Insurers have the potential to achieve even greater social good largely because they already act as society’s “financial safety net,” providing a backstop against financial loss for innumerable risks worldwide.
Today, more insurers are realising they have a bigger role to play in helping prevent risk, mitigating loss severity, and closing life and non-life protection gaps in global markets, especially in the face of the growing number of what appear to be financially unsupportable risks.
Specifically, GlobalData reported in April that Malaysia’s general insurance industry is expected to grow at a compound annual growth rate (CAGR) of 8.3%, from MYR19.4 billion (MYR$4.4 billion) in 2022 to MYR28.9 billion ($6.6 billion) in 2027 in terms of direct written premiums, driven by growth in automobile sales and infrastructure development that will support motor and property insurance growth.
Why Is Insurance Important?
In the quest for a more secure future with the peace of mind to make choices the insurance industry has risen on key principles on the need to ensure future economic stability and security; solidarity between similar groups exposed to the same risk scenario and the fiduciary relationship between the insured and the insurer, based on transparency.
The concept of insurance developed in response to the fundamental need for security and protection, aiming at managing uncertainty and protecting against risks. Often people need professionals who are robust to manage these events. This is the role of the insurer.
There are numerous types of insurance agreements among them are insurance for companies and Global Business Lines, personal injuries, damage to property, property and casualty insurance Investment policies, pure-risk policies, life and health insurance.
Insurance is key to the development of an economy as it provides safety and security to individuals and businesses by creating financial support and reduces uncertainties, it generates long-term financial resources which are then invested in building long-term infrastructure assets, like roads and ports that are significant to nation-building. Insurance mobilises domestic savings in turning accumulated capital into productive investments. Employment opportunities are increased by big investments leading to capital formation in the economy. It also provides support to families during medical emergencies and the ability to spreads risk.
The basic principle of insurance is to spread risk among a large number of people where premiums are paid to the insurer. Whenever a loss occurs, it is compensated out of corpus of funds collected from the millions of policyholders. Insurance is a promise based on trust; the good insurer is the one who promptly delivers on this promise turning a difficult situation in a more bearable one.
Vast Room For Growth
CEO of Generali Insurance Malaysia Berhad (Generali) & Country Head for Generali Entities in Malaysia Fabrice Benard (pic) spent some time with BusinessToday exclusively to discuss the growth potential of the insurance industry in Malaysia and the rise of Generali as a new entrant into a highly competitive market.
To understand the growth of the insurance industry in Malaysia, one has to look at the participation of the insurance industry towards the Gross Domestic Product (GDP) of the country. On the surface, both life insurance and general insurance coverage stand today at about 5%. This is rather low from a protection perspective, the mature or more developed countries are in a range of 8 to 13% with the U.S. leading the way with almost 15% and Europe being close to 10%, and, Singapore is about 8%.
To be comparable, Malaysia has vast room for growth in terms of insurance penetration. And it’s mainly due to the fact that the nation has a very huge population that is underinsured and underserved not only from an insurance perspective as it’s the same topic that the government is pushing on.
Benard added the industry has gained good momentum, demonstrating strong resilience since the pandemic years, as more and more customers are becoming aware of the need for and importance of having insurance.
According to Benard with reference from ISM and LIAM statistical report, for the period January to September 2023, the combined General Insurance and General Takaful have registered a Gross Direct Premiums/ Contributions of RM19.796 billion, an increase of 9.5% over the same period in 2022 [YTD Q3-2022: RM18.079 billion].
YTD Sep’ Life Insurance market registered APE of RM5.359billion, an increase of 11% over the same period in 2022 [YTD Q3-2022 : APE RM4.835 billion].
The Life Insurance market is expected to show growth especially in protection, endowment and term products, contributed by the rising awareness of health and financial planning. Investment-linked policies are increasingly gaining popularity among consumers too.
The entire industry is moving away from just paying claims, but to move into better prevention and risk management, said Benard, adding, “while we see strong growth potential in the industry, the insurance penetration rate is still relatively low in Malaysia. Generali’s current focus is to officially complete the integration (corporate streamlining, localising all or most of our IT systems and infrastructure) before we drive scale. This is a 2-year plan, our official integration ends in August 2024.”
By the end of 2024, Generali plans to scale up our product propositions, digital capabilities and distribution channels, and focus on bridging the protection gap in the market, especially for the underserved segment.
Asked on his vision for growth within a highly competitive industry, Benard said given the low penetration rate, there’s still an urgent need to create awareness on the importance of insurance protection and financial literacy, especially among the underserved segment.
