Accelerating Medical Premium Malaysia

Medical insurance premiums in Malaysia have been increasing at an unsustainable rate in recent years. Such a trend could render medical insurance plans unaffordable to many people, including those from the middle-income group, says Life Insurance Association of Malaysia (LIAM). 

Medical insurance premiums have been increasing at an annual rate of 6% to 8% over the past few years. This is something LIAM is looking very closely into to discover the root causes and to find solutions. 

One of the reasons for the increase is the high medical costs. According to Willis Towers Watson’s 2019 Global Medical Trends Survey Report, Malaysia was ranked No 2 out of 13 countries in Asia in terms of medical costs.

Last year, medical costs in the country increased 13.1%, mainly due to the availability and adoption of new medical technologies and equipment. The countries with the highest increase in medical costs were Vietnam (16.3%), followed by Malaysia, the Philippines (11.5%), Indonesia (10.8%) and China (10.7%).

But these costs are not the only factor to the high medical insurance premiums. Other issues include the design of these medical insurance plans or particular hospital charges (which include consultation fees, hospitalisation fees, the cost of operating theatre and more).

These stakeholders are the insurers, Ministry of Health, private healthcare service providers and medical insurance policyholders. Medical Cost Containment Task Force (MCCTF) was established by LIAM, the General Insurance Association of Malaysia (PIAM), Malaysian Takaful Association (MTA) and Bank Negara Malaysia last year. It carried out an independent study on the key drivers of increasing medical insurance premiums.

The issue of escalating premiums is not unique to Malaysia. In fact, Singapore acted last year to contain the rising medical insurance premiums in the city state. One of the things the Singaporean government did was to introduce co-insurance plans. Policyholders of co-insurance plans pay a lower medical insurance premium in exchange for paying a fixed percentage of the medical costs in their claims.

Lawsuits Against Allianz In USA

Pension funds for truckers, teachers and subway workers have lodged lawsuits in the United States against Germany’s Allianz, one of the world’s top asset managers, for failing to safeguard their investments during the coronavirus market meltdown.

Market panic around the virus that resulted in billions in losses earlier this year scarred many investors, but no other top-tier asset manager is facing such a large number of lawsuits in the United States connected to the turbulence.

In March, Allianz was forced to shutter two private hedge funds after severe losses, prompting the wave of litigation the company says is "legally and factually flawed". Together, the various suits filed in the U.S. Southern District of New York claim investors lost a total of around $4 billion. The fallout has also prompted questions from the U.S. Securities and Exchange Commission.

Allianz Global Investors said in a statement - “While the losses were disappointing, the allegations made by claimants are legally and factually flawed, and we will defend ourselves vigorously against them. The plaintiffs are professional investors who bought funds that “involved risks commensurate with those higher returns.

The latest claims against Allianz and its asset management arm Allianz Global Investors last week include one from the pension fund for the operator of New York’s transport system, the Metropolitan Transportation Authority (MTA). It has 70,000 employees and made an initial investment of $200 million.

Similar suits have been filed against Allianz by pension funds for the Teamster labor union, Blue Cross and Blue Shield, and Arkansas teachers. The suits are seeking a jury trial to award damages.

Structured Alpha Family Fund - The suits allege that Allianz Global Investors, in its Structured Alpha family of funds, strayed from a strategy of using options to protect against a short-term financial market crash. The SEC’s inquiry continues and Allianz is cooperating. The SEC did not respond to requests for comment.

The cases are a second front of litigation for Allianz, one of Europe’s largest insurance companies. The Munich-based company and its competitors face suits for not paying claims related to business closures during the pandemic lockdowns.

The company’s insurance business as a whole has been under pressure as it faces claims for cancelled events, and a decline in demand for car and travel insurance. It expects to post the first decline in annual profit in nearly a decade.

At the end of March, Allianz informed investors it was liquidating two funds, as well as an offshore feeder fund. Investors lost 97% on one of the funds, the suits say. 

In April, Morningstar downgraded its rating for the remaining funds to negative “because of the failure in risk management protocols and the uncertainty”.Allianz disputed that rating. 

54% EPF Members - Less Than RM50,000 Fund

As many as 54 per cent of Employees Provident Fund (EPF) contributors aged 54 have savings of less than RM50,000 for retirement.

EPF Operations Division Deputy Chief Executive Officer, Datuk Mohd Naim Daruwish said in total, only 34 percent of EPF active contributors reached the level of basic savings by age.

To date the EPF has 14.6 million active contributors and 530,000 employers with a total managed fund of RM940 billion.

The basic savings set by the EPF is RM240,000 because the average life expectancy of the people of this country has now increased to 75 years and generally the people will go through a relatively long retirement period of around 20 years, based on the retirement age of 55 years. This situation is worrying and is likely to become more serious in the future and may have a negative impact on the well-being of the people and a burden to the government..

Among the factors that caused the contributors’ savings to be low was due to poor financial literacy among the people, which is around 36 percent, compared to other countries such as Singapore at 59 percent and Myanmar, 52 percent.

