AIA Sri Lanka walks the talk in meeting insurance industry needs in Sri Lanka

Leading insurance company AIA Sri Lanka recently outlined its products and exceptional customer experience, in differentiating AIA as a high quality player that serves the needs of the Sri Lankan customer. Given Sri Lanka’s evolving insurance industry and changing customer needs, AIA Insurance’s CEO Pankaj Banerjee and AIA Director Operations Kelum Senanayake spoke to Daily FT about how AIA meets these trends through products and services. Following are excerpts:

By Charumini de Silva

Q: Could you brief about AIA Group?

Pankaj: AIA Sri Lanka is a part of AIA Group, the second largest insurer in the world and the leading life insurer in Asia. It is definitely one of the most dominant players as the largest independent publicly listed pan-Asian life insurance group. The direction of the group’s strategy is extremely clear and we believe that Asia Pacific is the region with right opportunities for the kind of business that we are in. 

Taking into account Asia Pacific’s mix in the global population and the emergence of the middleclass coupled with the fact that in general, social security systems across Asian countries, puts a lot of the responsibility of future financial planning on individuals; that’s where we come into help their longer terms health, and retirement needs. We believe that we have the right kind of platform with a multi-channel distribution and a strong premier agency force all across Asia. 

We are also one of the bigger players in corporate solutions and offer tailor-made group life and medical solutions to corporates, totalling about 16 million customers. It is a great platform to be in and we are -optimised by the opportunities available to really help people in this part of the world with their longer-term financial needs.  

Q: What’s AIA’s perspective on Sri Lanka’s insurance landscape?

Pankaj: We have been in Sri Lanka for -five years now. AIA is a leading life insurer in Sri Lanka, present in all provinces with over 120 branches island-wide. We are among the front runners within the industry, but that’s not something to be complacent about. When you look at Sri Lanka and peer countries, the financial capability of SL is around GDP $4,000 and if you look at other countries in this region (not withstanding their current population) our current penetration is around 0.5% as a proportion of the total GDP, whereas our peers in that range are up to three times bigger at 1.5% to 2%. So, there is a significant opportunity for us to grow and while we take pride in where we are today in Sri Lanka, we need to continue pushing forward. .

The shape of that opportunity is going to be very different from what it was 15 years back, as the behaviour of today’s consumer is completely different to what it was a few years ago. That is why we are always looking at new ways of getting closer to the consumer and being more aware of their demands and thereby providing appropriate products and services. There is significant potential for the life insurance business to grow in Sri Lanka over the next five to 20 years. This is why AIA is continuously learning and adapting best practices from other markets, so we can provide Sri Lanka with the best insurance products and services. 

Q: What makes AIA different from other insurance companies in Sri Lanka? 

Pankaj: Our key focus is the customer. A meaningful and sustainable differentiation comes when consumers believe we are different rather than us believing we are different! So, it has to start from looking at how economies and consumers are shaping up. In that context, we are trying to find our sources of differentiations from the experience that customers have with us, rather than claiming to do things that nobody else in the industry are doing. We are taking a much more market focused view. 

The sources of differentiation in our products are very much of a point of view of how and what is more relevant for the customer. We don’t make our past a benchmark, we don’t make the industry a benchmark, what we are benchmarking ourselves against is what is relevant and what is needed by the customer. 

The other aspect of creating this differentiation is technology. Investments on the digital front and automation within AIA Sri Lanka is another source of long-term differentiation for us. We are looking towards significantly enhancing our online customer interactive portal, so that our consumers can literally have an ‘anytime, anywhere’ service in a much more efficient manner. We are not perfect, but we are definitely moving towards where we would like to be, to do more and more to stay relevant and convenient for the customer. 

Q: What are your thoughts on the need for healthcare protection in Sri Lanka?

Pankaj: Sri Lanka’s entire healthcare expenditure is approximately 4% of GDP, amounting to roughly $4 billion. Notably, 42% of that healthcare expenditure is ‘out of pocket,’ which means that close to Rs.250 billion of healthcare expenditure is not covered by insurance. ‘Health inflation’ is a critical factor of health management. According to WHO data, in 1995 Sri Lanka’s health expenditure per capita was $25 and in 2014 it surpassed $125, increasing fivefold in just 20 years. This highlights a significant need to provide health insurance protection. 

Q: How does AIA address the changing health, savings and protection needs of Sri Lankans?

Pankaj: Taking into consideration the needs of customer we are focusing on, pension and health, which are two key areas which we believe need sustainable long-term solutions. Asia as a whole is ageing fast. The West became rich and then became old, but we are becoming old without being rich. This is a huge socio-economic issue which the countries will have to manage prudently. 

