Non-Executive Director | Strategic Board Advisor | Insurance, Healthcare, and Telecommunications Leader | Asia-Pacific & Global Expertise | CEO Business Mentor & Advisor
I’m reposting some of the Life insurance market data for 2023 showing growth versus 2022. In many markets life insurance penetration is still relatively low particularly in the broader mass market segments. If we can agree it is good for customers and communities to have greater protection for various life events and therefore big opportunities exist to increase penetration and close the protection gap in Asia. I’m passionate about the role insurance plays in our communities. Most of us will have personal experience of the benefits of insurance. Mine was losing two brothers in their 40’s with families including children who relied on them. The died suddenly, no warning or planning. One had life insurance the other one didn’t. It’s bad enough losing your husband or father and dealing with that. Losing your home and income is another. To address the protection gap in Asia, put simply, two aspects must be addressed being customer access (including awareness and education) via distribution and affordability of premiums. Let’s exclude HNW for a moment and focus on broader populations who need much simpler solutions. Broadly, in Asia you can buy life insurance (including health) from a life insurance agent or a bank, and, particularly in S/E Asia digital access and education on buying life insurance is negligible. Life insurance awareness and understanding of needs is still fairly low, so it generally sold not bought. The number of life insurance agents actually selling is declining (why? reputation of agency and appeal of this career to younger people) even more so post Covid. Banks have great customer access however, it is not their core business and many Bancassurance deals fall short of expectations why? Product development cycles are still long and simple products are still relatively lacking why? This brings me to my next point on customer affordability. To address the protection gap simple products are needed at affordable premiums with broad access and distribution. Distribution is still quite limited and costs are still relatively high. The model of big upfront for banks and high commissions for tied agency focused on upfront first year commissions driving lower persistency is also impacting pricing and affordability. There is a big risk or opportunity for disruption of the distribution models making insurance more simple, accessible and more affordable to mass market. Health insurance sold via Life insurers has also been impacted with higher claims post Covid and many markets still offering 100% percent coverage of hospital bills leading to over prescribing of treatment, over usage and driving increased premiums leading to reduced affordability and lower volumes of sales. Singapore is a great example of industry and regulatory reform that addressed product and pricing structures to address over prescribing of treatment, increased claims and rising premiums. What are your thoughts?
The 2023 results are in for AIA, Prudential, Manulife and FWD. The highlights: HK is hugely important for VNB. Pru in particular blew the doors off in HK but their other markets, especially CN and SG, performed poorly. MFC, historically less focused on MCV, saw more modest HK VNB growth. Asia ex-HK, particularly VN, was weak and MFC is at risk of being overtaken by FWD in terms of VNB in the mid-term. AIA and FWD showed VNB growth in both HK and rest-of-Asia. Thailand was strong with >20% growth for both companies. On a combined basis it is clear how important HK is as value driver for Asian life insurance as it comprised 40% of total Asia 2023 VNB (for these 4). Problems in several Asian markets mean VNB growth in rest-of-Asia was lackluster at 4%. This HK dependency is a strategic risk for Asian life insurers. They have to create more growth engines in Asia in case of another HK macro event.
