Smart Investor Malaysia

Malaysian Insurance Industry: Weathering the Covid-19 Storm

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The pandemic has provided an uncompromising test of insurance industry’s capabilities and resilience.

By Bernie Yeo

To say that the impact of Covid-19 pandemic on the global economy has been devastating is a gross understatement to say the least.

With the global economy expected to shrink by 3% – the worst downturn since the Great Depression of the 1930s, according to the International Monetary Fund (IMF) – experts have warned that the crisis is not going away anytime soon, and will have long-lasting and far-reaching repercussions on the way we live, work, and conduct business.

The insurance industry, too, is not spared from the onslaught of the pandemic. Despite the crisis, however, insurers have responded quickly to the crisis. In fact, amidst the coronavirus outbreak, it has been business as usual for the Malaysian insurance industry since the onset of the Movement Control Order in March 2020.


Business as usual

According to the General Insurance Association of Malaysia (PIAM), its member companies remain committed to providing essential services to their customers in a safe manner, whereby insurers continue to issue guarantee letters, process claims and renew policies during this period.

“Throughout the pandemic, PIAM member companies have proactively ramped up measures to assist policyholders and lessen their financial burden. In response to the government’s call (through the Ministry of Health), PIAM has contributed RM2 mil to the insurance and takaful industry’s RM8 mil Covid-19 Test Fund.

“This is part of the insurance industry’s effort to help the affected rakyat cope with the immediate health effects of the virus while enabling more Malaysians to undergo Covid-19 tests to help contain community outbreaks,” it says.

Some PIAM member companies have also offered extra coverage for Covid-19 to their customers with no increase in premiums while some have waived certain exclusions on medical policies where the pandemic is concerned.

As for the life insurance sector, Life Insurance Association of Malaysia (LIAM) chief executive officer Mark O’Dell reveals that all life insurance companies in the country have put in place a very robust business contingency plan even before the MCO was implemented.

As a result, all essential services continue uninterrupted, with the insurance sector being expected to stay resilient despite the considerable economic impact of the pandemic.

“Policyholders will continue receiving their services either online or assisted by Customer Service Centres and even face-to-face (with safeguards on social distancing, of course). In terms of the purchase of insurance products, this can continue to be done online since the introduction of online channels since 2018,” he tells Smart Investor.

In addition to online platforms, insurance products are also accessible via other distribution channels such as mobile phones, banks, insurance agents, walk-ins and post offices. Virtual connections, O’Dell points out, have become more and more popular and in demand due to the restrictions posed by face-to-face communications.

As for insurance agents, companies have been quick to implement facilities to allow them to conduct their sales virtually, and this includes submitting cases via digital platforms. On top of that, virtual training sessions for insurance agents have also been conducted during this period.


Providing relief measures

The onset of the pandemic has highlighted the importance of insurance protection, but yet, the problems arising from the pandemic – countless people have lost their jobs or suffered a steep drop in income, for example – have proven to be a challenge to the entire process.

To help with the situation, the insurance industry has granted a 90-day deferment period/no-lapse guarantee for policyholders who are impacted by the pandemic.

During this period, insurance companies will continue providing insurance protection to affected policyholders if they are not able to pay for their premiums. Affected policyholders must apply to their respective insurance companies to get approval before they can benefit from this relief measure, which was available from 1 April 2020 to 31 December 2020.

To date, more than one million policyholders have benefitted from this initiative with total premiums valued at over RM1.6 bil.

“Insurers are committed to structural repayments to ease the resumption of premiums following the deferral. Various alternative options are offered to the policyholders to help ease their financial constraints or challenges in paying their premiums and to enable them to maintain their insurance protection coverage during the pandemic,” explains LIAM’s O’Dell.

Meanwhile, Syarikat Takaful Malaysia Keluarga Bhd (Takaful Malaysia) chief executive officer Dato’ Sri Mohamed Hassan Kamil says that the company is striving to improve consumer perception towards insurance by capitalising on the positive sentiment towards the industry and greater awareness of the importance of insurance.

“It is our priority to ensure that our customers will be able to enjoy continuous coverage that adequately covers their needs, realising that the pandemic is not just a health emergency but a financially-challenging time as well,” he shares.

