Digital Insurance - Market Share Inceasing

Consumers' expectations for digital insurance have increased significantly since the outbreak of the COVID-19 pandemic, making digital transformation of the industry become more urgent, a new study said.

The virus and social distancing measures put in place have spurred people's strong need for seeking protections by taking out an insurance plan. And this in turn is now forcing insurance companies to optimize their online services to better meet consumers' needs, ZhongAn Online P&C Insurance said.

During the epidemic period, there was explosive growth in demand for online virus-related and health management consultations. Data shows that the epidemic prevention and control topics on some Internet medical platforms registered 1.8 billion views.

Across the industry around the globe, payout pressure on business interruption insurance and event cancellation insurance has jumped, while health insurance has got a boost.

In February, China saw an accumulated personal insurance premiums grow by only 2 percent year on year, while the accumulative premium income of health insurance soared by 22 percent compared with a year ago.

More and more insurers have been pursuing digitalization in recent years, and the input on that effort is increasing.

According to a recent survey by Celent, 67 percent of chief information officers of large insurance companies said that they had begun to adjust and increase their budget for IT segment after the outbreak.

Interestingly, the outbreak has accelerated carriers’ investment in digitalization. Self-service portal, real-time response interactive system, mobile applications for policy service and claim settlement and world-class call center technologies became the focus of competition among insurance companies during the epidemic, ZhongAn Online noted.

Also, applications like virtual inspection, independent claim, artificial intelligence-based damage determination and virtual dispute settlement court are also highly valued by overseas industry players.

Netflix Reed Hastings - Donates $120 Million

Netflix CEO Reed Hastings and his wife, Patty Quillin, are donating $120 million toward student scholarships at historically Black colleges and universities. The couple is giving $40 million to each of three institutions: the United Negro College Fund, Spelman College and Morehouse College. The organizations said it is the largest individual gift in support of student scholarships at HBCUs.

Hastings has a history of supporting educational causes, including charter schools. He launched a $100 million education fund in 2016, beginning with money toward college scholarships for Black and Latino students.

Hastings said now is the time when “everyone needs to figure out” how to contribute to solving racism. He said HBCUs have been resilient “little-known gems” for Black education.

Amid protests over police brutality that began three weeks ago, companies and business leaders have been pledging solidarity with their Black employees and the black community. But tech companies — including Netflix — have fallen short in hiring, retaining and promoting underrepresented minorities within their own ranks.

Other tech industry donations in the wake of the Black Lives Matter protests have largely been on the company level. Last week, for instance, Apple CEO Tim Cook announced that the company will spend $100 million on a new Racial Equity and Justice Initiative, investing in education and criminal justice reform among other things. YouTube, meanwhile, pledged $100 million to help Black artists and other creators.

AIA Indonesia Launch DigiBuy

Many urbanites in Jakarta are now able to conduct activities outside their house as the city administration has started to gradually ease the large-scale social restrictions (PSBB) that have lasted for over a month.

Workplaces, public places, public transportation, educational institutions and places of worship have gradually reopened during the easing period, also known as the transitional PSBB period.

Despite the relaxation of the PSBB, urbanites can no longer interact with each other as freely as they used to because they are obliged to abide by the health protocols, which include maintaining 1 meter distance between each other, avoiding gatherings and wearing a face mask in public places.

In other words, people have to get ready to live in the new normal era.

With almost everything requiring less physical contact amid the pandemic, including in matters of insurance, investment and financial planning, the use of technology is definitely the answer. 

PT Financial AIA (AIA), a leading and most trusted life insurer, understands this challenging situation well and, being at the forefront in digital technology, AIA provides ease for its customers.

AIA’s newly launched investment-related insurance product (PAYDI), or unit link, is marketed through a non-face-to-face service or digital-based service, AIA DigiBuy.

Under the PAYDI DigiBuy system, the marketing staff, either through an agency channel or bancassurance, communicate with customers through a phone or video call to market AIA insurance products without having to meet face-to-face.

Upon making an agreement on the purchase of an insurance product, the prospective customers will continue with another process, which they conduct through the Interactive Point of Sales (iPos), a digital sale platform that the AIA marketing staff utilize, while the customers use a microsite platform.

A video record containing the agreement made by the customers on the products and the benefits of the products that the customers will purchase will also become part of the prerequisite that the customers should meet under the DigiBuy marketing system.  

Next, the prospective customers should review all of the supporting documents and if they have agreed, they are required to send a photo of themselves with their ID card and give their signature electronically through an e-sign form.

US$1.1 Million - Hospital Bill For Covid-19 Treatment

After spending months hospitalized for COVID-19 at Swedish Medical Center in Issaquah, Washington, Michael Flor, 70, says that he knew his stay would be pricey. He’d spent 62 days in an intensive care unit, including weeks in an induced coma, and come so close to death that his family had called to say goodbye. But he says it was still “heart-stopping” to read the hospital’s bill — for $1.1 million.

