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AIA on a mission to break the cycle of under-insurance

Three years into his insurance tenure, chief executive of AIA New Zealand, Wayne Besant, talks candidly about the cycle of under-insurance that plagues the industry and how to break it.

Monday, October 21st 2013, 6:00AM

Step inside the boardroom at AIA and you will find it at the top of the Exco agenda.  Pop into the Operations hub and you will see evidence of it in the business decisions being made. Take a seat in the staffroom and you will hear it in passing conversations. A belief that the cycle of under-insurance can be broken appears to have taken hold.

By all accounts, this is a far cry from the AIA of old and fighting talk from a key player in the New Zealand life insurance industry. Can it be done? "Absolutely," says Besant "and we have a mandate to do it. At around 2% of GDP, our insurance penetration remains one of the lowest in the OECD. Not to mention that each year there is not a lot of new business, and premium increases are primarily CPI and age-related. With the diversity of the New Zealand population now beginning to outgrow the range of our collective solutions and access points, as an industry we clearly have much more to gain than we have to lose."

Known for his optimism, Besant goes on to describe the silver lining that is available to anyone who really wants it. "From where I stand the market is wide open, both for insurers and advisers. With the changing face of New Zealand, we have more communities to reach than ever before. New channels and products that provide entry points into the market will fuel rather than constrain traditional advice models. And with technology there is still so much more we can do for existing customers. It's exciting."

Nevertheless, the issue of under-insurance is not new and yet to be solved.  Besant is critical of the industry response to date which he says has largely focused on sizing the problem, pointing to existing product solutions and putting the ball back in the court of consumers.  What will AIA do that is different?

"The one-size-fits-all approach won't work, our market is too diverse," says Besant. "Our focus is on engaging communities. We have already built strong connections and designed initiatives to support many under-served New Zealand communities - Asian and Maori in particular. To develop the right solutions we must better understand the people we serve."

However, the adviser community today serves by far the broadest population in the market. Where do they fit in? "Advisers are critical to rebuilding and maintaining the life insurance industry and we believe there's a big opportunity for both new and existing advisers to expand their reach into the New Zealand market."

"For our part, we will actively support advisers who are looking to generate sustainable growth," Besant continues. "They will get the best of everything we have to offer."

According to Chief Operating Officer, Steven Brunskill, what AIA has to offer is second-to-none. "Over the last two years, we have made an unprecedented level of investment into the technology that supports both advisers and customers and it’s just the beginning - we have many more exciting developments in the pipeline. What's more, amongst a wider group of highly engaged people, we continue to have the best Underwriting and Claims leadership and teams in the business.  We have organised our New Business area to ensure we can accelerate quality new business and deliver exceptional response times relative to market.”

Of course there's always a flip side. Besant goes on to explain that advisers who blatantly churn business will be turned away. "We all know there is an unhealthy level of churn in the industry. That kind of business is ultimately costly for everyone - the customer, the insurer and the adviser. It perpetuates our low growth environment and is preventing the industry from moving forward. It does nothing for our industry.  We will play our part by focusing our efforts on sustainable business."

At last check AIA also had three complementary channels to its traditional Retail and Corporate Solutions adviser business. The Asian-focused AIA Financial Services Network and recently launched AIA Agency team aim to support both existing advisers and new agents to reach key demographic markets. In 2012, AIA also launched in partnership a direct Funeral plus Unveiling product with the specific purpose of engaging traditionally under-served communities, such as Maori and Pasifika.

Although adamant these and more initiatives are necessary in order to connect with under-insured segments, Besant resolutely includes the traditional adviser community in the equation. "We already work with advisers who target these communities - in fact, they are some of our biggest contributors - but we would love to see more focus in this area.  Whether primary or secondary opportunities, such as upsell, new-to-market business is a growth opportunity for everyone."

Having made several structural changes to the business over the last few years, AIA New Zealand is committed to its course.  “It's about future-proofing our business and helping to build a sustainable industry, one step at a time," Besant concludes. "Change is never easy, but our people believe in this because they know it's the right thing.  We're under no illusions that the challenges are great - but the opportunities are greater."

Read more about Wayne Besant at http://executivecomms.com/articlewayne-besant/

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