General Manager of Emerging Markets in Manulife Asia, Sachin Shah, shares his thoughts on some of the challenges that insurers face when it comes to building financial resilience in emerging markets, and what insurers can do to improve this.
My name is Sachin, and I am the General Manager of Emerging Markets in Manulife Asia. I have responsibility for driving the development of Manulife's operations in Southeast and South Asia.
Manulife has a strong presence in the ASEAN region, and working closely with the General Managers of Manulife's emerging markets, we understand the importance of building financial resilience in these markets where there are ever-changing regulatory developments, accelerated risks, and large growing protection gaps for consumers and for governments.
Given the large protection gap in Asia's developing markets, what are some challenges that insurers face when it comes to building financial resilience in these markets?
Southeast Asia has attractive demographics – a young, urban, digitally savvy population that is driving rapid economic growth. However, the main challenges that insurers face nowadays are four-fold: 1) low insurance penetration, 2) financial literacy, and these both are actually quite related, 3) a focus on traditional face-to-face sales process, and 4) affordability.
Although increase awareness of the importance of life, health and wealth solutions are observed post-pandemic, insurance penetration and financial literacy in these markets remains low. And many Southeast Asians are still new to the concept of insurance and the important role insurance can play in enabling their financial freedom. Hence, working closely with other international insurers and local regulators to develop a sustainable insurance industry is a top priority to build financial resilience in these markets.
One of the legacy challenges for the insurance industry is the focus on face-to-face sales processes whether it be through agents or bank branches, this inherently limits which consumers become aware of and have access to insurance products. On top of that, affordability is another key challenge – to keep insurance affordable for the mass market segment across Southeast Asia, insurers like Manulife must also focus on more efficient ways to reach mass market consumers.
How can insurers build financial and digital literacy in emerging markets?
Improving financial education and understanding of insurance products is critical to a sustained and healthy growth of the insurance industry in emerging markets. According to research by McKinsey, 95% of Asian consumers are digitally inclined. And leveraging digital technology as a means to expanding our reach, and more efficiently accessing mass market consumers represents an exciting opportunity for us. And our formula remains the same – building awareness, building our brand and building scale through digitally-enabled, face-to-face sales channels and strong partnerships with carefully vetted partners who are deemed credible and trustworthy.
At the same time, we have learnt that simplifying products, making them easier to understand and ensuring that purchase process is fast, easy, and convenient is fundamental to being successful in digital. For example, last year in the Philippines, we launched Manulife Shop which empowers consumers to choose their coverage based on their budget. Similarly, in Cambodia, we have rolled out the Sok Sabay digital insurance plan, which is embedded within our bank partner, ABA Bank's app. And we are now selling almost 500 policies a month through this app.
Manulife Indonesia has partnered with Halodoc, a healthtech platform which creates inclusive access to healthcare by connecting patients to healthcare providers via mobile application. Through this partnership, Manulife customers can quickly and easily access health services and submit their insurance claims. And these examples are just the tip of the iceberg in our digital journey and represent exciting, new, and different growth opportunities.
How can GAIP, as a unique public-private partnership, support efforts to improve financial literacy?
At Manulife, we see our commitment to being a digital customer leader and to providing accessible, affordable products as going hand-in-hand, and in emerging markets this is vitally important. With this in mind, working closely as an industry and with regulators to ensure consumers are being taken care of in a professional and customer-centric way is critical, critical to the overall reputation and critical to the long-term growth of the industry.
The good news is that ASEAN government regulators are increasingly paving the path for digitalisation of the insurance industry and for recognising the potential utility of a digital ecosystem to boost insurance availability and financial literacy. For multinational companies like Manulife, the success of these partnerships will play an important role in providing better solutions to our customers and creating a long-lasting change in how our customers interact with us.
We believe we are well positioned to take maximum benefit from these exciting growth opportunities across our emerging markets in Asia. And public-private partnerships are pivotal in providing digitalised insurance platforms and services to better serve the many underinsured consumers across Emerging Markets
