Covid-19 headwinds weigh on Allianz’s insurance sales

Insurance coverage is necessary to care for long-term wellbeing, but the importance fades in contrast to other priorities during a pandemic crisis

By NUR HAZIQAH A MALEK / Pic By RAZAK GHAZALI

ALLIANZ Malaysia Bhd expects its gross written premium likely to register a weaker growth this year as consumers’ have lower disposable incomes triggered by the Covid-19 pandemic which induced disruption in the job market.

Allianz Malaysia CEO Zakri Khir (picture) said while the insurance industry is insulated from the pandemic, the pandemic has presented an opportunity to sell more policies, especially clearly written contracts with pandemic extensions coverage.

“On that note, the insurance industry will be around. However, the consumption of products will decrease as it is based on disposable incomes. At this current situation, there are lay-offs, unemployment, etc, which will all impact the ability to buy,” he said at the Smart Retail Shield virtual launch in Kuala Lumpur yesterday.

He added that although buying insurance coverage is necessary to care for long- term wellbeing, the importance fades in contrast to other priorities during a pandemic crisis.

“There will always be food, security, and these other things are much more essential than insurance. So, growth will be much slower and there might even be regression,” he said.

Zakri said the fallout from the pandemic also means more financial institutions are bracing for a spike in large-scale loan defaults that will weigh on the insurance industry.

“It is expected to occur more come October when the moratorium is over, where people have to pay for their loans and daily needs,” he said.

He does not underestimate the impact of the virus on policy sales that rely on personal consultation and said the company is not planning a retrenchment exercise.

“We are not thinking of any lay-off or retrenchment, but never say never as things can happen. At this present moment, clearly we are not in the position where we think we need to turn to desperate measures as retrenchment and lay-off are very difficult, not only emotionally, but also financially,” he said.

Allianz General Insurance Co (M) Bhd chief sales officer Horst Habbig added that the current climate is not conducive to expand its footprints by opening branches and widen its distribution network.

“We need to think beyond the usual marketing: Consider the new risks, the new normal and how can we, as an insurance company adapt to it not only by giving insurance, but also what kind of services we can provide,” he said.

In the prevalence of a crisis, Zakri said calls and online connections will become normalcy as there will be an aversion to face-to-face interactions in signing up for new policies.

“For most products, you can just buy without further consultation. Insurance is not that, it needs to be sold professionally.

“So, we’re seeing the use of video calls, WhatsApp and such, to be more relevant during these times and there won’t be much change in how people will purchase insurance, because they know who they want to talk to. Thus, the agent is key in this particular process,” he said.

Allianz Malaysian posted a net profit of RM133.08 million for the fourth quarter ended Dec 31, 2019, up 33% year-on-year (YoY) on higher revenue contribution from its life insurance segment.

Revenue in the quarter rose 7.9% YoY to RM1.41 billion due to higher gross earned premiums and investment income, its past exchange filings noted.

Allianz Malaysia’s life insurance segment registered opera-ting revenue of RM817.2 million for the quarter, up 13.7% YoY on higher gross earned premiums and investment income.

Allianz Malaysia closed four sen lower at RM13.82 yesterday, valuing the company at RM2.44 billion.