New Ideas To Grow Life Insurance

Commercial, consumer and regulatory environments are combining to form a fertile breeding ground for the much-needed innovation in Indonesia life insurance industry. In the past few years, there have been few unique features introduced in different products. Increasing consumer preference for convenience has also driven players to relook at the delivery model and simplify the process of buying insurance.

Life insurance is bought to secure oneself against life's uncertainties. Insurance can have different purposes such as to ensure a regular income in case of loss of a bread earner, to secure a child's future, to ensure that one is financially equipped to face a critical illness etc. The meaning of buying life insurance i.e. protection might be the same, but the purpose may differ depending on a person's requirements.

Technology, a key enabler in changing customer behaviour - The changing demographics and use of technology are changing at a breathtaking pace. Old channel-based distribution and customer segmentation models are being challenged, and there is a greater appetite to embrace customers at a corporate customer level. Insurers are also grappling on how to extract benefits from the big data they hold, while at the same time mining social networks to better understand the behaviour and requirements of their customers. Insurance companies have also introduced triggers such as surveys and questionnaires within their interactions with their customers that enable them to provide the right products, at the right time based on their needs. These insights will further help them engage, enthuse and delight the customer.

Rural as a major thrust - More than 70% of the population lives in rural areas. At the same time their consumption pattern, choice and preference has changed. Technology and internet has given ample scope for rural people to adopt new ideas. Micro insurance is another avenue that has fostered growth, which has been specially designed for rural people with low premium and high coverage.

Transformation through new distribution channels - We are witnessing a growing trend among insurers who are adopting alternate channels of distribution such as bancassurance partnerships, corporate agents and brokers that will fuel business growth. An innovative idea of distribution is the new mantra and insurers need to align their business strategy in line with changing customer requirements and preferences. It is imperative to strike the right balance between traditional and modern models to survive for a longer period of time.

New way to look at life insurance - While the existing traditional formats are still equally in demand, the new income protection segment is rapidly gaining importance. Income protection is a type of term product that enables customers to protect their family’s lifestyle for a longer term in case of an eventuality. This provides a combination of lump sum amount to take care of immediate needs along with a regular monthly income that will address the family’s future financial requirements to achieve different milestones. Another important point that is considered is the impact of inflation. The cover increases in line with the inflation or simply in line with the increase in the bread earner’s income every year.

Opportunities - With insurance penetration of only 2%, Indonesia provides immense opportunities in the years to come. The challenge is to continuously look at simpler, easier products and effective modes of distribution.

We as an industry play a vital role in helping people achieve their goals and be financially independent. The opportunity is to look at needs and gaps of different target segments and have customised solutions for these groups. Players who will understand this and experiment with new solutions without fear of failure are the ones who will gain the most.