The insurance industry of Sri Lanka has undergone a rollercoaster of a journey over the past few years. Showcasing its resilience in overcoming the hurdles presented by the pandemic, the Life Insurance sector has incurred many changes. Lasitha Wimalarathne, the Secretary of the Insurance Association of Sri Lanka (IASL) discusses his insights into the sales force development seen within the Life Insurance industry and how it has adapted by transitioning to digital platforms to carry out business.
Q: Considering the onset of the pandemic, please give some insight into the current scenario experienced by the insurance industry in Sri Lanka.
A: It is no secret that 2020 and 2021 have been complete game-changers for industries across the world. The same can be said for the Life Insurance Industry of Sri Lanka. The ongoing pandemic has posed many challenges and threats to both service providers as well as customers. Owing to the current market conditions, insurers have taken drastic measures to address increased health needs. Multiple players have developed many health-related insurance solutions, addressing concerns related to the increasing demand for health products. Moreover, companies are continuing to honour claims related to COVID although claims related to a pandemic have been excluded from such contracts.
In reviewing performance during the first half of 2021, the Life Insurance industry has shown a 30% growth in terms of its Gross Written Premium (GWP) with forecasts of promising growth during the year. Keeping in line with the ‘new normal’, the entire industry has opted for virtual and digital platforms in conducting day-to-day operations while training and developing its employees. The main focus now of employers across the industry is to get staff and advisors vaccinated, as it seems to be the only way to move forward with the pandemic.
Q: What are some of the challenges that have come to the forefront during the pandemic?
A: The current pandemic has indeed thrown several challenges into the mix and is reshaping the entire industry as a whole. Life Insurance is a long-term contract and most often in such contracts, the ‘first impression’ or the first meeting between the customer and the advisor has a significant impact on generating policy. Given the current risk, the main challenge faced by insurance advisors is to obtain appointments as customers are reluctant to meet advisors face to face.
Further, lead generation is another key challenge faced by advisors in our industry. Lead generation goes hand-in-hand with networking and networking is a key element in insurance. Combined with proper and effective training, insurance advisors expand their network through referral-based models and expand their customer base. However, given the current restrictions, advisors are limited to their own networks and they depend on their friends, peers and colleagues to generate potential leads. This becomes a key challenge, especially for newly recruited advisors as the chances to network are very limited. However, some advisors have used their sense of creativity and technology in connecting with potential customers and expanding their network.
Due to the prevailing travel restrictions, it is no secret that the earnings of small and medium scale businesses have reduced significantly leading many to cut down on jobs across the country and ultimately posing severe threats to the livelihoods of communities.
The loss of jobs and slow economic growth, premium collection and retention of policies are some of the other challenges faced by our advisors. As mentioned, human connection is a key driver in our industry, and currently, the entire industry is experiencing a disconnection between advisors and customers, and from what I see, this is one of the main challenges.
Even with such challenges, the entire life insurance industry is geared to move forward and to service its customers during these challenging and trying times.
Q: What are some of your perspectives on the capability of the member insurance companies? How equipped are they and what are some of the products and services they have to offer?
A: The pandemic has surely changed the framework of the industry, forcing players to opt for more sustainable business practices. Member companies have aligned their business strategies and operations digitally to serve customers more efficiently during these challenging times.
To address another growing concern, as the usage of digital platforms has increased significantly during the past few months, the frequency of customers visiting physical spaces, be it a bank or any financial institution has greatly reduced. Hence, if we are to sustain the Bancassurance model of the industry, it is wiser for insurers to develop bundled products, addressing the current needs of their customers and combining these solutions with products offered by the bank. This would help provide a more holistic solution, capturing the best features of banking and insurance, thus benefitting the customer as well as the businesses.
The current challenges have reshaped the industry and as a result, most of the key operations are now being handled digitally. Today’s digital insurance advisors utilize digital spaces to connect with their customers and to generate potential leads. Customer service has also taken a digital turn with players introducing various apps, sites and solutions to serve a customer more efficiently. Moreover, day-to-day activities such as underwriting, policy management and settlement of claims too happen digitally.
Q: What are some of the new developments that have arisen since 2020?
A: Since 2020, we have witnessed significant changes and developments within the industry. The digital transformation of the industry and insurance companies opting in for agile and sustainable distribution, as well as operational models, have changed the outlook of the industry. Almost every key function of an insurance company is now being handled digitally and companies continue to invest further to develop more efficient and sustainable solutions.
Further, every key function related to recruitment, from the interviewing process to training and development is being done digitally through webinars and various programs.
Brands continue to invest more and more in enhancing digital infrastructure related to day-to-day operations to ensure a smooth flow of operations. As the concept of a Digital Advisor is being currently being developed, the number of non-face-to-face presentations and pitches has increased significantly. As mentioned earlier, advisors have combined their digital capabilities and creative thinking to generate leads across social and digital platforms.
Continuation of such sustainable initiatives will ensure that the industry will move forward despite all the ongoing challenges.
Q: What are some of the expectations during and beyond Insurance Month?
The current pandemic has taught us many valuable lessons. Most of all, taking care of ourselves and our loved ones, and that nothing is more important than that. As the public is aware of this fact and has realized the value of having a fallback plan when uncertainty strikes, the demand for life insurance, especially for health-related products has increased significantly. As an industry, we expect the same growth momentum which we witnessed during the first half to continue throughout the year. As the member companies are geared with sustainable business models, innovative sales, and servicing platforms, and with the increase in the per capita income levels, we are of the firm view that we will be able to double the size of the industry within the next 3-5 years.