and Big Data. 

The current trend is that the insurance industry develops in parallel with the advent of new technologies. “The emergence of Industry 4.0 helps traditional insurance providers pay close attention to the technological tools available to help them change the way they operate,” Mr. Back Jong Kook, Chairman and CEO of Hanwha Life Vietnam, told VET. “The next few years will see a boom in fintech and insurtech [insurance technology], and Hanwha is not an outsider and is focusing on building systems and infrastructure. We are also researching many breakthrough products to apply in the digital age.” 

Along with its claims program, Hanwha Life is also investing in building an e-submission system, enabling agents to apply for insurance online. The system is also a tool to handle pre-insurance assessments and also supports the finding of potential customers. In the future, e-submission will not only be deployed for agents but also for customers. Mr. Kook also revealed that the insurer is now building and developing the sales channel and we will soon introduce it to the market to meet the needs of users.

As the first life insurer selling insurance products online, in addition to bancassurance and wholesale distribution channels, the US-invested insurer Prudential has been the first and only life insurance company in the market to publish its own e-commerce website, ePrudential, with only four simple steps needed to access and pay online. At ePrudential, the company has introduced a cancer insurance product, Pru-iProtect, which is completely online and with a single underwriting question. According to Prudential, insurance firms will also be required to consider strategic partnerships with e-commerce firms in order to digitalize their conventional insurance business.

“Insurance product development is a very unique, heavily regulated and tough process, in which we are mostly leveraging big data analysis to understand what is more suitable for our customers,” said Manulife CEO Mr. Fleming. “Manulife Vietnam goes for both offline and online, depending on product complexity and customer readiness. Other insurers on the other hand have not developed any digital product – products distributed online only – and some others are still focused on more traditional channels. In our case we envision that digital distribution is here to stay and Manulife is ready to lead that change.”

Changing local mindsets

The “Vietnam’s Life Insurance Industry – Digitalization Trends” report released last year by the research, consulting and education firm Fintelekt found that life insurance companies in the country are still in the early stages of digital adoption and are contemplating a planned and cautious approach to digitalization. After some two decades of availability, the proportion of Vietnamese people with life insurance products is still low, according to the Insurance Association of Vietnam (IAV). The total number of valid main contracts is around 7.8 million, or only 1 per cent of GDP. Meanwhile, the rate is 2.4 per cent and 4 per cent in Indonesia and Thailand, respectively.

From Mr. Fleming’s perspective, it takes several interactions to let customers understand the need for life insurances and financial saving products. “In developed markets like Hong Kong, more than 90 per cent of people are insured compared to 9-10 per cent in Vietnam,” he said. “This is basically telling us that we need to work, not only in converting customer needs but also in promoting the benefits of financial planning and its impact on customers and their loved ones. One more factor is the fact that the traditional target segments of insurance tend to be people in their 30-40s, and while internet penetration is not as high among this group as in younger generations, that is changing quickly in Vietnam.”

Nevertheless, Mr. Kook believes that some insurers have done their best to make online products simpler but customer trust is still to come. “The challenge is how life insurers convince customers to change their habits from offline to online when purchasing insurance,” he said. “Finally, but just as importantly, the legal corridor supporting online insurance needs to be transparent. Nevertheless, I believe that authorities will adopt the right policies if this sales channel is developed.” 

In the context of Industry 4.0 and the expansion of e-commerce, insurance companies cannot stay out of the race. Online insurance investment is long-term, not an overnight game, and is for those who have strong resources and consistency in their strategies to promote digital solutions, improve the customer experience, and make long-term commitment to customer excellence.