As such he said, the EPF encourages more people, especially the self-employed, such as online entreprenuers and e-hailing drivers to register under the EPF’s voluntary retirement savings programme, (i-Saraan) to ensure their future, especially during their retirement period.

Until last June, only 255,958 people from all over the country had registered under i-Saraan. i-Saraan is a government initiative to ensure that the self-employed have savings when they reach retirement age by making payments or contributions voluntarily according to their ability and not exceeding RM60,000 per year.

Thailand Mandatory Insurance For Tourist

A consortium of 16 insurance companies in Thailand are now offering foreigners, who are eligible to travel to Thailand, the mandatory insurance cover valued at $100,000. Thailand’s Office of Insurance confirmed that it has set up a consortium of insurance companies offering Covid-19 insurance online as the country prepares to reopen its borders to travellers.

Once the country reopens all foreigners entering Thailand will need to buy Covid-19 insurance. But until the door reopens the scheme will make it easier for foreigners who are currently eligible to travel to Thailand to acquire the mandatory insurance cover online.

In addition to having insurance cover, travellers need to provide the nearest Thai embassy with a Fit to Fly Health Certificate and a negative RT-PCR swab test valid within 72 hours of the flight departing for Thailand. They are issued with a certificate of entry when they have fulfilled all the conditions and have a confirmed flight date. They must also have an appropriate visa that fits the approved category of travel. Tourist visas for leisure travel are not being issued.

The Covid-19 insurance policy - covers both deaths due to the disease as well as medical expenses for those undergoing treatment. In case of death caused by the Covid-19, the policy pays for funeral expenses and the repatriation of the corpse or ashes to the country of origin. The maximum payout is 3.2 million baht. For medical expenses linked to the treatment of Covid-19, including the period of hospitalisation (inpatient or outpatient), the maximum payout is 3.2 million baht.

Foreigners who buy insurance cover as part of the requirements to fulfil conditions to travel to Thailand must pay the insurance premium according to the period of their stay from 30 days to a maximum of one year.

The premium is set against benchmarks that identify the Covid-19 risk in the country of origin; the lower the risk, the lower the premium.

Insurance premium cover starts at 1,600 baht and can be as high as 14,400 baht for low-risk countries. Foreigners from countries with moderate risk are likely to pay an insurance premium of between 2,560 baht to 23,040 baht. If the traveller is from a high-risk country, the insurance premium could be as high as 43,200 baht.

Empowering Deaf Bakers In China

The oven's warm glow and aroma of fresh bread signal the morning rush at Bach's Bakery in the central Chinese city of Changsha, but although the baking staff chatter excitedly, you could hear a pin drop.

Bach's employs mainly hearing-impaired staff, whose banter over trays of pumpkin bread, Danish sausage rolls and apple turnovers is done entirely in sign language. The operation, owned and operated by German national Uwe Brutzer, provides work opportunities that are often hard to come by for his employees.

20 - 30 Million Hearing Impairment - Despite growing awareness of disabled needs, life remains a challenge for China's hearing impaired, officially estimated at between 20 million and 30 million.

It's difficult to "make good money and get an education", said Wan Ting, a 28-year-old employed by Bach's since 2017 after a previous unsuccessful stint in advertising design. "It's hard (to find work) in other places. You need to know someone to be able to find good work. If not, you have few options," added Wan, hearing-impaired since birth and speaking via sign language translated by Brutzer.

With their communication challenges, the hearing-impaired are often steered into work requiring skilful use of the hands, said the 50-year-old Brutzer, making the bakery a nice fit.

Bach & his wife Dorothee - first came to Changsha in 2002 with a German charity to help hearing-impaired children. He took over the bakery in 2011 and has since trained around 20 bakers. Most go on to work in other bakeries, restaurants or hotels. But other aspects of running a business - hiring, working with suppliers, talking to customers - pose major challenges to opening their own bake shops.

"Two of our very experienced bakers (have tried), but they both closed their shops later again. It was too much hassle for them," he said.

The bright and compact bakery has had a devoted local clientele for years in the city - known more for its peppery Hunan cuisine - despite being hidden in a non-descript residential side alley.

Challenges - Bakery margins are thin, however, and Bach's has struggled, said Brutzer. But things are looking up, despite China's traumatic COVID-19 lockdowns earlier this year.

Moving to no-touch take-out service during the epidemic kept volumes humming, and Bach's went viral this summer thanks to a spate of feel-good Chinese media coverage.

Today, a loud creak from the front door announces a new customer every few minutes and business is up five-fold from last year, said Brutzer. The challenge now is meeting demand.

"But that will slow down, I hope, to a good level where we can pay better salaries and people will be happier," he said.

Greed - Top Killer In Business Partnership

The downside of a business partner and what entrepreneur need to watch out for:

Lack of goal congruence - What are the probability that two unique individuals will have the same goals over an extended period of time? One of the partners could be more interested in making money with the business while the other partner views it as a profitable hobby. Goals changes over time. As the business grows, so do the two partners involved. Once some time has passed, one of you may start to view objectives differently. It’s surprising how much goals and views can change over time. The scary thought is that you both might want to go in totally different directions with the business.