Generali’s vision is to be a trusted Lifetime Partner, to drive the growth of Generali Malaysia sustainably and responsibly. This is undertaken based on driving a 2-pronged approach:
(1) building on Generali’s General Insurance business segment market share through innovative and meaningful product offerings, distribution network and strategic partnerships based on the commitment to narrow the protection gap and ensure that its products are inclusive, affordable, accessible for of all segments, including the underserved segment. Phygital (Physical & Digital) Advice’ is key. Generali believes in human relations but in a digital world in hopes to facilitate easy service for customers with best-in class digital tools and in-person interactions with agents and partners; and
(2) manage the expansion strategy for our Life Insurance segment.
On Generali’s value proposition in facing the competitive landscape and edge, Benard stressed healthy competition among other industry players can be a powerful motivator, which opens up new opportunities to drive up product innovation and create greater value for customers.
“What sets Generali apart is that we are a purpose driven organisation backed by over 190 years of brand history, insurance heritage and experience. We survived through a series of global financial crises and world wars and that proves our strong resilience and strength, and how much we understand the needs of customers.
“Our People are our strength. Generali is one of the largest general insurers and emerging life insurer in Malaysia backed by over 1,600 employees with more than 9,000 agents and partners and a wide network of branches nationwide.
“We will reach our goals by driving synergy effectively among our distribution channels, we will be able to increase our insurance footprint and reach out to a wider customer base with innovative distribution methods and solutions.”
Generali’s Over 190-Year-Old Heritage
Generali began in Trieste on December 26, 1831 at the initiative of the entrepreneur Giuseppe Lazzaro Morpurgo. In a short time, agencies were opened in all Italian states, in the major cities of the Empire, from Vienna to Pest, and in the principal ports of Europe. Acting in the current environment and anticipating future trends, it went on a course to find the best solutions to enable people to shape a safer and more sustainable future and to be the Lifetime Partner to its customers – this has been Generali’s heritage for over 190 years. Today, the Group is one of the largest companies in the world to enable people to create a safer and more sustainable future by taking care of their lives and dreams positively.
The Impact Of Change And Paying For A Policy
As shifts in climate, technology, workforce, and customer/societal expectations combined with macroeconomic and geopolitical volatility are compelling enterprises across the globe to transform their tech infrastructure, products and services, business models, and organisational culture to adapt not just to fuel profitability but to remain relevant and survive, the insurance industry is no exception.
In fact, these colliding forces could potentially be the catalyst that sparks reinvention both in how the industry conducts its business and in its overall purpose and role in society. Existential threats, such as the rise in cost of living, catastrophic climate change, the explosion in cybercrime, and concern over vast uninsured and underinsured populations, are driving many insurers to reimagine how to confront disruptions caused by the changing environment and help consumers across all segments prevent or mitigate risks before they occur, rather than merely paying to rebuild and recover after the fact.
The fact of the matter is that insurance combined with proactive risk management can still help minimise the degree of their impact on affected individuals and communities. The issue for many people today, is that insurance is always a last cause as a payout as their disposable income is decreasing due to rising costs.
On this, Benard said the Generali is committed to support Malaysians to proactively manage their risk.
“We are committed to further increase insurance penetration but it’s a long-time journey backed by our mid to long term plan to bring about a positive stance on this complex equation as when you are struggling to even feed your family, you’re not thinking about insurance. But then there are probably other ways to reach this population that have been tested in other countries. Let’s access the individual then the community and help them with the support the industry and other key parties in an organised, transparent and traceable manner.”
‘Bridging The Coverage Gap’
Benard added, Generali’s long-term agenda is we aim to deliver, to invest in the future of Malaysia and help to drive progress by aligning with the Government’s commitment towards ‘covering’ those for the middle-and lower-income stratus, without losing sight of our ambition to be a trusted Lifetime Partner, and a Responsible Insurer to bridge the protection gap in Malaysia.
To capitalise on market developments and meet customer expectations, Generali emphasises focused product solutions in continuously finding ways to be more inclusive, yet innovative and personalised in our product offerings to create avenues for new protection.
Again, Generali’s Phygital solutions aim to provide customers with a seamless and integrated experience that combines the convenience of digital channels with the personal touch of in-person interactions. Its end-to-end digital experience will enable the group’s distribution network to service customers effectively anywhere and through any channel. In addition to this, means for greater personalised solutions, by leveraging data and advanced analytics, will be offered to deliver personalised insurance solutions tailored to the specific needs of each customer. This can include customising product offerings, pricing, and services based on individual customer preferences, risk tolerance, and other factors.
