Two recent articles published in the Asia Insurance Review highlight the incredible potential of online insurance sales and by correlation the dangers facing agents with their relatively high commissions.
The first article highlighted the Indonesian digital insurance startup, PasarPolis.com, which recently received a Series A funding round from ride hailing company Go-Jek, e-commerce firm Tokopedia and travel booking startup Traveloka.
With the goal of tapping Southeast Asia’s growing internet economy, the deal is described as a strategic move as it offers the potential of developing products with these three companies and is expected to provide access to an estimated 100 million insurable hits per month.
Of particular note is the potential to bundle insurance coverage with ride hailing trips, e-commerce sales and travel deals. This type of insurance, focused onto the immediate needs and wants of the insured is likely to be the future of insurance i.e. embedding insurance into the risk management practices of the insured.
The second article focuses on China where online accident & health insurance grew 79% in the first half of 2018, with a premium income of USD1.05 billion, according to data released by the Insurance Association of China (IAC).
So, what does this growth in online insurance sales mean for existing insurance agents?
Life insurance agents currently focus on savings type products as the high premium rates result in lucrative commissions to the agent. These products as well are fairly easy to sell and require relatively little explanation or planning work.
It should be noted that with the new IFRS 17 reporting standard approaching, insurers will no longer be showing gross premiums as their top line. Instead, it will be risk premiums, so these easy to sell savings products will be less desirable than products with more risk protection. With this transparency created by splitting premiums into risk premiums and the savings portion separately there is the possibility that this business is partially lost to banks and other savings channels.
Where insurance agents will need to add value is with complex risk management products. Simple risk management products will be increasingly bundled with other purchases online, reducing the need for agents in this market, or bypassing them completely. Simple savings products will also increasingly be lost to other channels. Thus, agents will need to venture into more complex risk management products or face extinction.
For the insurance industry it is up to us to assist in this transformation. Risk management will need to become a part of the culture in our markets. This starts with school education, where risk management including the use of insurance needs to be taught as a subject.
This has been started in Australia already. With education and awareness and continued focus on professionalism, insurance agents will have both the tools and potential client base to avoid extinction and thrive.