‘Customer-centricity’ can empower policyholders and enhance the value chain, says EAIC panel

Insurance industry customers come in all sectors, shapes and sizes, and a number of providers have emerged to service increasingly niche markets. But the common denominator for all insurance providers should be “customer-centricity”, a panel of executives representing trade associations told delegates at the East Asian Insurance Congress (EAIC) in Hong Kong this week.

One advantage of marine insurance, for example, is fewer, but bigger, clients. “That’s a big advantage when it comes to customer-centricity,” said Lars Lange, secretary general of the International Union of Marine Insurance.

“Cover is still available for Red Sea passages despite the threats to commercial shipping from Houthi rebels.”

However, shipping industry clients have been going through some challenging times, he added, enumerating four issues in particular.

“The first is the elephant in the room: geopolitics,” said Lange. “We have a number of crises all over the place, starting in the Black Sea a few years ago.” The second is the Red Sea, he said. He named greenhouse gases, and supply chain tensions as the third and fourth.

Lange noted that there has been successful mitigation, pointing to the Grain Corridor initiative enabling vessels carrying grain and fertiliser from Ukraine and Russia to developing countries. “That’s covered by marine insurance mainly in London and still ongoing.”

Cover is still available for Red Sea passages despite the threats to commercial shipping from Houthi rebels in Yemen. “We’re in close touch with shipowners and shippers,” says Lange. “We can’t influence geopolitics, but we can help our clients come up with solutions, such as re-routing clients around Africa.”

Shipping was excluded from the 2015 Paris Agreement on climate change and the industry has committed only to emissions of greenhouse gases being close to zero by 2050. “That means we have to start immediately, and it has some safety implications,” said Lange, citing the use of fuels such as hydrogen or ammonia, which are highly toxic.

Supply chain issues remain a problem, covering everything from container vessel fires to the Suez Canal blockage by the Ever Given in 2021, and drought leading to shortages of capacity in the Panama Canal. Port congestion is widespread.

Helping the underinsured

For Michael “Mitch” Rellosa, trustee and executive director at the Philippine Insurers and Reinsurers Association, the focus is the underinsured. Companies such as Card MBA, Pioneer Insurance and Surety and Fortune Insurance service the portion of the population who cannot afford traditional insurance products.

“These are microinsurance products, and the Philippines leads the way in that field,” Rellosa said. “Microinsurance is no different from traditional insurance but delivered in bite-sized pieces.”

He describes the poor in the Philippines as the “majority of us”—subsistence farmers, fisherfolk, and operators of “mom and pop shops” and microenterprises. “They might not be indemnity based—you don’t insure businesses for the whole sum—but enough to bridge their needs during a calamity,” he said.

This, he added, is where parametric insurance comes in. “It enables an immediate payout.”

Takaful—insurance in accordance with Islamic principles—is another potential growth area. Two takaful companies have been approved by the Insurance Commission of the Philippines, Rellosa noted. “The Muslim population is less than percent of the total population—but the need is there.”

Triple trouble

In Thailand, a major consideration is disaster insurance, said Somporn Suebthawilkul, president of the Thai General Insurance Association. He said three major incidents over the past 20 years have tested the industry, which has tried to focus on protecting insurance buyers.

The first one was the 2004 Boxing Day tsunami, which killed more than 200,000 people worldwide, including in excess of 5,000 in Thailand. “We mobilised our workforce to help the people and we did not have parametric insurance at the time,” Suebthawilkul recalled. “But we approached our clients, and we pay them first.”

Ten years later Thailand suffered the worst floods in its history, extending from the northern part of Thailand down to Bangkok. “We did not have a single legal case against the insurance profession,” he said.

The third disaster was the COVID-19 pandemic. Thailand was badly hit because of so-called “lump sum” policies—short-term policies which paid out a sizable amount when the policyholder contracted COVID-19. Non-life insurers benefited at first from the enthusiastic uptake of these policies, which generated high profits at that time. But a prolonged wave of infections led to claims for payouts straining the balance sheets of several insurers. 

“Five insurance companies went bankrupt,” he noted.

Today, the industry works to avoid disputes rather than contest them. “A dispute is not desirable,” Suebthawilkul said. “We are more interested in promoting trust and we are lucky in Thailand that the industry works hand-in-hand with regulators to protect the rights of policyholders.”

For more news from the East Asian Insurance Congress conference (EAIC) click here.

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