Effortless & Caring Experience: Generali’s integration also provides an opportunity to improve the overall digital customer experience, making it more intuitive and user friendly. This includes features such as improved navigation, real-time updates, and more interactive elements.
Streamlined processes: While in the process of harmonising its systems, Generali is also leveraging on technology to streamline internal processes, such as claims management and policy renewals. For example, optimising claims journey for customers through dedicated resources for claims helpdesk and offering online claims portal and automated processes to expedite claims processes.
Accelerating Sectoral Digital Transformation
Benard has long stood by technology being a key enabler to enhance customer focus, product optimisation and channel excellence with the aim of sustainable growth and operational efficiency.
He cited Generali leverages on digital tools to automate and streamline internal processes, such as claims management and policy renewals, to improve customer experience. Generali does not stop studying trends to understand customers betters, and create tools which will immediately provide better services for them. These takes various forms which includes, Generali’s customer portal, an all-in-one portal that helps customers access to their insurance details and services easily and securely, anytime , anywhere with a ranges of solutions like renewal of insurance, policy information, claims submission/status tracker, after sales support, and a more immersive experience for retail e-commerce channels.
Generali’s Servicing CRM, in the process, allows frontliners to capture all interactions with customers, provide status update and support 1st contact resolution with personalised servicing. Customers can also use the Chatbox/Live Chat, round the clock assistance to purchasing motor or travel insurance online.
To turn these aspects into reality, Benard said, we are also future proofing our People and distribution network, accelerating their digital capabilities to ensure they are digitally enabled to better serve our customers. For example, this includes regular training sessions, informational materials, upskilling courses and one-on-one support as needed. This extends to specifically leveraging on data analytics, AI, and technology to create personalised experiences while allowing Generali to leverage on customer insights to drive personalized pricing, flexible coverage and tailored communication.
“It starts with a deep understanding of customers’ needs, incorporating insights into our products and services and from there, we can customise our product offerings, pricing, and services based on individual customer preferences, risk tolerance, and other factors.”
Asked on what are the viable products or services Generali brings to deliver enhanced value and innovation to customers, especially for those from the B40 and Small, Medium sized Enterprises (SMEs) segments, Benard said, accessibility is an important factor, where we want them to be able to purchase through their preferred distribution channels and this forms Generali’s long-term agenda which is ensuring that our products are made available and affordable to them.
UNDP-Generali Insurance Innovation Challenge Fund (IICF)
Generali’s focus on progressing financial inclusion and to narrow the protection gap among the B40 segment and Malaysian based SMEs has been at the forefront of Generali’s proposition in Malaysia.
Benard said SMEs account for about 97% of total businesses in Malaysia – they are not only the bedrock of the country’s economy, but also a priority to us at Generali, making it critical to for us to use our skills, resources and expertise to build their resilience and empower them with access to insurance and risk mitigation solutions.
Since 2022, Generali has been working with the United Nations Development Programme (UNDP) to develop insurance and risk finance solutions globally. The proposed solutions involve scaling up existing solutions and tailoring them to SME resilience while partnering with diverse distribution channels and integrating new technology solutions. Continuing on the partnership, we are now seeking proposals from participants nationwide focusing on innovative, sustainable solutions that can safeguard SMEs against climate and other risks.
The open contest involves a prize pool of up to US$40,000 per winner, including financial and technical support. Also, Generali is currently developing a loss prevention framework with UNDP for SMEs to harness the power of data, awareness and understanding of risks for businesses in vulnerable communities. This initiative follows the Asian edition of Generali’s flagship SME EnterPRIZE project, which has already successfully been running in Europe over the past 2 years.
The Future of Insurance In Malaysia – In Generali’s Eyes
In shaping the insurance landscape today, Benard expressed confidence in saying that in seeing the dominating position of advanced technology solutions such as AI which enables new capabilities, more efficient operations, IT itself will generate change to the way insurers approach their business.
Presently, there is a trend for more non-insurance/tech players operating high data volume entities coming to the market by integrating skills and technology with insurers to offer holistic customer experiences, or even selling insurance themselves.
But, Generali believes that insurance is all about human touch and nothing less. Apart from its strong legacy system, expertise and innovation, Generali ultimately expresses it is the empathy within our people that makes a difference.
Benard said among the main goals of Generali is to modernise human connections, to develop long-term relationships with customers of all segments, using a combination of best-in class digital tools and in-person interactions with our agents and partners.