“I had to look at it a number of times… to see if I was seeing it right,” Flor, a Seattle resident, tells.

The 181-page bill included almost 3,000 itemized charges. His room in the intensive care unit alone had cost about $9,700 a day. The total cost of his treatment will likely be higher, because the bill does not include multiple items, including fees for his skilled nursing facility, dialysis and the doctors who treated him.

He may not ultimately need to pay for much of his treatment. He’s insured by Medicare and Medicare Advantage through Kaiser Permanente. The health care company has announced that it will waive most out-of-pocket costs for COVID-19 patients through 2020.

Dr. Anne Lipke, a pulmonary and critical-care specialist at Swedish, said that there was a moment when she was surprised that Flor made it through a weekend. “He was as sick as you can get, with basically every organ system shutting down,” says Lipke.

Investment Scam

The Securities Commission (SC) has warned the public against investing in fraudulent companies that promise high returns. It said there had been an increase in “clone firm” scams, where the fraudsters use names, logos, credentials, websites and other details of a legitimate capital market intermediary to promote bogus investment schemes on social media.

“The scams also promise extraordinarily high returns with little risk. Victims are often instructed to deposit money into personal bank accounts of individuals who claim to represent a legitimate licensed entity or a corporate account,” SC said.

The commission also said that a number of licensed entities in the capital market had lodged reports on the cloning of their corporate identities by unknown persons or organisations.

“SC will take action against those who engage in securities fraud, hold themselves out as a capital market intermediary or carry out any regulated activities without a valid licence or registration under the Capital Markets and Services Act,” it said, warning that those found breaching the law are liable to a 10-year jail sentence.

The SC advised members of the public who wanted to invest in any funds to verify the status of the company or individual at their website.

Recently, tycoon Vincent Tan lodged reports with the police and the Malaysian Communications and Multimedia Commission (MCMC) over an online scam that has been using his name and image.

50 Drivers Fight For One Order

Indonesian motorcycle taxi driver Aji chain-smokes and checks his smartphone constantly while waiting for orders by the roadside in downtown Jakarta on a hot June morning, but is staring at the prospect of another fruitless day.

Before the coronavirus outbreak hit, the 35-year-old father of four would ferry at least 20 passengers for a daily income of between $13 and $20 as a driver for homegrown ride-hailing app Gojek.

Covid-19 Pandemic - But when transportation services halted under a city lockdown, Aji considered it a good day if he got more than two food delivery orders, which pay him $0.70 each time. On some days, he has had none. Even with restrictions eased this week, he is struggling to feed his family.

“The situation is that there are many drivers but orders are few,” he said, asking to be identified only by his first name.

Eleven drivers for Gojek and Grab, which is backed by SoftBank Group, in Indonesia, Vietnam and Thailand told Reuters they’ve similarly struggled, with income slashed by more than half as the pandemic batters Southeast Asia.

And, disappointingly, for both drivers and the companies, an increase in food deliveries - forecast as a major growth area for both firms - has come nowhere near compensating for the losses in transport.

Even in Vietnam, seen as a recovery success story, drivers are reeling.

“The pandemic may cost me and many colleagues our vehicles, which we had bought using borrowed money,” said Grab car driver Tung in Hanoi, fearing that lenders may repossess the vehicles.

Unions representing Gojek and larger Singaporean rival Grab, Southeast Asia’s most highly valued startup at $14 billion, say thousands of drivers are in the same situation, especially in Indonesia, both firms’ largest market.

Core Promise - Their plight threatens a core promise of both companies: that they can improve the lives of tens of millions of people across Southeast Asia even as they provide big paydays for their blue-chip corporate and financial investors.

Southeast Asian governments have warned millions could end up jobless as a result of the outbreak. The two firms claimed they are supporting drivers with measures ranging from food packages and vouchers to low-interest bank loans and car rental rebates. But the crisis has also led them to cut the subsidies that have fueled their growth.

Doubts have also crept up about the ride-hailing model globally and on whether investors will continue pumping in massive funds into the startups. Even before the pandemic, Grab and Gojek - like Uber and Lyft in the United States and other ride-hailing firms around the world - were operating at a steep loss.

Grab co-founder Tan Hooi Ling has warned the company may potentially face a “long winter”.

Both companies still have plenty of cash. One source with knowledge of the matter said Grab has $3 billion in reserves. Sources familiar with Gojek’s finances said it was finalising an over $3 billion investment round at a $10 billion valuation; Facebook and Paypal announced investments in Gojek’s fintech arm just last week, and it also counts Google and Tencent among its backers.

Each has avoided major layoffs so far, though Grab is implementing voluntary unpaid leave for staff and Gojek is reviewing its services. In the United States, Uber, whose Southeast Asia business was bought by Grab, said it would cut 23% of its workforce.

