Allianz plans to emerge as a master of digital distribution without compromising underwriting to win in the insurance marketplace

by PRIYA VASU/ pic by MUHD AMIN NAHARUL

THE insurance industry has undergone profound changes with the advancement in technology — from data analysis based on paper documents to automated information processing.

The rapid growth in technology enables the elimination of large-scale data interpretation and allows for more time and investment into enhancing customers’ experiences in purchasing new policies.

While the insurance industry is notorious for shying away from tech adoption largely fearing financial risks, it is beginning to show signs of digital innovation, said Allianz Life Insurance (M) Bhd CEO Joseph Gross (picture).

He told The Malaysian Reserve that one area the industry is adamantly focusing on is simplifying and shortening the length of policy approvals through efficacy.

“The internal complexities create friction that doesn’t allow policies to be issued fast, although customers want it.

“We in Allianz do strict performance management. We do it by digitising our agents. My view is that, if I want to have the best agents servicing my clients, I got to make their life as simple as possible through a seamless digital process,” said Gross.

He added that Allianz plans to emerge as a master of digital distribution without compromising underwriting to win in the insurance marketplace.

Therefore, the life insurer bets high on its 4,300 digital-savvy agents to deliver products to customers in a shorter processing time — as short as five minutes for policy approval, prides Gross.

“We dissected the process of policy approval and re-evaluated why we need these steps, such as unitisation that usually takes 24 hours. So, we stripped off that core process which is totally legal, and challenged the process,” said Gross.

To date, Allianz Life — a wholly owned subsidiary of Allianz Malaysia Bhd which is a part of Germany’s Allianz Group — delivers five-minute e-policies to customers that account for almost 25% of its new businesses.

“This is good because it shows that customers’ experiences are better, and agent experience is better whereby hassles of processes are reduced where they can say Allianz is the only insurer who can approve policies over a cup of tea.”

However, such a quick decision-making process to drive new policies could present risk that possibly could run counter to its aims.

Typically, insurance companies are legally bound to comply with the Anti-Money Laundering and Anti-Terrorism Financing Act 2001. Earlier this year, the central bank added sweeping changes to money-laundering regulations and compliance, including requiring insurance, takaful and Lembaga Tabung Haji (TH) branches to have compliance officers to vet, report or even reject suspicious transactions.

In a comprehensive 188-page policy document on Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Financial Institutions, Bank Negara Malaysia requires all institutions under its regulatory framework to enhance their compliance monitoring across the board, including at branches.

“Nothing has changed in terms of our due diligence. We are 100% compliant. In terms of our underwriting discipline where there is no medical underwriting needed further, then it is a straightforward process and customers will receive their policies.

“If there are trigger points, preconditions like smokers, then, of course, it is taken out and underwriting will be done,” said Gross.

Almost 60% of its life insurance customers are healthy, while the remaining 40% have pre-existing medical conditions that require in-depth analysis of a client’s health information.

He added that the life insurance segment will continue to execute its strategic initiatives of expanding distribution channels and focus on product profitability.

Although economic conditions are not in favour of businesses at the moment, Allianz will remain focused on expanding agency force, uplifting productivity through recruitment, training and performance management, and optimising product portfolios.

“We have a policy growth of 10%-15% year-on-year (YoY), and by definition, productivity increases. As a company, you have to focus on your strength and execute on what has worked. Till now, our strategy has worked well in recording double-digit top-line and bottom-line growth,” said Gross.

Allianz Life recorded a 10.9% increase in gross written premium to RM2.38 billion in 2018 which strengthened its foothold in the life insurance segment, capturing a higher market share of 8.45%.

For the fourth quarter ended Dec 31, 2019, the life insurance segment recorded a higher profit before tax (PBT) of RM72.7 million, an increase of 44.5% or RM22.4 million compared to a PBT of RM50.3 million in the preceding year, mainly attributable to higher premiums from agency, bancassurance and employee benefits channels.

For the full year, the segment recorded a higher PBT of RM340.7 million, an increase of 66.7% YoY or RM136.3 million compared to the preceding year, mainly due to the fair value gain arising from the change in the interest rate and contribution from protection business.