Greed getting in the way - Humans have moments of greed. Even the kindest and friendliest folks will feel a strong sense of greed at some point. When you go into business with a good friend it doesn’t mean that you’re completely protected. It’s always advisable that you get everything down in writing and that a third party is witness. You just never know when greed can become a factor in the business partnership.

One of you working harder - When you’re up late at night working on the company while your partner is not. This can become a major issue. The next issue revolves around deciding what to do when one of the business partners isn’t working as hard. Do you pay that person less? What if they don’t agree to a pay cut? This is a major issue that you need to decide on as you and your business partner put your plan together.

Decision making process issues - When your business is making no money the decisions are pretty straight forward. At that point the both of you are just excited about growing the company. All you can both think about is the idea of your business hitting it big one day. When large contracts and colossal clients come your way. The decision making process will drastically change at this point. One partner might want to expand while the other business partner is more conservative. Decision making can also get awkward when a boss-employee relationship starts to slowly form between the business partners. How will you make business decisions with your future partner?

External forces - The two business partners might get along well when together, but anything can happen once external forces get involved. What if one of the partners ends up in a relationship with a controlling person? What if one of the partners wants to bring in a third person into the business? Dual business owners is what happens when third parties get involved and start trying to get some input on the business and the future direction.

Exit strategy - Leaving the business is a topic that nobody wants to discuss. The reality is that at one point many other opportunities will come along. A potential buyer can get involved. A new business venture will come along. The work load of the business can become too tedious and one of the partners might want to get out. What will the exit strategy be? How will the two of you decide on exiting the business?

Life Insurance New Paradigm

The insurance industry is in the midst of a paradigm shift. The rise in digitization is bringing a host of technologies that are disrupting the industry, while bringing new efficiencies and expanding business opportunities to everyone in the insurance value chain. It’s also changing the way we do business.

The availability of highly reliable and diverse data sets around people, their lifestyles and behaviors have an enormous impact on everything from product design and sales approach to how customers like to be served. Data enables a whole new level of personalization and helps the carriers create an Amazon-like experience for their consumers throughout their life insurance product journey. Data also helps individuals obtain better solutions to their life needs and more affordable life insurance. It also gives agents and advisors a hearty boost to their business.

Insurers are forming ecosystems, partnering with businesses on projects that achieve greater value together than each could capture individually. For example, John Hancock partnered with Verily and Onduo to provide consumers with type 1 and type 2 diabetes an experience that includes personalized education, diabetes management prompts, incentives, rewards and premium savings.

The digital economy, rapidly-evolving technologies, the changing data paradigm and the rise of insurance ecosystems are changing everything about the business of buying and selling insurance. And these trends are also providing agents and advisors will tremendous opportunities to grow their businesses, better serve their customers, and increase the level of engagement and grow relationships with both insureds and their beneficiaries. In particular, these trends benefit agents by:

Opening up a whole new market segment - Historically, agents have sold primarily to the affluent large policy market because of the nature of their compensation structure. Sales in the midmarket and low end have been very difficult because pricing was relatively high and not affordable for customers. Today, innovation and technology can help insurers and agents sell more policies to a wider market by making products more attractive and affordable to historically underserved markets. Insurers can offer new pricing and servicing models that can bring the price within the means of more people.

Technology also enables insurers to personalize and tailor products and offer a low-touch buying experience. Insurers and agents benefit from this potentially multitrillion-dollar opportunity with increased sales. The community benefits as well, because more people are able to obtain coverage.

Selling to people previously considered too risky.- In the past, there was a bias built into the paradigm and approach to how we traditionally looked at life insurance. Historically, life insurance has been driven by categorizing risk pools. These pools have been very broad and in some cases, including and excluding people based on their health and lifestyle. However, not everyone in a common risk pool behaves the same way. Our methods didn’t allow for any distinction around individual behavior over a long-term horizon.

For example, someone with a family history of diabetes might be categorized as prediabetic, and therefore would not be able to get a good rate on a life insurance policy despite living a very active and healthy lifestyle. In fact, insurers would consider this individual a greater mortality risk than a younger policyholder who leads a less active and healthy lifestyle. Over a longer time horizon, the prediabetic with the better lifestyle may have been a better mortality risk but underwriting would have rejected them or given them an unfavorable rate. Because of technology advancements, these customers can become a viable customer base for agents and advisors.

Decreasing application processing cycle time and reducing abandonment - In the past, filling out life insurance applications was arduous, taking weeks or even a month for insurers to gather all required information for underwriting and issue a basic life policy. Today, the availability of data, digitized health records, advanced algorithms and machine learning, and technology advancements, completely changes the paradigm. The availability of digitized data is transforming underwriting models and driving decision making in a short span of time.

