The protection gap—where economic losses from risk events far exceed what insurance covers—is one of Asia’s most urgent challenges. In this conversation moderated by McKinsey’s Jady Ye, three industry leaders unpack the root causes and explore how customer centricity can help close the gap.
Min Hung Cheng, CEO of the Global Asia Insurance Partnership (GAIP), offers a macro view of climate, inflation, and trust issues. Stuart Spencer, group chief marketing officer of AIA, shares how purpose-driven initiatives such as AIA Vitality and the One Billion Challenge are reshaping customer engagement. Bernhard Kotanko, a senior partner at McKinsey, calls for transparency, personalization, and a shift from product-pushing to solution-building.
The results of this interview are visions for a reimagined insurance sector—one that empowers people, builds resilience, and earns trust through meaningful relationships. This interview offers a view of the future of insurance in Asia and the cultural transformation required to deliver it.
Jady Ye, McKinsey: Thank you for joining me today. Min, the protection gap is really a passionate topic for you. Based on a lot of research that GAIP has done, what would you say are the root causes of the protection gap in Asia?
Min Hung Cheng, GAIP: I would look at it in terms of economic losses or exposure from risk events. Climate change is leading to an increase in the frequency and severity of natural catastrophe events. It also impacts mortality and health. The other root cause is inflation. It is getting more expensive to recover and reconstruct. When we look at the life and health space, economic losses are about lifestyle—being able to maintain and have financial stability in the face of risk of death of a loved one. With inflation, that cost goes up as well. If I look at medical inflation—that’s been trending at around 10 percent or more for years. It’s getting more expensive.
If I look at the other side of the equation—insurance—there is relatively low insurance penetration in Asia. That’s caused by many things. On average in Asia, we have a lower average income that leads to affordability issues. We also have a culture where families step in to support one another. So, is insurance something that they will want to purchase?
Jady Ye: I am interested to hear the insurer’s perspective. Stuart, AIA has this purpose: “healthier, longer, better lives.” It’s a very powerful statement. It shows your commitment to protection. Can you share how AIA brings this purpose to life, to its customers?
Stuart Spencer, AIA: AIA is very clear, very passionate, very resolute, and very resonant about our purpose, because it touches a fundamental, primordial chord in everything that we do every day. Clearly it is designed to close the protection gap, build demand, build awareness. But it’s not enough to be able to articulate and communicate and enshrine a purpose like that. You really have to substantiate it. You have to have tangible assets and proof points and deliverables that really underpin, undergird, and demonstrate that this is clearly what you are all about. And as an organization, every strategic decision that we make is essentially to enable healthier, longer, better lives, which we call internally “HLBL.”
Jady Ye: My next question is for Bernhard. What would you say is the current state of customer centricity in the industry, and what are some critical unlocks needed for the industry to go to the next level?
Bernhard Kotanko, McKinsey: Thank you, Jady. And let me first say, Min and Stuart, it’s wonderful to have this discussion, and thank you for what you’re doing for the industry.
Why is there such a mismatch between need and actual in the pursuit of insurance? The first one is indeed affordability. Forty percent say on a price-to-value, insurance feels very expensive. The second one is trust. For an industry that is, in the end, an information business for human emotions, trust is so essential. This is where we are right at the beginning of a journey. Every insurer has customer centricity somewhere in the strategy documents. The reality, though, is most insurers focus on distribution channels. We need to create a much more direct connection between the insurer and the customer.
Every insurer has customer centricity somewhere in the strategy documents. The reality, though, is most insurers focus on distribution channels. We need to create a much more direct connection between the insurer and the customer.
Jady Ye: When Bernhard said that we’re still at the beginning of the journey as an industry, I see you nodding, Min. What is your vision of an insurance sector that effectively addresses the protection needs of the customers in Asia, and really puts customers at the center?
Min Hung Cheng: I would like to think that a customer-centric insurance sector measures its success not by top line or bottom line, but by how fast it has enabled individuals, families, businesses, or even governments to bounce back from risk events. Very often, we say that insurance provides a financial safety net. But it can be like a trampoline, providing the means by which individuals, families, and businesses can bounce back from risk events. That is my vision.
