The insurance industry plays a vital role in protecting lives and livelihoods. As the industry seeks to keep up with customers’ evolving needs and expectations, insurers are turning to propositions—an integrated combination of products, ecosystems, and planning tools—to help customers understand, plan, and prepare for their own financial security and life milestones. In 2021, AIA Hong Kong & Macau established a proposition function, which is core to how the insurer delivers on its purpose of helping people live “Healthier, Longer, Better Lives.”
McKinsey spoke with Alice Liang, chief proposition officer at AIA Hong Kong & Macau, to discuss the “why” and the “how” of propositions—and their potential to transform how the industry engages with customers and to unlock innovation at pace. The conversation covered the evolution of customer expectations, the process of developing a successful proposition, and what it takes to build a new proposition function.
This article is part of McKinsey’s Insurance Industry Leaders and Shapers interview series and has been edited for clarity.
McKinsey: How did AIA Hong Kong & Macau—and you personally—come to believe that propositions are the right way to serve your customers?
Alice Liang: For a long time, the role of insurance has been to help people financially protect themselves against life’s uncertainties. But now we’re seeing that as the environment has changed, customers’ demands have become more and more sophisticated. Look at what’s happened over the past two years: Hong Kong is still in the midst of our fifth wave of the COVID-19 pandemic. Social distancing, travel restrictions, and the increasing popularity of online shopping affected buying propensity through traditional channels. The public health crisis has not only affected customers’ perceptions about the need for insurance and the need for protection but also their preferences for how they buy insurance and their expectations for how insurers can fulfill their needs. When we looked closer at our customers’ journeys and pain points, it became clear that as an insurance company, there was a lot more we could do to help our customers beyond the traditional insurance product that provides financial peace of mind. That's why we created a new proposition function.
At AIA, we have a clear definition of “proposition”: delivering holistic solutions with products, ecosystems, and planning tools that can better serve our customers. This definition really resonates with me. Even before I joined AIA, I’d always been passionate about driving product innovation and combining products and services to deliver personal advice to our customers. The proposition function brings together all the necessary ingredients—the product, the ecosystem, and the expertise—into the same organization, which enables us to create something that’s more impactful and more relevant for our customers.
McKinsey: How do customers benefit from propositions? How is it different from a typical insurance product from a few years ago?
Alice Liang: Let’s take healthcare as an example. Traditional insurance tends to only support customers at the time of a given claim. Over the past few years, we have been building an ecosystem that can help our customers from prevention and prediction all the way through diagnosis, treatment, and recovery. This ecosystem includes a team of doctors, nurses, and other specialists providing their medical expertise to ensure AIA’s health ecosystem can fully meet the needs of our customers. We are also advancing care at an earlier time and helping our customers prevent and predict disease by maintaining a healthy lifestyle with AIA Vitality.
AIA’s health ecosystem includes partnerships with renowned hospitals, doctors, and clinics in Hong Kong. When customers fall sick, beside paying claims, we can also advise our customers how best to navigate the complex healthcare system—not only from a financial perspective, but also from an advisory perspective. Where should you go to get the most appropriate treatment? Which specialists should you see? We continue to enhance our joint, online-to-offline model, ensuring customers can access different services and information according to their preferences. AIA has been investing in these areas, and they will become an advantage in the future.
A traditional insurance product would only pay out a claim to cover the treatment costs. This peace of mind is incredibly important. But AIA is fortunate enough to have the talent and the resources to do a lot more for our customers. We aim to provide customer-driven, holistic, and trust-based advice to equip our customers to understand, plan, and prepare for life’s uncertainties such that they can live “Healthier, Longer, Better Lives.”
McKinsey: How do you create and shape a proposition at AIA? Who is involved in the process?
