Richard Marrison, National Sector Leader, Insurance, KPMG Australia
Mark Bain, Head of Insurance Consulting, KPMG China
My name is Richard Marrison and I lead he insurance team here in Australia, and I’m joined by Mark Bain, Head of Insurance Consulting in Hong Kong and China. Mark’s kindly taken some time out to answer some questions about the insurance industry both globally, in Asia and here in Australia.
Mark, what are the major forces that are dominating the insurance landscape globally and what are differences between Australia and Asia that you see?
It’s an interesting question because obviously there’s different levels of maturity in the markets globally, particularly Asia which is so much younger level of maturity and difference in terms of the understanding of consumers. But we see a lot of commonality in terms of factors that impact.
Distribution optimisation is key; how you actually sell and get product to the market and how effective you can be in that space. We see, obviously, the impact of a low interest rate environment which is having insurers having to rethink where they drive profitability out of product, how they distribute income back to the consumers and policy holders.
We’re seeing increased regulation which is a major impact across the marketplace, both globally, Asia and Australia, particularly around consumer protection. We’ve seen things like FOFA coming into Australia. We’ve seen a lot of implications and rules around investment link type products being sold throughout Asia, and that is obviously having a major impact in terms of how manufacturers have to deal with and manage their portfolios.
Mark, you are one of the authors of the Valued Insurer, which is a global piece of research that looked at the attributes of a number of insurers to identify why they they’d actually act before the market, and then identified a number of key attributes that were common across those insurers. Maybe you can give us some examples of what you found as part of that research.
Sure. It was an interesting piece of research obviously because we actually looked at organisations that had been successful either at a target market or a target geography or a specific strategic focus. And we saw some common threads come out of that in terms of why they were successful. There were probably four key ones.
First one was a relentless focus on customer at the heart of everything they do, whether it be how they interact, what product and services, basically a complete mindset around dealing with customer needs as part of that process.
Secondly was in relation to strategy, having a very solid strategy with a key action plan that’s driven right through the organisation; so linked to that vision and with customer at the heart of it that was key.
Agility, in terms of their ability to make decisions and execute, and actually monitor and drive that right through the organisation.
And trust. Very simply, in the economic times that we’ve had over the last few years the financial services industry has had trust issues. And these organisations have realised that, they’ve taken steps to address that with their consumers, and basically there’s been a flight to quality in terms of some of these organisations from a longevity perspective and that’s had an impact on their profitability.
Mark, are you able to give a real, practical example of an organisation that you’ve seen that’s actually taken some steps forward towards adopting some of these attributes.
I’m working on of the largest projects KPMG’s doing at the moment on data analytics and propensity modelling, and it’s very much focused on new channel type approach and seeing where the world is going in terms of direct distribution of insurance products. And this organisation is focusing very much on driving that as an increased and a new channel to drive profitability of the company.
And customers are at the heart of it. So knowing their customer, understanding how they want to interact, understanding their needs, where they’re at in their life stage, what products and services are going to fit into that space, and then being proactive in terms of making offers to them through direct channels of those sorts of products. And it’s having a huge impact. They had a 40 percent growth in profitability last year, and that’s only at the interim stages of implementing that strategy.
Mark, I’d like to thank you for your time with us here in Australia, it’s been very informative and thank you very much.