THE INSURANCE SECTOR must catch up with the banking industry in terms of digitization to boost its operations and ensure continued growth, industry officials said.
“You see the banks, they’re way ahead of the insurance industry. We’re both considered financial institutions, but we’re playing catch up to the banking industry,” Philippine Insurers and Reinsurers Association, Inc. Executive Director Michael F. Rellosa told BusinessWorld in an interview last month.
Mr. Rellosa said technology that aims to aid insurance agents is currently being developed with the help of both foreign and local technology companies.
“We realize the importance of agents and we don’t want to disenfranchise them. So, we’re equipping them to be able to better service our clients or our common client via technology,” he said.
“As we harness the power of insurtech, we feel that it can only make our Advisors’ performance and productivity stronger. It doesn’t necessarily mean cutting or stopping recruitment — if at all, it’s just going to make our Advisors better at what they do,” Sun Life Philippines Chief Operations and Digital Enterprise Officer Gaurav Mishra said separately.
Mr. Rellosa said the industry relied on the legacy systems before the coronavirus pandemic, but the lockdown required them to use technology to reach out to clients.
“If there’s anything positive that came out of the pandemic, it’s the realization of the industry that we really have to tech up,” he said.
He added that the implementation of International Financial Reporting Standard (IFRS 17) in 2025 will require insurers to adapt.
“It’s going to necessitate a huge change in the way we currently do things in our offices. So, even the legacy systems that I was talking about may have to be updated or changed altogether to be compliant with IFRS 17 requirements,” he said.
Mr. Mishra said IFRS 17 will “allow greater comparability and increase transparency.”
“Legacy systems are often the cause of insurers not being agile and nimble enough to allow instantaneous and high-volume digital transactions. Larger scale modernization projects are often needed to make these capabilities possible,” he said.
“Legacy mindset also largely contributes to the difficulty, as it stunts and limits creativity in implementing new insurtech-infused processes, business models, products, and ways of working,” Mr. Mishra added.
While banks and insurance companies could be on similar ground in terms of digitization, banks are more aggressive in implementing new technologies, he said.
“As clients transact more frequently with banks, digital transformation is more accelerated since clients have high expectations on digital services, and banks compete for attention,” Mr. Mishra said.
“This is not to say that the insurance industry is more relaxed — ultimately, we also compete for clients’ attention, and more and more — digital capabilities are becoming one of the top reasons why clients choose an insurer,” he added. — A.M.C. Sy