Incumbent insurers are often painted as being at the mercy of startups and tech giants ready to disintermediate and disrupt the industry. But according to AIA Group Chief Executive Ng Keng Hooi, "We have not seen any evidence that it will work well in the life insurance sector."
On whether life insurance products that meet the protection needs of customers can be done on a commercially sustainable basis from a pure disintermediated model, he said, “So far we have not seen any evidence that it is heading in that direction. Maybe these models sell a lot of policies yet not make any money. You can’t survive like that.”
He opined that for banking and insurance, the disruption is likely to come from within, incumbents transforming to serve their customers better.
“Because a lot of digital companies are not used to regulations in the way financial services industry is. We are in an industry where there are clear regulations and capital requirements as part and parcel of our business. We live by rules and regulations. They are not used to it. It’s a different world,” he said.
AIA’s digital strategy
However, that is not to say that AIA is resting on its laurels. Because “we can never say never”.
When it comes to digital, AIA has a clear strategy comprising three horizons, with enabling advisers an integral pillar, he shared.
This horizon is about enhancing the capability of its distribution and its representatives’ engagement with customers.
“We equip our agents with state of the art digital tools and technology to enable them to engage with customers very efficiently. If you look at our agency today, more than 90% of our new business by agents is done digitally,” he said.
The second horizon is boosting back office efficiencies. With approximately 32 million policyholders and 16 million customers in its group insurance schemes across the region, and some 13 million benefit payments made last year, it has to ensure the “backbone of the company” is running efficiently.
Read: More to come in AIA's digitalisation push
“We invest a lot in technology and upgrading our systems to make sure that they are very robust. Over time, our ambition is to ensure that all our businesses go paperless,” he said.
And the third horizon is to transform the way it does business. Citing wellness programme AIA Vitality which has more than a million members as an example, he said it has transformed the way customers are engaged and rewarded to live “Healthier, Longer, Better Lives”.
And AIA has plenty to show for its innovation and transformation efforts. These include being the first insurance company in Singapore to introduce humanoid robots in customer service; and partnering with WeDoctor, a leading Chinese provider of online healthcare services affiliated with Tencent Holdings, in addition to its various innovative digital tools.
Mr Ng, said, “It is not the responsibility of a single person or department with regards to transformation. AIA operates on an empowered model. We give our markets a lot of autonomy in terms of execution and pursuing innovation initiatives. They are involved in the formulation of the broad strategy that is defined at the Group level, and once that is defined, the Group moves in a common direction.”
But anyone can copy a strategy. It is not something which you can have intellectual property rights to, he added.
“So what makes the difference? It’s the people. If you want to empower people to do great things, you need to have very good people. We are very focussed in terms of making sure that we get the best people. That, to me is the key difference,” he said.
Face-to-face still the way to go
As for the role of advisers, there is no doubt in his mind that face-to-face interaction is still consumers’ preferred way to take up life insurance. Approximately 70% of AIA’s new business is done via its agency force.
Technology, such as artificial intelligence and robots, will make a greater impact on the industry in the coming years as it continues to mature. However, he believes it will be as a complement, enabling advisers to focus on their customers and upgrading their skills so they become more efficient and productive.
“In life insurance advisory, clients still require face-to-face interactions. You still need a financial adviser for that ‘final mile’,” he said.
In the third quarter of 2018 AIA achieved value of new business (VONB) growth of 17% y-o-y to US$979 million, as well as annualised new premiums (ANP) increase of 12% y-o-y to US$1,582 million.
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