Spotlight on Distribution in Asia – Swiss Re and LIMRA
Article Synopsis :
With premium growth of 5.7% per annum over the last decade (compared to 4.3% for the world as a whole), Asia is the fastest-growing life insurance region in the world, on its way to becoming the largest. This survey, “Spotlight on Distribution in Asia: Consumer Channel and Product Preferences,” sponsored by Swiss Re and LIMRA, covering over 6,000 consumers in 12 Asian countries, gets to the crux of what really matters from the buyers’ perspective.
Asian consumers are gaining an unprecented level of control over how, when, and where they buy insurance. A growing range of product choice, demand for rapid fulfilment and availability of product information and opinions means companies have less control over how their products are evaluated and sold.
The survey very helpfully organises respondents into four populations: Insurance Buyers; Shoppers; Non-Buyers; and Disinterested. Naturally carriers will be keen on the data around Buyers – but the other three categories deliver useful insights as well, especially around triggering events and product complexity and its impact on the purchase (or non-purchase) decision.
Some of the key takeaways from the report include:
- The products Asian consumers are most interested in are life insurance, individual health insurance and medical reimbursement products. In some markets, cancer insurance and personal accident insurance are also of interest.
- About 60% of those consumers who have researched life and health insurance products say that they went on to make a purchase. Yet around one third say that they are still “shopping” and that they are yet to make a decision to purchase. These “shoppers” constitute a large segment in some markets and converting them into buyers represents a huge opportunity to increase insurance penetration.
- Interest in life insurance is triggered mostly by positive events like getting married or having a baby, whereas negative events are more likely to trigger interest in health insurance.
- Face-to-face channels still dominate. In particular, agents are the top choice for either gathering additional insurance information or making purchases. Brokers and banks are distant first and second runner-ups. In some markets, such as China, consumers are becoming increasingly used to researching and buying from insurers’ websites.
- Asian consumers are yet to adopt social media as an information source as they look into buying insurance. This is the case even for the younger generations. Young people are more inclined towards banks to gather information about an insurance product as well as to buy life and health insurance.
- There are a number of people who are not interested in insurance. They are put off mainly by the perceived complexity in insurance products and the purchase process. In comparison, most prospective buyers (who have started to research insurance) dropped out due to cost considerations.
- Most who decided not to purchase dropped out early either during initial research or upon receiving more information. A key reason is cost: insurance is often perceived to be expensive and not good value for money. Educating consumers on the value of insurance will help to overcome this challenge.
Digital Insurer's CommentsThe Life and Health insurance industry in Asia sees varied and diverse consumer needs across mature and emerging markets. Insurers need to know how customers evaluate products and make purchase decisions by class of offering, age group, and country. Bottom line: the key to success in Asia is segmentation, to which end this survey is an immensely valuable tool.
In a recent speech Bill Gates said what strikes him about Asia is “the old seems older and the new seems newer.” Asian insurers would probably agree. The trick is identifying and understanding consumers and engaging them via their most preferred channel. For example, insurers targeting the “silver generation” (ages 68-80) will invest to get technology in the hands of agents – if they invest in technology at all. Meanwhile insurers targeting Gens X, Y and Z need to figure out how to get technology in the hands of the buyers themselves, realising the smartphone app is the agent.
As a whole, the industry needs to be where the consumer is, at the right time with the right product conveyed via a buying process that’s simple and engaging. Old methods and networks have their place but new methods are required. We agree with the authors of this report: “Failure to adapt could see the life and health industry in Asia miss a whole generation (Generation Z or beyond) of buyers.”
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