LONDON--(BUSINESS WIRE)--Technavio’s latest report on the life insurance market in Southeast Asia provides an analysis on the most important trends expected to impact the market outlook from 2016-2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
The top three emerging trends driving the life insurance market in Southeast Asia according to Technavio research analysts are:
- Rise in use of closed-book operations in BPOs
- New distribution channels
- Improved profitability through better customer segmentation
Rise in use of closed-book operations in BPOs
In Southeast Asia, the life insurance vendors are looking for strategies that can help them reduce operational costs. One of the strategies that may gain momentum during the forecast period is the outsourcing of closed book operations to BPOs. Closed book operations help top life insurance vendors and pension providers to transfer products to a third-party provider for better operational efficiency. While a closed book operation does not generate any revenue, it can have claims and service expenses. Therefore, life insurance companies try to outsource closed book operations, and this creates an opportunity for tier 1 and tier 2 life insurers. Such a strategy also helps top vendors to avoid legacy systems, which are expensive and risky.
“The closed book initiatives are driven by technology, where the life insurance companies can identify the BPO as a system replacement or part of modernization step. In addition, the closed book operation helps internal IT systems to produce materials required for management and compliance reporting purposes,” explains Bharath Kanniappan, a lead analyst at Technavio.
New distribution channels
As life insurance products are complex and lack transparency, many customers, especially in the middle-income group, are opting for other savings options. As a result, many of the top life insurance vendors have started offering basic life and disability insurance policy in office. They are also conducting workshops to promote such policies, and this has become an integrated marketing tool. The companies are also clubbing different life insurance products into one customer-friendly package. This has encouraged many employed policyholders to save money for retirement and avail tax benefits. Therefore, life insurance companies must formulate different strategies that are related to income protection within different customer bases. This would help life insurers to build a long-term relationship with employers and to understand their needs.
Improved profitability through better customer segmentation
Top life insurance companies are trying to provide embedded services in protection products through innovative annuity options. These products are designed to offer retired employees with optional medical care - in addition to lodging facilities. “This can be done when the life insurance companies establish a wide customer base and understand customer reaction to each product. For this, the companies are using the multi-pronged approach, which involves software, technology, and strategies,” says Bharath.
The life insurance companies should provide an attractive package to generate new revenue sources, such as protection products like term life insurance, disability insurance, and annuities, which are gaining popularity, thus offering new sources of income, generating stable margins, and diversifying risks. Under the new capital standards, diversification can help minimize capital requirements. The products appeal to two significant sources of relatively untapped demand, namely the emerging markets and the low-income segments of mature markets.
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