Global Consumer Insurance Survey 2012 Asia-Pacific by ERNST & YOUNG

The Asia-Pacific region is one of enormous growth and opportunity for insurers. It is also one of significant diversity. In developing countries, agency sales forces dominate and play a vital social role in making products accessible to low earners. The development of insurance markets in western- Developed countries, however, indicates that the emergence of more independent, but also expensive, distribution channels often ultimately leads to the demise of traditional agency sales forces.

In the emerging markets of Asia-Pacific, the race is on between insurers to secure new customers by selling them their first insurance product. In the more developed Asia-Pacific markets, the battleground is shifting to focus on securing a greater share of the market and increasing retention by deepening the customer relationship and cross-selling.

Australia, perhaps the most mature market in the region, presents an unique dynamic with compulsory retirement savings. The Australian challenge is to overcome customer misconceptions of their insurance protection as part of their superannuation plan, create products that complement and fill gaps that exist in this cover.

Similarly, the region exhibits a wide diversity in non-life insurance. Distribution channels in particular vary greatly across the region, spanning traditional agents and intermediaries through to the continued strength of bancassurance and a continued emergence of direct and online channels. As a result, Asia- Pacific insurers face a complex array of market dynamics and customer preferences.

Despite this diversity, some consistent themes have surfaced from our research that present both opportunities and challenges for insurers.

Asia-Pacific life and pensions key findings

• The good news is that customer confidence in the insurance industry has been less affected by the financial crisis and recession than other financial markets. However, there is no room for complacency because a significant minority of customers still are not certain that they have the right products to meet their needs.
• Customers are demanding simpler and easier-to-understand products.
• Among the rapidly growing number with internet access, there is a very significant increase in customers who are conducting their own research and who expect clear and transparent information from insurers.
• With some notable exceptions, customers in most markets surveyed perceive that insurers do very little to try to retain their business. Accompanying this perception is a desire among customers for more, and improved, communication from insurers (as opposed to agents or intermediaries).
• Customers perceive that the insurance industry is falling behind other consumer-focused businesses in rewarding loyal customers.

Alongside these opportunities there is an underlying threat that an increasingly well-researched and aware customer base, combined with potential for regulators to apply retrospective regulation, will increase the long-term mis-selling risk for those insurers who are not diligent in maintaining leading practices with well-trained agents.

We believe that a major opportunity exists within the agency market for insurers to shift the focus of their strategy from product profitability to customer profitability. This is similar to the journey taken in mature markets such as Australia and elsewhere in the world.

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