AIA hires digital officer to combat rise of online platforms

The Hong Kong-headquartered insurer's first digital officer needs to push through change as the staid industry faces disruption from online startups.

Daisuke Iwase will join AIA Group as its first chief digital officer with effect from July 1, the group said, in a symbolic move for the region's largest pan-regional insurer.

Digital officers are in demand these days as bricks-and-mortar financial institutions look to keep up with consumers who increasingly prefer to transact on their mobile phones.

Rival insurer Sun Life poached its head of digital in Asia, Gavin Gollogley, in 2016 from AIA where he worked in the digital marketing team. The Canadian insurer also named Eduard Fabian as its Asia head of technology in January, according to his LinkedIn profile.

Life insurance companies have been a relatively sleepy backwater of finance, mostly shielded from the fintech revolution taking place in, for example, retail banking or property and casualty insurance. However, it is only a matter of time before the owners of tremendous repositories of data and clients, such as Ant Financial, Google and Facebook, look to take business from well-established insurers.

Not all companies in the relatively dowdy sector have spotted the threat. Some 74% of global insurers believe their sector has failed to show leadership in digital innovation according to a 2016 survey conducted by consultancy Willis Towers Watson.

To catch up, 49% of the 200 senior-level executives who responded to the survey said they expected to make an acquisition over the next three years, including 14% that intended to make more than one acquisition.

Competition is certainly heating up. China’s first online insurance company, ZhongAn Online Property & Casualty Insurance, backed by Ping An, Tencent, Alibaba and SoftBank, listed in Hong Kong last year. In January last year Aviva set up a digital platform in Hong Kong with Tencent and private equity firm Hillhouse to sell basic life insurance products, allowing the British firm to bypass door-to-door salesmen who charge high commissions up front, putting strain on growing businesses.

MassMutual said in August last year that it plans to sell control of its Asian arm to a small Hong Kong-listed robo-advisory firm, Yunfeng Financial Group, and the world's largest mobile and online payments platform Ant Financial.

To be sure, life insurance is not being disrupted by digital start-ups to the same extent as, say simple, short-term products such as travel insurance. But online is steadily growing in importance as a way to reach new clients in Asia, where there are relatively few bank branches and distances between townships for the travelling salesman are time-consuming.

Big data is also offering ways to make insurance sales less risky by analysing citizens' habits. In some countries in Southeast Asia where data protection is more lax than, say, the West, supermarket point cards can be analysed to see whether eating habits are healthy, while bank deposits and withdrawals could be checked to judge ability to pay premiums.

For AIA, Iwase's hire does not mark a radical shift in strategy. It will continue to focus its efforts on agents going door-to-door across Asia. About 70% of its value of new business comes from agency sales and 30% comes from distribution via partners such as banks, brokers or IFAs. 

To date, its digital efforts have focused on helping the agents make sales more efficiently and ensuring compliance as well as making its back-office functions more efficient. When it started operations in Cambodia last year from the get-go it made it a paperless enterprise.

What Iwase's appointment shows is that the 99-year old firm is open to change. Iwase will be heard at a senior level as he will be a member of the AIA executive committee.   

Iwase is currently the president of Lifenet Insurance, a listed digital direct life insurance company in Japan. His track record shows he has some of the entrepreneurial spirit that is driving some of AIA's new competitors. Iwase co-founded Lifenet in 2006 and took the company public on the Tokyo Stock Exchange in 2012. Iwase will report directly to AIA's chief executive officer, Ng Keng Hooi, and be based in Hong Kong. 

Prior to co-founding Lifenet, Iwase started his career as a strategy consultant with The Boston Consulting Group in Tokyo before establishing the Japan office of a US-based technology venture capital firm and working in an international private equity firm.

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