Insurers in the Asia-Pacific region have the benefit of a market with significant growth potential but must also cope with changing distribution models and the related need to adapt administrative systems. Toby Rotstein of Bravura Solutions discussed with LII how technology provides answers to the challenges.
Home to many of the world’s fastest-growing life insurance markets, the Asia-Pacific region presents insurers with significant growth opportunities. But the region also poses a number of major challenges to insurers, not the least of these being to enhance product distribution models.
Highlighting this, professional services firm Deloitte Touche Tohmastu noted in a recent study of alternative distribution models in Asia-Pacific: “Forward thinking insurers are leveraging distribution channels as one way to capture the opportunities that exist in the fast-growing Asia-Pacific markets.”
Consultancy Celent highlighted in a recent research study, Distribution Trends in the Asian Insurance Market, that insurers in the region are moving away from agency based distribution towards a more diverse model that encompasses other channels such as banks and direct sales.
Celent pointed out that, in some markets, premium income for new life insurance business generated through banks now exceeds that of the traditional insurance model of selling through individual agents.
To support a diverse range of distribution channels and remain competitive, Celent stressed that insurers require increased flexibility in the technology they use.
Echoing Celent, Toby Rotstein, head of sales in Asia-Pacific for Australian vendor Bravura Solutions, told LII it is vital for insurers to turn to technology for solutions.
As an example of what modern technology can achieve, Rotstein explained that Bravura’s internet-based Sonata software solution enables an insurer’s bank partners to key in new business applications directly from branches into the insurer’s processing system.
Rotstein stressed another important driver of efficiency is automated underwriting.
“Advances in straight-through processing open the door to heightened levels of operational cost savings and benefits by streamlining and automatically underwriting applications within minutes,” said Rotstein.
What can be achieved, he continued, is illustrated by the recent experience of one of Bravura’s clients, a major bancassurance life provider in Thailand. Half of new applications are now being accepted and issued without manual underwriter intervention, said Rotstein.
“Technologically advanced web enablement may also provide support for a direct sales channel,” said Rotstein.
“Prospective customers can go online and either get a quote, or submit an application directly into the policy administration system. If the application fulfils the automatic underwriting rules, then within minutes the applicant will be advised their application has been approved. Otherwise the applicant will be advised their application is pending underwriting review.”
Rotstein added that web-based distribution is becoming increasingly important as members of the emerging Generation Y market (consumers 30 years old or younger) expect to be able to use online tools for purchasing items and services.
“With the evolution of local and national wireless broadband networks, automated underwriting technology can be further harnessed for agents,” said Rotstein.
“For example, an agent could visit a client, do an online needs analysis and electronic application capture and provide an underwriting decision in a matter of minutes, all on a iPad.”
Adaptability of software applications is also of key importance, emphasised Rotstein.
“In terms of adaptability in a software application, two areas of business require flexibility with respect to supporting multi-channel distribution,” he said.
The first area is flexibility to develop and rapidly launch new products. Rotstein explained that to differentiate themselves from competitors, insurers’ bank partners are continually looking for additional customised life insurance products for their customer base, while financial advisers are looking for new, innovative investment life insurance products for their clients to invest in.
“Modern, rules-based and table-driven life insurance applications with product cloning capabilities provide this flexibility. Using these tools, new products are simply configured, not coded, for rapid launch,” said Rotstein.
He added: “We are now seeing examples of this. A large Asian life insurance provider recently launched a new bancassurance product for its primary bank partner in under six weeks, contrasting markedly with the typical six months to market seen previously.”
Rotstein said the second area relating to flexibility is an ability to effect changing workflow processes, in line with the needs of each of the different distribution channels.
“Currently most life insurance applications require changes to their software code in order to change a work process,” said Rotstein.
But modern technology is changing this, he stressed.
“Modern, more advanced software systems now encompass built in workflow management that effects changes to workflow processes simply and quickly by merely changing a table or a workflow diagram.”
Overall, stressed Rotstein, insurers stand to reap considerable benefits if they use technology to meet the challenge of evolving distribution channels and improving processing efficiency.