Not only is this new paradigm cutting the cycle time, but it’s helping better convert prospects into customers. In the past, if an agent approached 50 customers and five wanted to buy a policy, there would be one or two who would likely drop off because the policy would take too long to issue. A faster and more streamlined application process enables agents to help a prospect apply for insurance, get a quote and issue a policy, all in a single office visit.

Growing the relationship within the insured’s circle, broadening sales opportunities - We’re seeing a shift in the agent-insurer relationship where they’re likely to communicate more frequently, grow closer and work together. The intersection between wellness solutions, health care and life insurance sets up a unique opportunity for insurers and agents to foster a working relationship – and increase business. Data availability and an expanding insurance ecosystem is helping agents keep in better touch and nurture relationships with policyholders. It’s also helping customers live longer and healthier lives.

Improving insured’s health and wellness - Insurers can also provide help with health and wellness so their policyholders can live longer and more satisfying lives with their families. Advancements in genomics have the potential to completely disrupt Life insurance. As genomics and other healthcare paradigms start to become more mainstream and evolve, today, customers can invest in a healthier and longer life, including compensating on their disease markers instead of investing in life insurance.

Rewards and customer engagement play an important role in encouraging adults to improve their health and lifestyle and purchase life insurance. New research from The Harris Poll on behalf of SE2 and Life.io revealed that more than four out of five Americans (85%) would be likely to improve their health and fitness habits if a life insurer offered a lower monthly premium based on their real-time health information. The study also found that about two-thirds of Americans surveyed said they would engage in gamification to reward healthy lifestyle and wellness habits if their policy offered the capability. A full 82% of millennials said they’d be more likely to purchase a life policy if it included a rewards program to help them improve their wellness.

Many life insurance policyholders are willing to share personal health and life data if they receive some benefit in return. Half of Americans surveyed said they would share their wellness information gathered from a wearable device of customer portal if it would lower their policy premium. This is very similar to the telematics model the auto insurance industry is following, providing discounted premiums and increasing driver safety for drivers who agree to allow their carrier to monitor their behavior behind the wheel.

The rise of insurance ecosystems, and the availability of digitized data is transforming the nature of risk and policy sales for the life insurance industry, paving the way for greater innovation and personalization of services. For agents, this will continue to help increase opportunities to grow their customer relationships – and increase sales.

Article by Vinod Kachroo, chief information officer of SE2

Universal Life Is Too Risky For Most Customer

Indexed universal life insurance (IUL) has been one of the life insurance industry’s most

profitable businesses. Growth in annualized premiums of IUL quintupled during the decade, worth more than $3 billion in 2019.

And more than 20% of all new premiums written in 2019 were IUL policies. At least 52 insurers selling indexed universal life insurance. Pacific Life is the biggest and holds about 19% of the market.

Complex & Risky Product - Critics claimed that indexed universal life insurance is being sold dishonestly. IUL are complex products sold with false promises and deceptive marketing. The cash value within an IUL policy is tied to an index. This might include plain vanilla ones such as the S&P 500 and the Russell 500 indices. But money could be going into more esoteric ones like the Hang Seng, Gold and Emerging Markets.

Options allow the holder to buy or sell the underlying index at a certain price at a certain time, which can rise or fall rapidly. If an option is exercised “in the money,” the payoff can be significant. But if the option expires “out of the money,” the entire investment in that option is lost. And this is why IUL is a riskier investment than traditional insurance. The risk is not properly disclosed and is borne by the policyholder.

Consumers are adviced to avoid IUL because the insurers and agents who sell the product have no obligation to work in the consumer’s best interest. Mix in massively complex products designed to juice illustrations with opaque and unaccountable features and you have the recipe for future financial disaster. 

The American Council of Life Insurers (ACLI), which represents 280 companies in the insurance industry, admits that IUL is not for everyone. Indexed universal life insurance is in the same class with other permanent life insurance policies, such as whole life insurance. This means that it won’t expire—the way term life will—provided the premiums you’re paying in and policy account values are enough to keep the policy in force.

Investment Philosophy - Life insurance companies that sell traditional policies like whole life insurance invest primarily in corporate bonds and government-backed mortgages where the money will be safe and generate a small, but reliable, annual return each year.

An indexed universal life policy is different. As the name implies, it takes yearly interest income from the bonds and mortgages underlying the policy and invests that interest in options on one or more indices. These policies are sold by insurance agents as an indirect way to play the options market. The insurance company manages and buys the options, rather than the policyholder, who expects to see additional gains in value while keeping the basic policy investment safe.

It’s a way for life insurance policyholders to have their cash value take part in the market.
Fees Can Drain the Policy

While it’s true that indexed universal life insurance offers a bigger upside than a traditional life policy in a good year—like 2019 when the S&P index rose 28.9%—and while it can protect against investment loss, the costs associated with an IUL can drain the policy of its value.

Hidden Fees - To afford the budget for the money management involved in options trading and compensate the insurer and its agent, IUL policies can include significantly more fees and costs than an average life insurance policy. One insurer charges upwards of 8% of the premiums and cash value in the policy in the first year alone. That’s more than most hedge funds.

