AIA Accelerates Forward

AIA Group is ramping up its efforts to expand its footprint in Southeast Asia and China, where demand for insurance is surging. The Hong Kong-based life insurer plans to exploit its technology and human resource development program -- as well as its status as a long-established insurance provider in Asia -- to spur growth.

 

Life insurance markets in many Asian countries are growing rapidly due to swelling ranks of middle-class consumers and aging populations. To boost its shares in these markets, AIA needs to one-up such formidable competitors as Prudential of the U.K.

     

   
 One tool it has at its disposal is a portable sales assistant based on Apple's iPad.  AIA insurance agents use the iPoS digital assistant to provide potential customers with advice as well as information about the company's products.

Since wireless Internet services are not widely available in rural Southeast Asia, the point-of-sale assistants work over cellular networks so customers can buy life insurance policies on the spot.
The tablets are also loaded with documents and videos explaining complicated features of AIA's various insurance policies.

Steffen Schade, AIA's director of distribution platforms, was in charge of developing the sales tool. He likes its ability to boost the quality of communication between agents and customers. With iPoS, he said, "We can have much deeper conversations with customers and explore more options, which also gives customers more confidence" that they are buying the right products in terms of their life stages and financial situations.
            
An AIA agent makes a sales pitch to a potential policyholder by using the company's iPoS assistant in a suburb of Chiang Mai, northern Thailand.

 

AIA was once the Asian unit of American International Group, a New York-based insurance conglomerate that has its roots in an insurance agency opened in 1919 in Shanghai by an American entrepreneur.

By the end of the 1940s, the insurer had expanded into Southeast Asian markets like Singapore, Thailand, the Philippines and Malaysia. Over the decades, the company has established broad and reliable sales networks in the region.

After its initial public offering in Hong Kong in 2010, AIA entered less-developed Asian countries including Myanmar, Cambodia and Sri Lanka. It now operates in 18 Asian markets.

As of the end of May, AIA had $172 billion in assets. Its market value rivals those of Western insurance giants like Allianz of Germany, Axa of France and MetLife of the U.S.

Because of its long history of doing business in Asia, AIA has the trust and confidence of regulators. This helps the insurer recruit talent.

AIA holds the largest share of Thailand's and Singapore's life insurance markets.

iPoS assistants are also designed to help the insurer build up more flexible and efficient sales squads. They are used in 11 markets, including South Korea, Taiwan, Indonesia and Vietnam, and have become essential in winning new customers.

AIA also puts a lot of effort in employee training, ensuring that its sales operations are tailored to the business customs and needs of each market it serves.

AIA has a phalanx of high-quality insurance agents, which can be seen in the number of employees registered as Million Dollar Round Table members. The MDRT is internationally recognized as the standard of excellence in the life insurance and financial services industries. To qualify as an MDRT member, an agent needs to generate a certain amount of premiums, commissions and income as well as demonstrate high levels of expertise and customer service skills. As of May, AIA had 3,752 MDRT agents, more than any other life insurer.

AIA is now focusing its expansion strategy on China. In the early 1990s, AIA became the first foreign insurer to get permission from Chinese authorities to open a mainland branch on its own. Other foreign insurers were required to form joint ventures with Chinese partners.

China's life insurance market is dominated by domestic players like China Life Insurance and Ping An Insurance Group. Joe Cheng, AIA's chief executive of group agency distribution, is confident the company will succeed in the vast market. "In China," Cheng said, "statistics show AIA agents are almost 30% more productive than other agents."

AIA's products appear to stand a good chance of becoming popular in China. For many years, mainland Chinese consumers have been traveling to Hong Kong in droves to buy high-yielding insurance products. The deluge of mainland consumers into the city in pursuit of better insurance deals has been so strong that Beijing has started restricting the purchases of insurance policies outside the mainland as it tries to keep capital from flying out of the country.

Despite its suffering through a painful economic slowdown, China will be a crucial market for AIA in its next 100 years. Asia is already the main driver of growth for the insurance and other industries.
   
Swiss Re, a major reinsurance provider, has forecast 7.2% growth in life insurance premiums in Asia for 2016.  This is a much faster rate than the global average of 3.9%. The reinsurer sees double-digit premium growth in China, Indonesia and Vietnam.

In Asia, Prudential and Manulife of Canada, which, like AIA, have been operating in the region since the early 20th century, are strong rivals for the Hong Kong insurer. The three are locked in a fierce competition over Asian markets other than China and India, which impose tight restrictions on foreign investments.