Health is a core area we are focusing on; with families becoming more non-nuclear, it is important that they provide for themselves in better ways than in the past. ‘Health Protector’ is a new health insurance product we have launched this year. Around 85% of the working population in Sri Lanka are salaried in private sector and/ or self-employed. Largely, most of them get medical insurance from their respective companies, but most often they are significantly underinsured and need a higher coverage than what the employer provides. Therefore, we introduced a feature called ‘deductible’. 

For example, if a person is buying a Rs.1 million annual hospitalisation cover from AIA, the customer can pay the first Rs.50,000 by themselves (which is basically paid by their employer) and AIA will reduce the premiums for the same Rs.1 million coverage by anywhere between 25% to 40% on an annual basis (depending upon their age). We are not positioning this as a premium reduction feature. We are just making our products more relevant to our customer needs. 

We have also launched a program called ‘AIA Vitality’, a science-backed wellness program that rewards people for improving their health by staying active and what we have seen in that last one year since its launch is the significant amount of interest in people in the program. This is reflected in the number of people who have downloaded the app but more so the number of people who have remained engaged with the program. We had over 27,000 active users as at March this year. It is not just about downloading a health app, but it also about whether that is helping an individual to change behaviour to be healthier. That is where we come in, in helping people make positive lifestyle changes so they can live healthier, longer and better lives. Through this tool we are rewarding people for taking care of themselves. 

This in itself is a differentiating factor because it is a first time a life insurance company going out and talking to customers about being healthy. And you don’t need to be a customer of AIA to use AIA Vitality. So, even if you haven’t bought a policy from us, you can download the app and keep earning rewards for being active and for being healthy. These are differentiations more valuable for the customer because they leave a lasting positive impact on their health and wellbeing. It also  helps us in fostering a long-term relationship with the customer and engaging with them in a meaningful and relevant way through every life stages.

‘AIA Smart Pension’ is another product we introduced recently. Inflation is something that continues to affect all of us. Keeping this in mind, we have come up with a very simple feature called a ‘Pension Booster’. When a customer has saved enough over a period of time, we start paying monthly pensions to them. While those payments continue, the fund with AIA will keep earning the declared dividends. With this Pensions Booster, the customer earns 30% more than the declared divided for the year. With this feature customer can increase his monthly income, thereby countering inflation.  

Q: Could you elaborate on how AIA Bancassurance has moved past being a product provider to a partner in fostering a relationship with customer? 

Pankaj: Bancassurance is a complementary way of accessing customers. We are in the forefront in bancassurance in Sri Lanka and currently have three partners, namely NDB, DFCC and Standard Chartered Bank. These banks cater to various segments and through them we can interact with their customers to help them with their insurance needs. It is a relatively new channel for Sri Lanka in the financial landscape and our focus in on empowering the banks to effectively address the health protection and retirement planning needs of their customers. 

Q: What are the major challenges in introducing new products which are relevant to customers?

Pankaj: First of all, we are in an industry where we are providing a service which many feel that they don’t need. So that it is a major challenge that can be only overcome by education and awareness creation. We firmly believe that if we educate the customer appropriately, they will see this need. I think more than a challenge; it is a fundamental responsibility for us as an industry, to articulately demonstrate to people why it is essential for them to protect themselves and their families and save and plan for retirement.

The second challenge crops up for our distribution channels, as often, agents start discussions with customers with the product they are selling. But the product is only a solution. Without knowing what the problem or need is, the customer doesn’t fully know what the insurance company is trying to solve! Therefore, the first and most important step is to create an awareness on the need for insurance and protection. 

Thirdly, I believe that as an industry we need to embrace digitisation with much bigger and wider arms! The world around us is changing fast and we need to be responsive towards that. As a company, we must constantly change and evolve our way of doing things in line with the changes in the world. We need to, as an organisation, embrace change and be confident that this is where Sri Lanka is moving towards.  

Q: Digitalisation is the next big wave and internationally the insurance sector is being challenged. What is AIA’s digital strategy? How has AIA embraced technology and innovation to be more responsive to the evolving market/customer?

Pankaj: It can be argued that technology replaces people and the personal relationship we have with our customers. We firmly believe that it is not going to happen with AIA. Technology to AIA is an enabler. We just want to strengthen, enrich and make that relationship much more proactive using technology. The technological advancements that are happening in Sri Lanka are mindboggling. In my view, as a category, the insurance industry hasn’t utilised technology as effectively as some other industries. 