These fees threaten to drain your policy’s cash value during adverse periods when the market—or whatever index the policy is tied to—plunges. If internal costs cause the policy account value to drop too much, your policy is at risk of lapsing and you’ll have to pay more in premiums just to keep the policy intact.

Pay Up or Lose Out - When the S&P dropped 500 points in March due to the COVID-19 crisis, the policy’s investment loss was zero—if measured from the previous year. But the monthly policy expenses may have caused losses of several percent in the value of the policy—and if it went down too much—then policyholders got a ‘premium call’ requiring them to put in more money.

If you don’t keep paying the higher premiums to keep the policy in-force, you risk losing all previously paid premiums, as well as the death benefit going forward. In one example - a person could pay $367,000 over six years on an IUL policy and get nothing back if the policy is canceled. When a policyholder tries to surrender the policy, the insurer might keep the entire first year’s premium since it has already paid the commission costs to the agent who sold the policy.

Policy values in IULs are depressed for many years due to high up-front charges and high surrender fees. These typically last for more than 10 years after the policy was taken out. Recently part of a class action suit against Prudential Insurance Co. involving overbilling and improperly lapsing universal life insurance policies. Another one is against Pacific Life over deceptive sales practices concerning the earnings potential of indexed universal life insurance policies.

If you don’t have the stomach for investment losses, or don’t have the patience for long-term investing, IULs probably aren’t for you.

The IUL Sales Problem - IULs are not regulated by the U.S. Securities and Exchange Commission, unlike stocks and options. Insurance agents typically aren’t required to undergo the same training as stockbrokers to sell so-called “derivative products” such as options based on an underlying index like the S&P 500. Their only requirement is to be licensed by the state as an insurance agent.

A wide range of consumer protections are in place for all life insurance customers, including a 10-day ‘free look’ period after purchase. But insurance agents often use optimistic projections, or “illustrations,” to show the gains these policies can earn over the years. This makes it appear as if the policy will be “costless” in certain years, or you won’t need to pay as much into it as other types of life insurance.

The problem is that these projections are not guaranteed, and may not come to fruition. People will buy IUL policies based on a fictional future and hit a hard reality when they have to pay substantially more than they expected in order to keep the policies in-force.

Dealing with the Unexpected - Remember that a life insurance policy may be in effect for 40 years or more and a lot can happen during that time. For one thing, after a few years the insurer may lower the “crediting cap,” which is the maximum amount it allows the policyholder to earn on the policy when options do well.

Insurers often use low-cost loans in order to sell IULs, and have lenders lined up to offer loans to potential IUL buyers. This practice is called “arbitrage.” In fact, many indexed universal life insurance buyers have been encouraged to buy up to five times the amount of insurance they actually need with these low-cost loans. They are led to believe the policy will earn 6% or more each year, and since they can borrow the money to pay the premiums at 3% or less, they think they will make at least 3%, far better than a bank can offer—and on borrowed money.

But the policy owner is likely to have to requalify as a borrower every three to five years, during which time the interest rate may go up while the cash value inside the policy could go down.

Opinions about indexed universal life insurance vary - but critics warn that it’s not the riskless investment it may be sold as, and you could lose it all. Potential customer should check with a certified public accountant before buying, since they operate under a stricter set of rules than most insurance agents. Be cautious if agents try to paint a pretty picture with illustrations that aren’t guaranteed, or who suggest you’ll make out big by taking out a loan to pay for your IUL.

Covid19 Disrupts Indonesia Insurance Industry

 

COVID-19 has decimated many industries, but the insurance sector could be one of the few silver linings to come out of the pandemic, one Indonesian startup believes.

Awareness of insurance has increased quite substantially. Via platforms such as Gojek, the five-year-old company provides small ticket, affordable insurance products, which are underwritten by the larger insurance companies. One example of a PasarPolis product is the insurance consumers get when sending parcels via GoSend, Gojek's logistics service.

As a result of the increase in goods being bought online, Company's business had been helped by a significant increase in the logistics required to deliver these items. Company expects that the pandemic will help to boost sales of other types of insurance, be that health or life, in a country that has one of the lowest insurance penetration rates in the region.

Insurance penetration tends to rise in tandem with a country's economic development, but while Indonesia has recently been classified as an upper middle-income country by the World Bank, its insurance penetration rate was only 1.99% in 2019, well below Thailand's 4.99% and Malaysia's 4.72%, according to data from SwissRe Group.

Indonesia can follow a trend seen in China, which appears to be seeing higher insurance take-up since the pandemic. A survey in May by Morgan Stanley found that 16% of respondents had increased their medical coverage over the previous three months, and a third were considering taking on more insurance.

There is a caveat, however: insurance policies need to be affordable and easy to sign up to.

Insurance in Indonesia is still primarily sold through traditional channels like agents and banks, and requires extensive paperwork to be filled in. The associated costs of this are added to the premiums, leading to higher prices. While PasarPolis still deploys agents, their primary distribution channel is through digital platformers like Gojek, Tokopedia and Traveloka -- which are all investors in the company -- allowing them to reduce costs and slash premiums. Purchasing insurance is also done online.

