Sun Life Financial’s chief executive Dean Connor and his right-hand man in Asia, Kevin Strain, went earlier this year to sit down with China’s Tencent, one of the biggest internet and gaming companies in the world, to talk about selling insurance to China’s burgeoning middle class.
Toronto-based Sun Life is looking at ways to sell more insurance policies over Tencent’s messaging service, WeChat, working its way deeper into the ecosystems of China’s citizens. Sun Life was one of the first insurance companies to sell on WeChat and sales of wealth-related products from this partnership have already exceeded RMB 35 billion since kick-off late last year.
What the Sun Life executives took away from the meeting with Tencent was that insurance companies have to approach the customer differently.
“WeChat wants to enhance their clients’ lives every step of the way, whether it is ordering a taxi or booking a doctor’s appointment. I think that is a huge learning for our industry,” Strain said in an interview with FinanceAsia.
Canada’s third-largest insurer by market capitalisation and asset is not alone in feeling insurers could do more; 74% of global insurers believe their sector has failed to show leadership in digital innovation according to a survey conducted by consultancy Willis Towers Watson.
To catch up, 49% of the survey respondents expect to make an acquisition over the next three years, including 14% that intend to make more than one acquisition. Nearly all respondents expect distribution to be the area where digital technologies have the greatest impact over the next five years according to the survey of 200 senior-level executives in the insurance industry in 2016.
“Insurers that hesitate could very well get left behind and fail to capture future generations of younger policyholders, who are more likely to engage via digital channels,” said Nicholas Chen, head of digital solutions at Willis Towers Watson in Asia Pacific.
Competition is certainly heating up. China’s first online insurance company, Zhong An Online P&C is growing fast and attracting investment capital. In January 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.
To be sure, life insurance is not being disrupted as much as, say, property and casualty insurance by digital start-ups. 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 if eating habits are healthy while bank deposits and withdrawals could be checked to judge ability to pay premiums.
Sun Life has scrambled to cement distribution relationships with a host of telecoms companies and fintech players across the Asia-Pacific region over the last 12 months.
In its second-largest Asian market by sales, the Philippines, it signed a distribution agreement last year with mobile services provider Smart Communications, which has around 67 million subscribers.
It has hooked up with Celcom in Malaysia while in India, Sun Life is in talks with the country’s number three mobile operator by subscribers, Idea Celluar, which is partly owned by the conglomerate the Aditya Birla Group.
“We’re very close to signing a telecom in Indonesia within the next few weeks and close to signing a digital bank in Vietnam,” said Strain.
These digital relationships are opening up new niche markets for Sun Life and are in tune with the emerging cultural trends in the region’s middle classes.
“Chinese consumers are very comfortable transacting on mobile devices hence having a strong mobile offering that leverages leading local platforms including WeChat is expected,” said Towers Watson’s Chen.
The root-and-branch upgrade is gathering momentum within the company. “That will be a big theme over the next two years,” said Strain.
In the next two years, 77% of insurers say web and mobile delivery channels are the digital technologies they expect to have the biggest impact on the sector, while they anticipate big data, automation, robo-advice and sensors to emerge in importance over the next five years.
Over ubiquitous telecoms networks, Sun Life can hit specific needs quickly, using data analytics.
“Through the telecoms’ relationships we can sell more targeted, simpler products with less underwriting,” said Strain, noting that in Indonesia it has identified personal accident insurance for people who ride motorbikes as an opportunity.
The plan is to use the nascent relationship to build the brand recognition and sell the new customers higher value products later.
Sun Life has been hiring more data analysts to support the overhaul, including a new head of digital in Asia, Gavin Gollogley, last year from rival insurer AIA.
“I don’t think the cost will be less - you need big data analysts, you need brand strength,” said Strain. “It’s not so much a cost-play as gaining access to the client.”
To be sure, there is a limit to the digital disruption in Sun Life’s business model.
Sun Life’s agency force, door-to-door insurance salesmen, still inks a bit more than 60% of its sales in Asia, not surprising given the importance of face-to-face meetings and leveraging existing relationships across the region, while bancassurance sales are growing particularly fast and already represent 19% of sales. Aviva’s digital platform could be seen as a substitute given in 2015 it lost its bancassurance deal with DBS.
But even the agency sales force and the bancassurance channels are getting a digital facelift, via online sales tools and customer support services.
In the Philippines there were 60,000 downloads of Sun Life's client mobile app in the first four months after its launch in August. Sun Life will be rolling out the app shortly in Hong Kong.
As China’s Zhong An looks to raise more capital in an IPO, Strain thinks Sun Life will be well prepared to defend itself against disruptive fintech insurgents. “I feel quite confident,” he said.