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Insurance Association of Sri Lanka Vice President Iftikar Ahamed explains the key factors that affects the perception of life insurance in Sri Lanka, and how the industry should best respond in order to ensure better and more suitable solutions being made available to the community
Q: How has the sales model and approach of the life insurance industry evolved over the past years
Over the years, the insurance industry in Sri Lanka, especially in life insurance, has relied significantly on the agency channel. This has been the traditional way in which life insurance has been marketed in Sri Lanka. However, in the recent past companies like Softlogic Life, have changed this dimension of sales. For example, Softlogic Life has created two additional channels apart from this traditional channel led by agents. What I feel is that the insurance industry should create a way in which differentiated products can be offered to different segments through different distribution channels.
Q: How has COVID-19 impacted life insurance sales?
When we look back at the past six months, we have gone through some really tough times as far as the insurance industry is concerned. Life insurance in particular was hard hit because it is mainly driven by insurance agents, and therefore it is all about our advisors visiting customers in their homes or offices. So obviously that could not happen with social distancing and other restrictions that COVID-19 brought about. So business took a big dip during the time curfew was on. However, since then, we have seen quite a good recovery. Some of the companies in the industry have had a remarkable month in August, which is a clear sign that the risks of health and life are now very much at the centre of the customer’s mind. This is a big positive for life and health insurance in Sri Lanka.
IASL Vice President Iftikar Ahamed
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Q: Do you see any particular trends emerging from the recent adverse situation?
One of the biggest challenges that COVID-19 brought about was that none of the insurance agents could meet their customers in person. Yet, the opportunity that was created as a result, was that it opened up the roads to digitalisation and technology in terms of accessing customers, informing customers about products, allowing customers pay via contactless mediums, and enabling claims. So COVID-19 has fast tracked things; whatever that would have normally happened, or the pace in which it was likely to happen, has been fast tracked. In an odd way, it has created a positive route for the industry, because what it will bring about is convenience for the customer. In the longer run it will also bring in economies of scale for the insurance companies and it will finally reduce the operating costs in running businesses.
Q: What role does customer engagement play in improving the insurance industry?
When it comes to insurance the tendency has been to have a standard set of products and try and sell this set to every customer that you come across. While that has certain merits and will suit the customer segments who want to buy those products, there is also a whole universe of customers who want insurance products, but in a different way. It’s about having the product at the right time, at the right place and at the right price. What this means is that, as an insurance industry, we need to carefully segment our customers, and then come up with products and solutions that address the particular needs and requirements of those different customers. This is how the insurance penetration in Sri Lanka can be improved.
During this month of insurance we are building this awareness. We are discussing different aspects of insurance that we would normally not talk about, so that we get the awareness on insurance further out to the society and educate as many as possible. We also get the industry leaders thinking, as well as leaders of other industries considering how they can use insurance for the betterment of the community. When all of this is put together we will see Sri Lanka’s insurance penetration improving quite dramatically.
One of the most sensitive yet important points in both Life and General insurance is claims. Unfortunately, what has happened most times in the past is that insurance companies tend to hide behind the small print; the various clauses that sometimes allows the company to not pay a claim. What is required in this issue is fair play. It is important to be fair by our customers. Policy holders do not always understand the technical jargon that is in the documentation. If the customer has come to you to cover a certain requirement, we should provide the product and solution that actually addresses that requirement. Once we do that, we need to have a proper price, and proper documentation, so that it is very transparent. Then when it comes to the claim itself, if a claim has to be paid, there is no need to delay. The claim aspect is a very sensitive and very important aspect in insurance. How the public and customers will believe in insurance is if we are honest and fair in terms of how we address our claims.
Q: In your opinion, is the key message of insurance – the importance of being protected – being communicated effectively to the public?
Communication is very key when it comes to insurance products. Once again, if you look back at the insurance industry, the message that has come out from the insurance sector itself is about fear; the industry has tried to scare people into buying an insurance product. What actually needs to be communicated is the positive side of it; that life is meant to be lived and you need to focus on your health, wellness and looking after yourself. While life is thus being lived, your insurance policy will take care of all the risky things in life. This has to be the positive message that we drive into the society.
Q: How has the insurance month helped to communicate this message?\
The whole idea of an insurance month is for the whole industry to come together, and talk about the topic together. The industry as one body tries to push the message of insurance across the country, which is a remarkable feature. Over the years we have progressively improved this communication to the society. There is definitely a lot more to be done in the future, but what is very important is that we have started on that journey. Our industry is growing, which means we are making progress. We have to continue this journey, make sure that our communication is consistent, in showing the positive side of having an insurance policy, and see that the benefits of it flow down to the entire community.
From an IASL perspective, we are working on a blueprint for the industry. This will create an active discussion on the measures that can be taken together as an industry to uplift the sector in Sri Lanka. This is work in progress with the involvement of all the stakeholders, comprising of all life and general insurance companies in Sri Lanka who are part of the IASL Executive Committee, leading the project. Once ready, we hope to take it to other stakeholders in the government and other sectors to see how we can enable it at its best.