Existing for nearly 200 years now, the insurance industry in the Philippines, according to the Oxford Business Group (OBG), has been expanding steadily in recent years, and is among the region’s most mature and competitive sector.
“In addition to having a strong economy and a growing middle class, the country has a large number of people who have historically been underinsured. The push for inclusiveness is adding to new business coming from individuals seeking to build wealth and protect their assets. The sector is also well regulated, open to foreign investment, and underpinned by a long history,” OBG stated in a 2017 report.
According to recent reports, the insurance sector had another banner year in 2017. Insurance Commissioner Dennis B. Funa said that the three sectors — life, nonlife and mutual benefit associations — all posted positive growth in the four parameters of assets, premiums earned, net worth, and paid-up capital or guaranty fund.
As the sector continues to thrive and grow, trends also continue to evolve. According to Mr. Funa, based on reports, the emerging trends involve the greater use of online platforms and social media to sell insurance products.
“With this, and other innovations in the distribution and sales of insurance products, we are expecting heightened product awareness, improved efficiency in their delivery, and ultimately, increase in market penetration,” the commissioner was quoted as saying.
Similarly, OBG reported that there are signs that technology is starting to play an increasingly large role in the country’s insurance sector. To illustrate, OBG shared that some insurance companies have partnered with digital solutions and telecommunications companies to offer insurance solutions through the use of financial technology. Moreover, some insurers also collaborated with money transfer companies to sell affordable insurance products, and increase distribution in harder-to-reach locations around the country.
OBG continued to cite examples and shared that some companies are forging partnerships to offer services that will allow customers to also make cashless transactions.
On a global scale, digitization of selling insurance products and other services has also become a norm and a major disruption in the industry.
PricewaterhouseCoopers (PwC), a multinational professional services network, said in its Top Insurance Issues 2018 compilation report that the insurance industry has gone through its own digital transformation over the past five years.
“With a general acceptance that digital is here to stay, most insurers have incorporated digital into their organizations, implementing ad hoc capabilities to make their business faster and cheaper, creating online tools to further engage their distribution channels, and implementing table stakes technology in areas such as marketing, digital portals, customer self-service capabilities, and automation of some back-end processes,” PwC stated in the report.
“As we move into 2018, digital is continuing to reshape the way insurers do business. The ecosystem of available capabilities has grown exponentially and industry leaders are starting to leave behind the ‘fast-follower’ mentality, reallocating their investments into core capabilities that give them a more customer-centric view, as well as ways to differentiate themselves in the market,” the report continued.
PwC said that companies that develop a meaningful competitive advantage will design and implement digital platforms that can handle disruption and positively change cost structures.
“They will build scalable systems, deliver an end-to-end customer experience, and change their business models to foster a test and learn environment that helps them improve how they go to market. These leaders will be the most likely to quickly adjust and grow as the industry continues to become more digital,” PwC stated.
The report went on by saying that building a digital platform that will take your company into the future — not just respond to current needs — is critical to prolonged success.
Insurers are also advised to better know their customers by serving them better. “Developing a detailed understanding of customers and their end-to-end journeys is necessary to improve customer value. Knowing your customers — not just as segments but individuals — will help you pinpoint opportunities and effectively optimize their experience across all channels and throughout their lifetimes. Tying these digital initiatives to measurable business value from the beginning is critical to justifying the case for investment and creating a framework for measuring the effectiveness and impact of various initiatives,” the report said.
Meanwhile, amid emerging trends and major disruptions both locally and globally, OBG’s outlook for the insurance sector in the country remained positive. In their 2017 report, OBG shared that the Philippines’ insurance sector is well-positioned for the future.
“Its companies are firmly established, weaker institutions are being recapitalized, merged or folded, and insurers have a large market to sell into. Challenges remain primarily around awareness and affordability, and tapping markets outside of large urban areas will require the development of the right products at the right price point,” OBG said. — Romsanne R. Ortiguero