If you look at card-based payments, Sri Lanka is the fastest growing market in South Asia. Also, internet penetration over the past one year is double digit. We have almost 6.5 million people who are hooked on to internet and the change in past one year is significant. Another very significant change happening in Sri Lanka is that the usage of the internet is moving from desktop to mobile, with the advent of economic smartphones being available to more people. So, more and more of my world is on my palm and I hardly need a desktop to go online. This gives a fairly significant perspective of how five years down the line our customer would behave. They have integrated themselves to this entire web of online management of life and if we are not present there, we will be not on top of their mind. We may have the best products, but if we cannot allow ourselves to be accessed through that medium, then we are going to miss the target. Our strategy is built on how we can use technology to enhance and enrich this personal relationship with the customer. 

Q: What can you say about customer trends in Sri Lanka?

Kelum: Consumer behaviour in Sri Lanka is rapidly changing along with the demographic and lifestyle shifts that are taking place. A visible rise in interest for health and wellbeing is evident. There is an increasing crunch for time with the more emphasis for easy, fast and convenient processes and solutions. As a company we proactively monitor and track customer trends and are constantly trying to see how to keep ourselves relevant to the market needs. 

Q: Could you elaborate on AIA’s customer services?

Kelum: We constantly realign, strategise and make changes in the way we do business. We strive to keep pace with the growing needs of all our customers to provide a unique customer experience across all points of interactions. We prioritise efforts to enhance digitisation and mobile connectivity as pertinent means of increasing ease-of-doing business for all our customers.

A total of 65,094 new policies were issued in 2017. This is a testament to the trust Sri Lankans have in us and our ability to provide the differentiated solutions that meet their needs. This was the highest number of new policies in a quarter in the history of AIA Sri Lanka which was issued during the fourth quarter of 2017. Our customers are at the heart of our business and our team is committed to improving customer experience by achieving continuous process efficiencies through the use of technology and innovation. 

Our team handles customer requirements such as claims, policy servicing and new business underwriting within a day. Our dedicated contact centre answers 750 calls daily and 80% of calls are answered within the short span of 20 seconds, further reinforcing the commitment we have to each and every one of our customers. Enabling ease-of-doing business is of utmost importance to us, which is why we continuously review and expand our premium payment network bringing greater convenience to customers. 

The avenues open to customers include mobile and e-wallet services, banks, supermarket chains, white goods stores and mobile banking networks, thereby allowing our customers to pay their premiums at any time from any location. Our customers currently enjoy over 3,300 dedicated premium payment points for their convenience, in addition to our website.

Think Green-Think Paperless is our latest digitisation project which is aimed at being environmentally friendly. We all know that the world has limited resources with more and more people using them up. So if we want our future generations to enjoy the same clean environment and standard of living we’ve experienced, we need to take some action. Taking care of our planet is our responsibility and the good news is that little things can go a long way. We also understand from customer research that our customers prefer SMS communications as they find it faster and more convenient. We believe that going paperless will not only benefit the environment but will also benefit the customer.

The paperless initiative is intended at moving away from cumbersome processes that require you to store piles of paper, which can be rather tedious. We have adopted best practices in going paperless and have the most integral and secure processes to ensure customer data protection while increasing the overall efficiency of processes. Moving away from reliance on paper is an AIA Group priority and we look forward to implementing this in Sri Lanka.

We recently launched our Premier Customer Initiative called ‘AIA First Class’, which is a way for us to provide differentiated services for our top end customers. It is not just another loyalty program, but rather an initiative to differentiate our service to our premier customers so they have a superior experience with us and enjoy a host of benefits along the way. These customers get priority service and also have a dedicated customer relationship officer who will be in touch with them at any given time. From separate hotline numbers to emails we have prioritised service all the way for the ‘AIA First Class’ customers. 

Q: Has technology helped with the customer experience? 

Kelum: We are continually reinventing ourselves as an organisation to use new technology to serve the customers and make their encounters with AIA fast, easy and convenient. In the past three years, we have been extremely active and focused in ensuring that we can have contactability with the customer. Our current customer contactability ratio is almost 90%, which I believe is very high. It is definitely helping us in terms of creating a better connection and relationship with the customer. 

Our agents are on iPad, which is an interactive point of sale, which is all digitised. So the agents don’t need to utilise time going back to the office submit a policy or a premium, which means more productive time for the agents and faster and easier for the customer. 

Therefore, technology is helping us to be more efficient, more productive and closer to the consumer. I believe this is just the beginning of the journey for us. Our aspirations on this path of using digitisation and technology to enhance our overall proposition are far greater what we are doing today.  

Q: Where would you invest as a business for the future?

Pankaj: Mainly in customer service, digitisation and training. These are areas where we have invested significantly thus far and will continue to invest further. We believe that investment is really needed to create efficient and effective platforms which would make the business much more sustainable in the longer term.

Pix by Indraratna Balasuriya