Reducing cost "is very important to democratize access to insurance in Indonesia as this would help reduce financial stress among citizens and help Indonesia's economy to grow. Insurers make sure insurance are affordable, as well as extremely seamless and frictionless to buy.

PasarPolis says it issued more than 650 million policies to first-time insurance purchasing consumers, including ride-hailing drivers, delivery couriers and merchants of small and medium online enterprises last year.

The company is also working to deploy a "dynamic pricing" model, whereby premiums change based on a person's habits and tendencies -- for example, a health insurance premium will be reduced for those who exercise daily.

Chinese smartphone maker Xiaomi was a key component of this approach. The company was one of the investors which participated in the Indonesian startup's recent $54 million series B funding round.

Hong Kong Insurance Sales Albeit Covid19

Hong Kong insurance companies are developing more online sales channels and introducing more medical and retirement products to boost sales as the sector is poised for its worst slump on record.

Mainland Chinese, until now huge spenders on Hong Kong insurance policies, spent only HK$839 million (US$108 million) on them in the second quarter, down 85 per cent from the first three months. In the first half, their spending dropped 76% year on year.

Coronavirus travel restrictions have prevented mainlanders visiting Hong Kong to buy the policies. Total new sales of life insurance in the first half-year dropped 34 per cent from a year earlier. If the trend continues, it will be the worst slump on record, bypassing 2008 when sales dropped 25 per cent during the year.

To cope with the challenges, HKFI earlier this month introduced a virtual platform to assist insurance companies in developing online sales channels.Local insurers have also been selling more medical and retirement products to Hong Kong customers since April last year when the government introduced tax incentives for these products.

The HKFI is also working closely with the Insurance Authority and its mainland equivalent to introduce the so-called "Insurance Connect" in the Greater Bay Area, Hui said. The plan, which has no launch date yet, will allow the HKFI to rent office space in Shenzhen, Zhuhai and Guangzhou. The three services centres will allow Hong Kong insurers to provide post-sale services to clients, and hopefully expand to cross-border sales in the longer term.

HSBC Life, AIA and BOC Life have all seen more online sales this year. HSBC Life's digital sales rose 5 per cent year on year in the first half of 2020, with one in four of its protection policies sold via online channels. The insurer introduced video conference services for its staff to explain policies to customers.

Bank of China Life saw its online sales in the first half double from a year earlier. AIA, the largest insurer in Hong Kong, allows thousands of salespeople to use telephone, video conference and other online tools to sell policies.

The pandemic led to greater demand from customers for medical insurance products. HSBC Life launched a new medical plan in July that offers HK$40 million of coverage per year, the highest amount in the city.

Top 3 Insurers In Vietnam

Competition is stiff among Vietnam's three top life insurers, even with a booming market which has tripled its revenue in the last five years.

In terms of new contracts, Manulife Vietnam led the market for the first time with a 17.7% share, followed by Bao Viet Holdings with 16.49% and Prudential Vietnam with 15.78%. The latter two have taken turns to lead the market in recent years, reported VnExpress citing data from the Ministry of Finance.

Vietnam had 18 life insurance companies with combined premium revenues of VND106.6tn ($4.6bn) last year, an increase of 24% year-on-year and 2.8 times since 2015. Industry insiders say competition is expected to become keener in coming years.

Canadian insurer Manulife has in recent years been seeking to increase bancassurance sales. It signed an exclusive bancassurance contract with leading private lender Techcombank in 2017. The company has reportedly emerged as the leading bidder for the Vietnamese operations of British insurer Aviva. The deal, if successful, would allow it to sell its products via VietinBank, one of Vietnam's four large state-owned lenders.

State-owned Bao Viet Holdings, the second largest insurer, saw its share of new contracts drop by 4.4% percentage points between 2016 and last year. The company, in which the Ministry of Finance holds a 65% stake, has not sealed any major bancassurance deals and relies on traditional channels. It had 2,500 salespeople last year, equal to that of Manulife and Prudential combined.

Prudential Vietnam has seen revenues fall in recent years since being overtaken by Bao Viet in 2017. Company executives said they have been focusing on experienced employees instead of rushing to recruit new ones.

Who Is Charles "Chuck" Feeney

Charles “Chuck” Feeney, 89, who cofounded airport retailer Duty Free Shoppers with Robert Miller in 1960, amassed billions while living a life of monklike frugality. As a philanthropist, he pioneered the idea of Giving While Living—spending most of your fortune on big, hands-on charity bets instead of funding a foundation upon death. Since you can't take it with you—why not give it all away, have control of where it goes and see the results with your own eyes?

Over the last four decades, Feeney has donated more than $8 billion to charities, universities and foundations worldwide through his foundation, the Atlantic Philanthropies. He's given away 375,000% more money than his current net worth. And he gave it away anonymously. While many wealthy philanthropists enlist an army of publicists to trumpet their donations, Feeney went to great lengths to keep his gifts secret.