Alice Liang: It has to start with our customers—their pain points and needs, how well they are served by our current proposition, and where there are gaps. Using claims analytics and digital assets, our customer insights team and data analytics team work together to analyze customer preferences, behaviors, and underlying needs. From there, we have a diverse team proactively looking at these insights to identify opportunities to create solutions that matter. I strongly believe that teamwork is the foundation for innovation and creation. Bringing together people from different backgrounds to brainstorm and cocreate the proposition is such a powerful thing. Once we have an idea, our colleagues in finance, pricing, IT, and operations come together to make sure the idea is feasible and will be affordable for our customers. If it doesn’t work, how can we make it work?
We engage our channel partners—our financial planners and our bank and broker partners—throughout the process. They are closest to our customers, so we value their input to help us develop customer insights and cocreate the solutions. At the end of the day, they are the ones who will deliver our proposition and articulate its value to our customers. It really is a true collaboration across all of the functions within AIA Hong Kong & Macau. We are actively instilling this mindset of collaboration and co-ownership across the organization. As AIA develops more fantastic propositions in future, everybody can proudly say they have played a part.
McKinsey: Insurers have been on a long journey to be more customer-centric and better leverage customer data. When it comes to crafting propositions, what is most important to understand about the customer?
Alice Liang: For a number of years, insurance companies were primarily using focus groups to validate their product ideas. They would ask customers in these focus groups to choose between plan A, plan B, plan C, and plan D, right? But in this model, customer insights are not fully integrated into the product development process. Ultimately, you need to go back to the fundamentals of what your customers want, rather than just having them choose among pre-established products.
At the beginning of our proposition development process, we identify target customer segments and dive deep into the customer journey for a few representative personas. How do they live? What are their challenges? What is their experience? We try to live through that journey ourselves. Often, if you jump right into asking a few questions, the customer will tell you what they know, but they don’t know what they don’t know. There’s an old saying that before the car was invented, if you asked a customer what they wanted for their transport needs, they would tell you they wanted a faster horse. It’s important for us to think beyond the surface level of what our customers are telling us. In our process, we deliberately added a step to interpret the insights we get from the customers. What is it we’re trying to solve for? What are our customers trying to accomplish? These are the questions we have to answer before we can start cocreating solutions.
McKinsey: You mentioned the importance of an integrated, cross-functional process to create a proposition. How do you enable these different teams to work together and cocreate a solution?
Alice Liang: We created agile tribes as a part of the reorganization and equipped them with the right training and tools to help them embrace new ways of working. Each tribe is made up of cross-functional team members and is fully empowered to make decisions toward a shared set of goals. And we created a separate physical space for the tribes, designed to foster collaboration.
The results have been phenomenal. We’ve seen that when people are placed in an environment where they can cocreate and co-own the solution, their mindsets begin to shift. In a siloed, functional structure, employees typically focus on their specific piece of the puzzle. But within the tribes, our employees contribute more frequently and offer recommendations beyond their own domain because they understand the bigger picture of what the tribe is collectively trying to deliver. Based on the success of this initial pilot, I believe that we can continue to move in this direction and adopt more agile ways of working across the organization.
McKinsey: I’m sure this transformation has had its ups and downs. What advice would you give others before embarking on this journey?
Alice Liang: Looking back, I think there were three areas that were most important to get right from the start. The first was prioritization: spending our time and resources on what matters most. The second was building the optimal structure: putting the right people in the right roles so that they could take ownership and be accountable for their contributions. Because this was a newly created function, there was no existing blueprint to fall back on. So it was equally important to establish how we work with the other functions in the company to deliver on our common goal. We’ve put a lot of effort into helping the team define their roles and expectations within the day-to-day working environment.
The third area was strategy. We studied the market landscape and the opportunities in the next horizon. How can we play a bigger role in healthcare and wealth management? What key segments do we want to focus on? How do we differentiate ourselves from our competitors? This forward-looking strategy will inform all of our decisions moving forward—from the capabilities we develop to the partnerships and ecosystems that we build—so it was critical to define early on.
Nine months in, I am personally very excited about the future, and we have had a number of early successes. There is huge potential. With the right vision and the right direction, this transformation of our company—and the industry overall—can spearhead innovation and create immense value for our customers and for society.