Transport has fallen off a cliff, food has held steady, while logistics went through the roof and online payments are high... so having a portfolio of products helps. If we were only a transport company, I’d be quite bowled over.

Executives and investors at both firms point to the resurgence of orders at Chinese ride-hailing company Didi Chuxing as cause for optimism.

The crisis has revived speculation among investors about a merger of the two firms, which sources say has been discussed in early 2020, but not led to serious talks. Gojek said any reports of a merger are inaccurate. A Grab spokesman declined to comment.

Food delivery - Grab and Gojek have long touted the fast-growing food delivery industry as a big opportunity. But with platforms taking only a 20%-30% commission that is shared with drivers, margins are slim. And growth did not materialize in every market during the lockdowns.

A restaurant chain CEO in Jakarta said food delivery had not picked up in Southeast Asia’s largest economy due to people cooking more at home and as most orders traditionally consisted of lunches for office workers, who are now at home.

Aji described food delivery in Indonesia for Gojek as a “fight”, with “sometimes 50 drivers for one order”, with Grab Vietnam drivers recounting similar experiences. Even in Thailand, where orders jumped for both Grab and Gojek, profitability remains distant.

According to an April interview with local media by then Grab Thailand - food delivery was fast-growing but loss-making during the pandemic, with costs mounting and competition steep. Grab Thailand lost more than $22 million in 2018, while rapid growth led to losses nearly doubling in 2019.

Last year’s loss-making business growing rapidly in a short period of time, while the business that used to make profits for us is nearly gone.

Unit-linked Policy - A Threat To Unknowing Customer

When buying life insurance, people are generally not concerned with the movement of the stock market and do not look for earning very good returns on the premium. They think they should get reasonable return and the return must be certain. Traditionally, endowment policies have been fulfilling such expectations.

As awareness of the stock market grew, some people started demanding stock market-like returns on life insurance. In order to meet this demand, insurers introduced Unit Linked Insurance Plan (Ulip) in which the risk premium amount is maintained in the life fund, while the remaining amount is invested in the stock market as per the options exercised after deducting expenses as per Irdai norms. The fund is invested in the stock market as the mutual funds do and the NAV is declared daily for each fund. The risk in respect of each fund is borne by the policyholders.

Policyholders need to be alert - The policyholder has to be very alert while exercising options for different types of funds and he also needs to know when to switch funds for best return and highest safety. But the ground reality is that policyholders do not have enough expertise to get maximum benefit from their investments. There are all the chances of a good return but at the same time they stand to lose if their investments are eroded by declining market return.

When an agent talks to a prospective customer, he presents Ulip as an attractive product which can give him more return on maturity than the endowment plan. Both endowment and Ulip policies are meant for payment of maturity amount with reasonable growth. Ulip is affected by volatility in the market and the income depends largely on the skill of the fund manager. There are options such as debt, equity, or balanced fund but these issues are quite complex for an ordinary policyholder. If the intermediary tries to sell Ulip and shows only high returns to the prospective buyer, he does not respect the trust reposed in him by the client.

Agents must explain - The intermediary has to explain the nature of the funds and investment and tell the policyholder to track the NAV of his fund and take timely action. There have been several instances when Ulips have been sold to senior citizens on the basis of past record of return and they have lost their entire wealth due to falling markets.

Highest number of grievances received by life insurance companies are for misleading or insufficient information given to policyholders by the intermediaries. Moreover, those who buy Ulips are expected to stay invested by paying premium for a long time to take advantage of the cyclical ups and downs in the market.

The endowment policy return maybe lower but that return is guaranteed. The endowment policyholders get return, mostly reasonable return but that return is not get affected by the ups and downs in the market as the investments are mostly confined to sovereign bonds.

Market risks - The main issue today is whether Ulip is a deceptive or faulty product or whether it’s misunderstood and mis-sold. I think the latter is correct. Ulips should never be projected as a plan that multiplies money faster. It should be treated as a stock market investment exposed to all the risks that go along with the market.

This product had brought a bad name to the industry in the past. It is meant to serve a few and not everybody who wants to buy life insurance. Hence the life insurance marketing should focus more on term insurance or on the traditional endowment policies; the Ulip should be sold only to a few who can wait for their money to grow over a long period. For them, Ulip brings the advantage of stock market return on their premium and exemption from tax on the proceeds under Section 10 (10)D of Income Tax Act.

In the first 10 years since introduction of Ulip, a lot of mis-selling, mostly by private sector insurers, took place. Policyholders lost their savings in most of the cases. Heavy initial expenses deducted by insurers sometimes resulted in negative return to the policyholders. It is advisable to buy insurance plans according to one’s needs after fully understanding the terms and conditions. It is not necessary to combine insurance with investment.