But Feeney has come in from the cold. The man who amassed a fortune selling luxury goods to tourists, and later launched private equity powerhouse General Atlantic, lives in an apartment in San Francisco that has the austerity of a freshman dorm room.

Feeney gave big money to big problems—whether bringing peace to Northern Ireland, modernizing Vietnam’s health care system, or spending $350 million to turn New York’s long-neglected Roosevelt Island into a technology hub. He didn’t wait to grant gifts after death or set up a legacy fund that annually tosses pennies at a $10 problem. He hunted for causes where he can have a dramatic impact and went all-in.

On September 14, 2020, Feeney completed his four-decade mission and signed the documents to shutter the Atlantic Philanthropies. At its height, the Atlantic Philanthropies had 300-plus employees and ten global offices across seven time zones. The specific closure date was set years ago as part of his long-term plan to make high-risk, high-impact donations by setting a hard deadline to give away all his money and close shop. The 2020 expiration date added urgency and discipline. It gave the Atlantic Philanthropies the time to document its history, reflect on wins and losses and create a strategy for other institutions to follow.

Where did $8 billion goes? Feeney gave $3.7 billion to education, including nearly $1 billion to his alma mater, Cornell, which he attended on the G.I. Bill. More than $870 million went to human rights and social change, like $62 million in grants to abolish the death penalty in the U.S. and $76 million for grassroots campaigns supporting the passage of Obamacare. He gave more than $700 million in gifts to health ranging from a $270 million grant to improve public healthcare in Vietnam to a $176 million gift to the Global Brain Health Institute at the University of California, San Francisco.

One of Feeney’s final gifts, $350 million for Cornell to build a technology campus on New York City’s Roosevelt Island, is a classic example of his giving philosophy. While notoriously frugal in his own life, Feeney was ready to spend big and go for broke when the value and potential impact outweighed the risk.

Grab Advanced Talk With Prudential & AIA

Southeast Asian tech giant Grab is in advanced talks with insurance honchos Prudential and AIA and several others to raise US$300 million to US$500 million investment. The Singapore-based company aims to reach investment agreements as early as October.

The money is being raised for Grab Financial Group. This deal can also support Grab in its sales pitch for the Singapore banking licence.

Grab is currently valued at US$14.3 billion. There have also been reports about Grab’s ongoing talks for a potential merger with rival gojek. The two companies are still deadlocked over management and geographical control.

Gojek — which counts Google, Tencent and Temasek among its key investors -recently raised US$1.2 billion from undisclosed group of investors.

Grab recently laid off employees as the pandemic hit the company, mainly its transport business.

FWD Invested in IPP Financial Advisers

FWD Insurance has invested in IPP Financial Advisers, acquiring a minority stake in the financial advisory firm that has presences in Singapore and Hong Kong. The financial terms of the deal were not disclosed.

In a statement, IPPFA said that the alliance will allow it to cement its position as a premier financial advisory firm in Singapore and the rest of the Asia-Pacific region. It will also enable FWD to design more life insurance products that comprehensively meet the evolving financial needs of clients.

The development will complement IPPFA’s range of financial products, financial planning services and investments capabilities. It will retain its position as an open architecture financial planning institution with complete access to a range of products from different insurers and fund houses.

The deal will also boost IPPFA’s digitalisation efforts through integration of FWD’s technology capabilities, as well as increase its footprint across Asia, thanks to the insurer’s extensive network.

Aviva Singapore Sold To Singapore Life

Singapore Life (Singlife) intends to merge with Aviva Singapore in a deal valued at S$3.2 billion, which will make it one of the largest in the South-east Asian insurance sector and the largest in Singapore.

Singlife said the deal will bring its mobile savings and protection solutions to Aviva's 1.5 million strong customer base, and offer existing Singlife customers a deeper product range and advisory capabilities.

The transaction is subject to closing conditions, including regulatory approval, and is expected to complete by January 2021. The merger of the Singlife and Aviva Singapore legal entities is targeted to take place in H1 2021, subject to approval by the Singapore courts. Until the merger is complete, Singlife and Aviva Singapore will continue to operate independently.

When merged, the new combined business will initially be named Aviva Singlife, and will initially trade using both the Singlife and Aviva brands.

Life Insurance Malaysia Covid19 Impact

Life Insurance Association of Malaysia (LIAM) has launched its inaugural consumer awareness program on social media called #BukanExtra to help accelerate the country’s life insurance penetratiion rate to 75%. During the Movement Control Order (MCO) period in April, the activity recovered about 48% of the previous year, it recovered to 75% in May and 86% in June. Many in the industry agreed that in July, the activity has gone up close to the normal activity.

Covid-19 situation has created more awareness, adding that the industry would like to continue engaging with the youth, single professionals, newly-married couples and young families.

