Q1: How does the Filipino perceive the role of insurance in their lives? How does Malayan deal with these perceptions?
Majority of Filipinos are unaware of insurance, and those who are aware might know only about life insurance. It is only after disasters such as Ondoy (and other calamities) that many people began to realize that there are other forms of insurance that could have protected them from disasters.
As of 2011, the penetration rate of non-life insurance industry is less than 15% vs. population, due to 1) unfamiliarity of the majority about how insurance protects them and their assets, and 2) insurance is viewed as an expense rather than a necessity or investment.
Q2: How does Malayan develop products that address changing needs of the Filipino?
Malayan Insurance develops products that are easily sold by our agents, intermediaries and distributors. In 1996, when I joined Malayan, there was minimal activity being done in the area of product development. The direction of the past development efforts was also very product-based, without regard to how the market or distribution channels would respond. I then set up our Integrated Marketing Communications department or IMC with the responsibility, among others, of spearheading the company’s product development efforts for our existing channels, and also to develop alternative outlets for selling insurance.
Through the IMC department, Malayan Insurance led the local non-life insurance industry in maximizing revenues in the retail market by introducing packaged insurance policies sold to individuals, branded and marketed in the same way consumer goods are marketed, e.g. sachets, bundle packs, free taste, upsell and cross-sell, push distribution, minimal footprint pricing, convenient packaging, etc. At the same time, we did education campaigns to make people know the benefit of non-life insurance in general so people were less resistant spending a few pesos for insurance coverage.
Q3. What are the challenges facing the insurance industry?
One of the challenges is the recruitment of talents. Many graduates don’t think insurance as “sexy” or “attractive”. Another challenge is many insurance companies are doing cash flow underwriting and are just after market share thus the insurance companies that are professionally managed are challenged in balancing price/rates over market share. There are instances when we walk away from a risk because it is not properly rated.
Also, AFTA (or the Asean Free Trade Area) in 2015 is opening borders amongst Asean countries and we are currently studying the impact of this on the insurance industry in the Philippines. One of the critical issues we are looking at here is that Asean insurance companies can operate in any country in the Asean region, making competition tougher. Our industry is highly taxed. We have been working with Congress to lower the taxes similar to what the life industry has done.