Digital transformation key for insurers: Moody's

The coronavirus pandemic has greatly changed how global life insurers operate as they adopt more sophisticated online tools, especially in insurance buying, underwriting and servicing processes.

Insurers have been forced to pivot to virtual modes and processes as the Covid-19 crisis brought face-to-face sales of products and services to a screeching halt.

Videoconferencing has become a widely used platform to connect with employees and distributors for sales meetings, virtual marketing, agent seminars and wholesaling. Smartphone apps have also been used to sell new policies and disseminate health messages in some parts of Asia.

These were among the findings in a survey on the global life insurance industry published on Tuesday by credit rating agency Moody's Investors Service. The survey covered 39 firms in North America, the Asia-Pacific, Europe, the Middle East, Africa and Latin America.

Moody's vice-president Laura Bazer said technologically advanced life insurers will likely emerge as winners from the crisis in terms of sales, revenue and profit growth over time.

"The losers will be those with rigid product and business models that fall technologically behind their peers. Although we do not expect rating changes due to technology alone in the near term, firms that are the least tech-savvy will likely have weaker credit profiles over time," she said.

In Singapore, the industry has seen an increase in hiring for project and product management roles, and an ongoing need for more digital specialists as insurers accelerate their digital transformation plans, the Life Insurance Association Singapore told The Straits Times last month. The sector has continued to hire despite the downturn, with 368 new hires in the first half of the year, a 4 per cent year-on-year increase, growing the workforce to 8,650.

Aviva Singapore is among the insurers that have undergone digital transformation recently, conducting digital training classes for its advisers and equipping them with a financial needs analysis digital tool, among other steps. "These new tools have made Aviva's sales process 100 per cent digital and we have also seen an uptick in non-face-to-face sales," it told ST.

AIA Singapore is "enhancing our online customer experience as more customers indicate interest in simple insurance products that require little or no medical underwriting", said Ms Tay Jin Li, head of product and funds development, implementation and distribution.

Despite the benefits of digital transformation, new business prospecting and sales have been hindered by a lack of human involvement, noted Moody's. This is especially the case for more complex products, markets that favour a more traditional face-to-face approach, and younger insurance markets that are less technologically advanced to begin with.

"When coupled with the global recession, high unemployment and ultra-low interest rates, this means lower sales in 2020, and possibly for longer - a credit negative for global life insurance revenue and profit," it noted.


ST ILLUSTRATION: CEL GULAPA

Moody's also found that underwriting will continue to move online, even after the pandemic ends, with the growing adoption of e-signatures and e-policy delivery. Biometrics, such as face recognition and fingerprints, will increasingly facilitate e-delivery in certain Asian markets, it said.

Work-from-home arrangements have generally been successful for global life insurers and will likely play a larger role post-Covid-19. "Many firms plan for a more extensive, permanent use of these arrangements, reducing real estate and operating costs, but also exposing them to new data and security risks."

 
A version of this article appeared in the print edition of The Straits Times on September 10, 2020, with the headline 'Digital transformation key for insurers: Moody's'. Print Edition | Subscribe