And how do we really go about that? First of all, instead of just looking at insurance products and selling these insurance products, we work collaboratively across sectors to build solutions across the whole risk journey—from risk to loss to recovery.
At GAIP, we advocate for an integrated holistic approach to protection gaps. This is looking at risk reduction, insurance coverage, and fiscal risk financing together. Because we believe that there is a virtuous cycle going on there as well.
… a customer-centric insurance sector measures its success not by top line or bottom line, but by how fast it has enabled individuals, families, businesses, or even governments to bounce back from risk events.
Jady Ye: Everybody says insurance is a product to be sold, but Bernhard, you mentioned customers have needs and insurers must learn how to speak the language of the customer. What does it mean, really, for the industry?
Bernhard Kotanko: I firmly disagree with the notion that insurance needs to be sold. I think this diminishes the value of insurance. In the end, insurance is about information—information for the customer and for the insurer—and that requires trust. It’s about understanding emotions.
So, how could insurance move from being a form of risk reduction to helping people fulfill their dreams?
I think the first one is indeed one of transparency. We need to have the courage to be more open about what is included and not included in insurance cover. The second one is, of course, personalization. My emotions, as a father of three daughters, as a husband, are very different in terms of what I see as my risks, as my dreams, from Stuart’s, or Min’s, or yours, Jady. We need to have the ability to personalize how we tackle this.
… insurance is about information—information for the customer and for the insurer—and that requires trust. It’s about understanding emotions.
Min Hung Cheng: One key thing that leads to customer centricity is really understanding the customers—the people that you’re designing the solutions for. Speak to them, really understand their needs and concerns, and perhaps even cocreate the solution with them. That’s where we get solutions that are fit for purpose.
Jady Ye: This sounds so intuitive and so simple, but a lot of the insurers are not yet doing that. Stuart, why is that, and could you suggest how this could change?
Stuart Spencer: Life and health is a people business. You have got to infuse emotion. It cannot all be rational, technical. You have got to inspire people to buy. This is intangible. It is a promise. And the industry has traditionally tried to push insurance products through fear, consequences, fire, and brimstone, literally scaring people into buying. You can look at all the advertising for generations.
AIA has turned this on its head. It is about life, living, optimism, positivity, vitality. It is about encouraging the joy, the beauty of what lifespan and health span can bring, and making sure that you have sufficient protection. That is how we are trying to be more customer-centric. That is how we are trying to change the game to make insurance more affordable, available, accessible, to build demand.
Jady Ye: A lot of insurers say the same thing, but very few really succeed. Bernhard, based on your experience of working in the industry, what are some reasons why?
Bernhard Kotanko: I think part of the challenge is that every risk has drivers. Often product designers minimize the risk so that we can be competitive on price. We need a more honest conversation with the customer, and to have more confidence to say, these are the risks. We empower the customer to understand the risks. And then, protection has a certain price. I’m pretty confident that customers, if we are nimbler on this, will then say this is a fair deal.
Stuart Spencer: The capacity to drive tailored and bespoke solutions for consumers that are driven off real insights into customers’ needs and therefore closing the protection gap is key. Customers do not want to buy a bog-standard, vanilla, one-size-fits-all solution. They want to be understood. They want to feel like their needs are being personalized; their demands are being exactly met by their insurer. With the extent to which the industry is designing modular, flexible, agile, very fluid design solutions, we will be able to capture much more new customer growth over time. Personalization is everything.
Personalization is everything.
Jady Ye: There are a lot of innovations that are happening in insurance. What are some promising innovative approaches that are key to meeting the holistic protection needs of today’s customers?
Stuart Spencer: I think with the advent of AI and having more information at our disposal, we’ll be able to have a much more comprehensive and holistic understanding in view of the current state versus potential long-term needs so that we can make sure that we’re really closing gaps at the beginning of the relationship. That’s the first thing.
The second thing, as we talked about, is agility. I see the industry needing to move on the underwriting side as well. There are lots of constituencies and communities and customers out there who we do not touch today based on morbidity, based on age, you name it. Essentially, they are discarded from the value pool or the universe. We need to find creative ways to underwrite and to be more inclusive as an industry, more innovative to use more tools other than “smoker–nonsmoker” to determine if “Bernhard” is a good risk or not. We need more imagination, more flexibility, more willingness to take risks, but with more information.