Takaful Malaysia is part of the Covid-19 Relief Programme, an industry initiative offered by the life insurers and family takaful operators to provide eligible participants with a three-month deferment period to pay the regular premium/takaful contribution for their life insurance policies or family takaful certificates.

This measure is to ensure that policyholders/certificate holders affected by the pandemic continue to have life insurance/family takaful protection even in the midst of temporary financial difficulties.

In addition to the company’s contribution to the Covid-19 Test Fund initiated by LIAM, PIAM and Malaysian Takaful Association (MTA), Takaful Malaysia has also introduced an affordable online protection plan called Takaful myClick MozzCare.

Apart from coverage against the ever-present dengue and zika viruses, the plan also offers a complimentary extension of coverage for Covid-19 at no additional cost for a lump sum cash pay-out of up to RM2,000 if the person covered is diagnosed with the virus.


Awareness comes with education

If anything, pandemic has demonstrated the need for life insurance. However, efforts to increase awareness and educate consumers on the importance of life insurance protection comes with its own challenges.

For the National Association of Malaysian Life Insurance and Family Takaful Advisors (NAMLIFA) President AM Naidu, the association has come up with a series of programmes and courses to help improve the level of competency and professionalism of their members.

“Awareness comes with education, and these programmes and courses are important because this will in turn help our members (agents) to educate their prospects on the importance of insurance and help convert these prospects into policyholders.

“With the agents’ higher level of competency and professionalism, they are able to identify and analyse the needs of their prospects and subsequently, propose a relevant plan specific to the consumer’s needs. This helps to increase the confidence of the public towards the agency force,” he continues.


Digital reckoning for insurance industry

The pandemic has rapidly accelerated the digital adoption rate for many businesses, and in order to survive, many industries have had to cross the digital transformation chasm in a matter of weeks, if not days. The insurance industry is no exception.

Fueled by shifting consumer mindsets and behaviours during the pandemic, many insurers have accelerated their digital transformation to provide the digitalised customer experience that people have now come to expect.

On the takaful front, takaful operators are relying profoundly on their digital capabilities during these unprecedented times to maintain an uninterrupted connection with customers and business partners by offering faster and more comprehensive services through various online and digital platforms, says Takaful Malaysia’s Mohamed Hassan.

The past few months have witnessed takaful operators gearing up their presence on social media platforms to crosssell online products, with the main target being customers who may not have access to intermediaries for face-to-face selling.

“Takaful Malaysia has been able to maintain its resilience in terms of financial and operational aspects due to our solid financial fundamentals and past investments in technology for operational efficiencies.

“We have implemented various digital strategies and infrastructure to develop the online business with a full range of online protection products in the last few years. We have previously witnessed substantial growth in our online motor takaful business as more customers started to realise and take advantage of the great convenience of online transactions, especially during the phased MCO period.”

But despite the urgency surrounding the digitalisation of the insurance industry following the Covid-19 outbreak, the digital transformation of the insurance industry had, in fact, started way before the pandemic, reveals PIAM.

For instance, BNM established its Financial Technology Enabler Group (FTEG) back in June 2016 to facilitate the adoption of technological innovations in the Malaysian financial services industry. A Regulatory Sandbox was also introduced for insurtech players to test their products in a live environment before deploying them.

“Insurance companies have also been strategising and gearing up their organisations’ digitalisation initiatives, and these range from revamping their digital/online communication channels such as websites, social media platforms and chatbots to digitalising their value chains and payment methods,” PIAM remarks.

Concurring with PIAM, LIAM’s O’Dell points out the industry has taken proactive steps in transforming the insurance industry towards digitalisation since 2017.

“While new methods and technologies will impact how business is conducted on a day-to-day basis, we believe that the adoption of technology is inevitable in order for us to be more efficient, responsive and productive to connect with our customers,” he says.

Citing comparison websites such as GoBear Ltd, GetCover Sdn Bhd and RinggitPlus as examples, O’Dell urges industry players to make intelligent use of technology to achieve higher productivity and greater efficiency.

“Given the prevalence of digital adoption in other industries, insurance companies cannot risk sitting on the sidelines. Digital technology and insurtech developments will be the future moving forward which will tremendously improve service delivery and customer experience,” he adds.

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