#BukanExtra campaign, which starts from Sept 9-Oct 6, LIAM together with its 16 member companies aim to generate awareness and educate consumers on the importance of life insurance protection; encourage financial planning among the younger generation; and create a sense of urgency to act early. It also intends to bring the insurance industry closer to the younger generation and demystify life insurance through social media engagements.

The life insurance penetration rate has been hovering around 54% for the past five years and has been reduced to 41% after eliminating multiple ownership of life insurance/takaful policies.

Out of the 41%, only 4% of households in the lower-income group have some form of life insurance/takaful cover, while over 90% of them do not have sufficient coverage for themselves and their loved ones.

In 2019, the average sum assured for individual policy categories reached RM130,000 per policyholder. This means that each policyholder will have an average life insurance protection of RM130,000 to take care of their family in the event of a loss of the breadwinner.

However, the level of protection is still not adequate and there is a wide protection gap in terms of insurance coverage needed. The average protection gap for the group headed by a breadwinner who is not covered by either life or medical insurance is the largest, at about RM723,000 per family.

New Trends In Life Insurance Sector

The insurance industry in India has been changing fast over the last couple of years. The current crisis has further provided a ‘digital-first’ push. The industry that was for years driven by traditional business models has evolved driven by a change in customer behavior, data, disruptive technologies, artificial intelligence and innovation.

The most relevant example of today’s time is the rise in the numbers of Internet users and the smartphone users. As of 2020, there are an estimated 697 million Internet users in the country. As the result of widespread high-speed Internet availability, the usage of smartphones has also widely increased. The forecasted numbers are shown to cross 970 million-plus smartphone users and Internet users in next five years.

The insurance sector was already on an evolution trajectory driven by technology even before the crisis set. The advent of the crisis provided an urgency that exponentially increased the adoption of digital and the speed of innovation from both ends of the demand-supply spectrum; replacing the original ‘business as usual’ norms.

Insurers have irreversibly transformed their workforces and cultures to operate in a digital world. This has re-instated some trends for the sector and introduced new trends for the future as well.

Customer behavior - The current crisis has had a strong impact on the financial planning priorities of customers placing insurance at the forefront. The perceptions, needs and concerns of customers with regard to insurance have also undergone a change with more sensitivity towards stability for themselves and their families.

This has naturally led to a shift in what customers look out for when they source insurance increasing the need for a more need-based and personalized products.

In addition the need for better and quick service has also taken a forefront as there is a shift towards ‘self-service’ requirements.

Being future ready for a ‘virtual life’ - The digital/innovation demand is driven strongly by customers now. From a marked shift towards paperless and penless processes for buying insurance to expecting virtual assistance during service requests; digital processes are no longer a differentiator but a survival requirement.

Though the need for human intervention is expected to continue as customers would still need guidance on suitable products but would rely heavily on digital aids. The current situation has hastened the customer migration towards a ‘virtual life’ where most interactions are driven by digital and social media.

This also provides insurers the opportunity to develop competitive advantage by evolving further to provide solutions that adapt better to the ‘virtual life’ future that most customers are migrating towards.

Data driven automation and AI - Data has been on the forefront of the latest digital technologies. Insurance has always been a data intensive industry with the possibility of utilizing that data for analytics and automation expanding in the last few years.

These trends will continue to dominate and even disrupt the industry further as more customers become comfortable with sharing additional information for better value and quicker services.

Disruption from tech-based companies - Lifestyle apps have the potential to re-imagine the insurer-insured relationships. Application programming interfaces (APIs) will enable the creation of insights-driven offerings as they integrate data from multiple sources. Many mobile applications have already become an integral part of daily interactions and have disrupted a sizeable portion of financial services sector.

In addition many insure tech companies have shown significant growth over the years. This will continue to stimulate insurers to acquire technological capabilities and partner with insuretech companies.

Overall this would lead to a win-win situation especially when the innovation is driven by the evolving customer demands for personalized services. Traditional insurers would be able to drive faster results and get access to larger customer bases whereas insure tech companies would get further insights on historical customer behavior and funding for further growth.

Liquid workforce - The demands for a more fluid workforce for insurance would increase. At present there is a strong need for underwriters and claims investigators to work with data scientist and analysts. By having a liquid workforce component companies can have a right mix of internal employees, freelancers and technologists. This helps drive faster innovation and change within the company. This trend has been gaining popularity across industries and we expect it to become prevalent in insurance as well.

‘Work from home’ - One of the biggest offerings from the new normal has been the adoption of the ‘work from home’ culture across industries. Many companies have invested in technology infrastructure to enable work from home to ensure continued services. There have been reported benefits of the work from home culture and over the last few months employee behavior has also adapted. Work from home also provides companies with the opportunity to deploy its resources better and help in flexible expansion across geographies.

India is largely an underinsured population with the insurance penetration amongst the lowest in the world. Thus the un-explored potential in the country remains high. The current insurance industry is largely focused on the urban organized sector. This segment is most vulnerable to the financial loss from the untimely demise of the bread-winner and has unique needs.

Article by -  Casparus Kromhout MD & CEO Shiriram Life Insurance