By Chelsey Keith P. Ignacio, Special Features Writer
Recent developments in the insurance industry manifest in the growing interest and innovation in its services. Since the coronavirus disease 2019 (COVID-19) crisis invoked doubts and disruptions, it underlines the worth of financial security among individuals and the need for the industry to adapt and further improve.
In the Philippines, specifically, the increasing awareness within the younger generations and the digitalization of insurance services signify how the industry moved forward amid the crisis.
Atty. Julio Bucoy, CFA, SVP – Corporate Finance and Strategy Division at Cocolife, noted that the insurance penetration rate in the Philippines is very low, yet the pandemic can bring more awareness among the people about the role and importance of insurance.
“This experience has taught us that certain risks, no matter how unlikely, can occur at any time, so we need to be protected,” he told BusinessWorld in an interview.
Similarly, Atty. Alloysius Yebra, SVP – Risk Management and Compliance Division at Cocolife, noted that the pandemic stressed the value of “having a security or emergency fund to tap into in times of tragedy or unforeseeable negative events.”
As the purpose of insurance is being highlighted, Atty. Bucoy believed that this could serve as an advantage to the insurance industry in the new normal. And notably, according to Atty. Yebra, the pandemic has marked the beginning of the increase in the number of policyholders from the younger age groups.
“We expect the younger segments to start securing more insurance protection. For many Millennials and Gen Zs, this is the first crisis [they] experienced in their adult lives. Growing up, it was mostly in a booming economic environment. As mentioned earlier, [the pandemic] has highlighted the importance of managing risk and protecting the most important things,” Atty. Bucoy explained.
“In terms of preference, given the growth of the different products and the profile of these younger generations, we expect them to have a more bespoke approach in product selection,” he perceived.
The expansion of financial literacy and the readily available and transparent information could make it easier for the customers to know which insurance product they want to avail or what seems to be the best fit for their needs, he added.
This rising interest in knowing more about personalized insurance products is among the observations that Cocolife has taken note of and will pursue, Atty. Yebra said.
Atty. Yebra also noted that the personalization of insurance products, through the aggregation of preprocessed data and advanced analytics, is a potential service that will push to fruition with the support of digitalization.
“In the new normal, digitalization is rapidly becoming the standard,” he observed, adding that the digitalization of services has already begun in most insurance companies, and more companies would soon follow on this transition.
Like most industries, insurance adapted during the pandemic by doing business remotely. “While we believe that human interaction is still critical, the new practices have provided several alternatives in conducting the same,” Atty. Bucoy shared.
“New ways of doing business have opened up, and the utilization of technology has accelerated. We were fortunate to have taken such steps even before the pandemic, so our business disruption was limited,” he added.
“The insurance industry has adjusted rapidly to meet the needs of their clients over the past year and a half,” Atty. Yebra continued. “The negative externalities brought by the pandemic to both the income streams and the health of the clients have caused the insurance industry to further innovate and pursue client-centric practices, which we are seeing today through digitalization.”
Currently, he observed, the Philippine insurance industry focuses its efforts on digitalizing its services, including the emphasis on utilizing online platforms to market and sell its products.
“The industry is also exploring the streamlining of the underwriting process and claims through the use of data analytics. These innovations would likely cause a further increase in the number of individuals who would avail of insurance and also pave the way for personalized insurance policies, which we are already seeing in the global insurance market,” he added.
With this acceleration of digitalizing services, the insurance industry can bring convenience to clients, especially with heightened safety precautions due to the pandemic.
“Our Company is currently on the path of digitalization. We are looking towards a customer-centric strategy that will further client satisfaction and encourage others to pursue their own policies through our platform,” Atty. Yebra shared.
“Through digitalization, clients will have access to most, if not all, services that their respective insurers provide from the safety of their own homes. From inquiries and premium payments to claims and policy renewals, everything can be done online,” he noted.
“Digitalization will make transactions between the insurer and the insured easier and faster, resulting in an increase in client satisfaction and increase in the number of people who will be encouraged to obtain their own insurance policies due to convenience and ease of access,” he added.
The rise of digitalization, moreover, will also set insurtech as the new standard.
“Insurtech can be seen as an attempt to optimize the current insurance industry model,” Atty. Yebra said. “This optimization is achieved through advanced analytics and results in the creation of personalized insurance policies.”
While insurtech, along with fintech, will play a significant role in moving the insurance industry forward, Atty. Bucoy noted, several challenges will be encountered along the way, including those concerning regulation.
“Most of our current laws and regulations were written when these technologies did not exist — it is like fitting a square peg in a round hole. Our regulatory framework must be updated to take these new technologies into consideration,” he said.
Atty. Bucoy also deemed that insurtech and fintech would surely help in making the processes more efficient. But an exclusive reliance on insurtech and fintech may make the situation impersonal for clients, especially for Filipinos who, in his observation, value personal relationships more than rote efficiency.
“We still believe that human interaction cannot be replaced,” he said. “The insurance business is built on trust.”