Bernhard Kotanko: Yes, Stuart, I would like to echo that. I think this is where technology helps us personalize, both in the way we engage and also how we craft the solution.
Too often we treat the customers [like] this is the once-in-a-lifetime sale of the policy, and then we forget it—“get and forget.” We need that continued, seamless experience. This is where a more direct relationship between the insurer and the insured is important because while the agent, of course, is a critical intermediary, they need support.
And then we need the moment of truth, and then service intervention, and of course, the moment of claims. That’s where there is a lot of dissatisfaction. Most insurers are still organized in functional swim lanes rather than horizontal journeys. Organizations need to change and evolve to then help to get toward the vision that both of you have highlighted.
Jady Ye: What should a really customer-centric organization in the insurance context look like, in your view?
Stuart Spencer: You need leadership to be absolutely maniacal about the customer. And the challenge for most insurers is we are so distribution-centric that the customer has always been cared for by their agent. I think many insurers have taken a step back, but with the advent of digitalization, that is changing dramatically.
You need to understand behaviors and think through improved data analytics, and have a better grasp of the protection today and the protection needs of tomorrow so that we have a more holistic view of the customer, and can make sure that people on the front lines are empowered, and agents are empowered to resolve in single resolution. Make sure that from an IT perspective, you have a single view of the customer.
Jady Ye: On the one hand, the future is really promising. On the other hand, it is also very overwhelming. As insurers move toward customer centricity, what should they prioritize, and what are some pitfalls they should be mindful of?
Bernhard Kotanko: Number one is the tone from the top and how it translates into incentives, KPIs. Second is a much better understanding of customers so you can personalize. Number three is much more confidence that insurance is a solution to people’s biggest fears and dreams. These are the main elements.
Min Hung Cheng: At GAIP, we believe that the different risk types are interlinked. Having a holistic approach means you need multisectoral collaboration. For years, insurers have been talking to insurers. Insurers also talk to reinsurers and regulators. How often do we go out there and talk to other people? Find out what they can bring and work collaboratively across the different sectors, take into account all these solutions, so what the insurance sector offers to the customers is fit for purpose. There’s no duplication, and there are no needs that are not covered.
Jady Ye: What cultural shifts would be required to enable this?
Stuart Spencer: You need the right rewards and incentives. You need the right KPIs. You need to make it clear that this is important. Most insurance companies’ KPIs are traditionally financial—top line, bottom line, growth margin. But the extent to which there are key KPIs that relate to the customer—customer delight, customer retention, customer protection, density, et cetera, as well as time spent with and listening to customers, and the amount of time it takes to resolve customer issues, disputes, how quickly we pay claims, how well we survey a customer sentiment after claims and so on, how we are understanding how we are performing, and make that systematic and industrialized across the business—that really is the way to do it. And make sure that the compensation, performance management, rewards, and incentives reaffirm that.
Without our customers, we are merely an organization, not a business.
Jady Ye: If you were to offer a personal, closing thought for today, what is the one thing that you want to highlight?
Min Hung Cheng: I think for me it is very simple—talk to people beyond insurers. We need to be talking to healthcare providers, researchers. We need to, on the nonlife side, talk to utilities companies, involving the right stakeholders, involving the people whom you are designing solutions for, bring in the experts to the table.
Stuart Spencer: This is a people business, and we need to focus on lifespan and health span and longevity and positivity and optimism and emphasizing the emotional. We are dream makers, dream keepers, dream securers, dream protectors. We serve a remarkable purpose in society.
Bernhard Kotanko: Insurance, in the end, is about the biggest emotions. And it is about mobilizing and having the right information to help solve these emotions and hope that we can all have better and safer lives. So, my main takeaway is confidence—it’s having confidence in this sector.
Jady Ye: If I might add to this, my reflection is customer centricity is really about reimagining insurance of the future to make a force for resilience, for empowerment, for making an impact in people’s lives.
And that is a promise that the industry needs to deliver to the people that they serve.
We are dream makers, dream keepers, dream securers, dream protectors. We serve a remarkable purpose in society.
Bernhard Kotanko: Wonderful.
Stuart Spencer: Well put.
All: Thank you very much.
