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Life insurers: How to win in Asia–Pacific

Bernhard Kotanko

Advises insurance companies across Asia on strategy, growth and innovation.

In a recent blog, we discussed where the real value is in Asia–Pacific life insurance: overall, the region has been growing at a fast clip, but beneath the top-line numbers are countries with vastly different prospects and consumers. To capture value in Asia–Pacific, carriers must gain a granular understanding within markets, segments, channels, and product lines. Only then can executives accurately determine where to play.

That’s just the first step, however. Insurers must then devise strategies to win in their chosen value pools. For carriers that get it right, the rewards are substantial: our research found that life insurers in Asia–Pacific achieved a total return to shareholders (TRS) of 9 percent a year from 2016 to 2019, on average. The top performers were able to double that figure, yet many others fell well short.

In our experience, value growth leaders follow five core lessons to succeed in their selected Asian markets:

1. Become immersed in local markets

A closer look at Asia–Pacific countries reveals a tapestry of local cultures, socioeconomic profiles, and regulatory environments. Winning insurers have been able to weave themselves into the specific local fabric and create a strong sense of local ownership and connectivity. Doing so requires becoming familiar with the needs and preferences of specific markets and stakeholders to tailor their strategy to local tastes.

2. Build quality distribution

Insurers that have been successful in the region have prioritized quality distribution over additional capacity. Most of Asia’s agency networks, however, remain part-time with low activity, advice quality, and sustainability. China, for example, has around 8 million agents, but the overall level of professionalization still lags behind other countries, with a few exceptions. In addition, the growing desire of middle-class customers to obtain quality advice expands the opportunity for differentiation through quality distribution. Besides agency, bancassurance is still in the early days for many partnerships, which have formed in past few years.

3. Innovate in customer proposition and experience

Although customer experience has become a focal point for life insurers, carriers in Asia–Pacific so far have seen mixed outcomes. The combination of “push” selling and uneven service has resulted in subpar customer satisfaction. This challenge creates an opportunity for those insurers committed to investing in several areas: developing a customer-centric proposition with tangible living benefits and service elements; adopting an innovation approach beyond “the next product”; shaping simple, digitally enabled customer journeys; and establishing a high-engagement brand and customer communications.

4. Invest in talent and technology capabilities

Life insurance in Asia–Pacific has grown and evolved so quickly that carriers must build core capabilities for performance to keep pace. Insurers have trained their sights on attracting top leadership recruits and transfers from other regions, but carriers still have to fill significant gaps not just at the upper levels of the enterprise but also across the organization. In addition, the growing importance of data and analytics—particularly in customer segmentation, product pricing, underwriting, and claims—further increases the premium on talent.

5. Stay bold and resilient

Asia–Pacific life insurance offers superior growth and value creation. But it is far from a leisure cruise. Success demands a bold and resilient approach that cuts through short-term volatilities and focuses on the long-term opportunities. Markets have rewarded players that stayed on course and developed superior performance over time. For multinational insurers, Asia–Pacific should be a meaningful pillar. For domestic carriers, it is about protecting the core and expanding from there.

The five lessons described above offer a playbook for the region. If carriers want extra incentive as they develop their Asia–Pacific strategy, they need only to look at the potential rewards. The overall value at stake—currently more than $500 billion—means that the difference between leaders and laggards is likely the largest in global insurance.

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