Etiqa, ethics and insurtech

HOW would you feel if that fragile item you bought online is assured to arrive at your doorstep safely. Simply because the driver of the delivery vehicle is being tracked to drive responsibly?

Or, just moments after your travel insurance comes into play due to a flight delay, you get a text message that your compensation money is already in your account. Without you doing practically nothing to trigger it.

Now that would be a service provider that you can trust, won't it?

This is something that Maybank Ageas Holdings Berhad, the parent company of Etiqa Insurance Berhad and Etiqa Takaful Berhad, is working towards to achieve in the near future.

INSURANCE TECHNOLOGY

Insurance technology or insurtech strives to innovate the age-old insurance business of risk management by using new streams of data from digital devices to competitively price premiums according to observed behaviour.

Insurtech is a subset of the now well-defined scope of fintech, or financial technology. Insurtech uses big data to form precise risk profile of the subject that is being covered.

"One example is the telematics system in vehicle-monitoring, where employers can track the driving behaviour of their employees," said Maybank Ageas CEO Kamaludin Ahmad.

"The idea is to place a tracking device in the customer's vehicle and you’ll know when they do hard-breaking, hard-swerving or sudden acceleration and the like. That will give an indication of how good a driver this person is.

"This may not be for individual customers, but would be more useful for corporate clients with a sizeable fleet of cars or vehicles. It is in their interest to put a device in their vehicles so that they know whether their fleet-drivers are driving responsibly or not," he said.

The point he is making on this service not being suitable for individual customers is because of the 'invasive' tracking mechanism these devices are placed inside the vehicles. Would you be comfortable to know that your insurance company tracks your driving behaviour?

But these 'invasive' tracking devices would serve corporate clients well.

Kamaludin said the intended market would include logistics companies, delivery companies and even small-medium enterprises with only three to five vehicles.

"It's a win-win because not only will it inculcate better driving behaviour amongst the employees, it will also allow us to reduce the premium price for the customer (employer) if they have a good track record.

"It's also good for the society when everybody just drives better," he told Market Talk's Ibrahim Sani.

Kamaludin said Maybank Ageas is currently looking at ideas where they can sell some coverage where an incident of a (small) loss can happen quite frequently.

"In insurance sales, it's all about building trust as quickly as you can because insurance is a business of trust. And you have to be there when something happens. But you don't get into an accident often, for example, how do you build trust quickly?

"Insurance companies are very focused on the claims part. For example, in travel insurance, there's a flight delay compensation. Let's say we tie ourselves up with an international flight data provider, and once a customer's flight is delayed, we are immediately notified. We can then bank-in the compensation money as soon as possible to the customer's account and notify them. This will help to build trust quickly. And this can only be done when insurtech is fully embraced," he said.

The idea is that communities would have to embrace insurtech in order for it to succeed. Any form of resistance usually comes from consumers that do not entirely understand fully the risk and rewards of such a revolution.

Kamaludin believed insurtech can be sold and will be beneficial to people. However, it requires a change of mindset.

"For many years, insurance companies have been focused on distribution and we don't have direct reach to the public. It's all about building intermediaries. With insurtech, the focus should be more on the companies themselves, being able to deliver the kind of trust that customers can feel right away, and feel it frequently. If customers feel that they can trust the company, then we (insurers) can make available more of the product (in the market)."

Kamaludin added that while Maybank Ageas already has a tie up with an insurtech provider, they are still on the lookout for more great ideas from insurtech start-ups and aspirants.

TAKAFUL VS CONVENTIONAL

Already Etiqa is dominating the market share, capturing over half the total insurance and takaful market.

Maybank Ageas is capitalising on the takaful business, with Etiqa Takaful already a household brand that has several acclaimed awards to its name.

"On the takaful business, we are mostly riding on the shift towards takaful from the Malaysian public. At the same time, we are also putting many good things in place to ensure that we are able to capture this market shift," said Kamaludin.

"In the conventional space, (it's) going really well for bancassurance. But we're missing out on the agency sales. There are several things that we are trying to make better. We are making sure the agents are being helped in the way they do things, we provide them with straight-through processing (STP) to make things easier for them to close a sale."

CONSUMER EXPERIENCE

The Etiqa brand records 90 percent of online insurance sales. But Kamaludin said this was not the reason why agency sales were down.

"The learning that we've drawn from the online business has helped us to make things easier for the agents as well. When people go online, they try to find a space where they can purchase things easily, so we keep learning on how to make things simple for the customers there. And whatever we learn from the online customer experience, we apply to the agencies as well, such as the STP.

"So, it's not about 'one over the other' (takaful or conventional). It's not a zero sum game. The market is growing and we just try to capture as much as we can," he said.

Kamaludin said people purchase insurance online only for the simpler products – car insurance, personal accident insurance, some home insurance as well as for travelling.

"For agents, they are not too keen to sell insurance for personal accidents or travel because they don't earn much income from there. But for products that require more explanation, such as family takaful or life insurance, this is where the agents can add value to the products," he said.

THE MAYBANK ‘MONOPOLY’

Some may argue that the size of the Maybank-Etiqa insurance is too big – to the extent of being deemed a monopoly – and this would be bad for the insurance sector.

"Yes, a monopoly would be bad. As it is right now, on the takaful side, our share for the combined basis of general and family insurance in the market is about 30 percent. But in life insurance and the conventional space, our share is only about 7 to 8 percent combined. It's a long way away before we monopolise anything," Kamaludin said.

"At the same time, we (Maybank Ageas) are not really about pushing sales, to be honest. Our focus is more on how to be the best at what we do. For an insurance company and a takaful operator like us, it is about being there and making that claim settlement as quickly as we can. And if people tend to like us because of that, and they buy from us, then that’s not such a bad 'monopoly' after all,” he added.