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