Lonpac Insurance has made it its priority to focus on some of its newer business arms to ensure it offers the best service to its clientele
Lonpac Insurance is in a league of its own as it listens, learns and acts. The company’s receptiveness to customer needs, and its solid financial performance year after year, have undeniably turned the insurer into one of the winners within the Malaysian insurance market. There is no denying that Lonpac’s status within the industry is unparalleled in its achievements. The insurer has not looked back since its incorporation in 1962 and has stayed true to its corporate mission and philosophy to offer customers excellent products and a service of international standard.
Mission and philosophy
Lonpac does not differentiate; it puts equal weight to its responsibility towards the companies insured, shareholders, employees and the community. The insurer fully comprehends that its employees are its biggest asset. The group takes pride in rewarding good performance and long-serving staff with attractive remuneration and benefits to inspire loyalty and achievement within the organisation. Clients deal with a team of highly trained, fulfilled employees that take care of any insurance need a customer might express.
Lonpac provides a broad range of commercially viable options. Its team delivers innovative products through a continually expanding business network that ensures enhanced client convenience and approval. The group’s long-term shareholder value is boosted through unremitting growth and profitable results as Lonpac consolidates its position as a stable and progressive institution.
Accountability, ethics, integrity and transparency are values it cherishes immensely. These characteristics are applied in its business conduct and complement its strong sense for community support and the manner in which it approaches corporate social responsibility. Its hands-on approach shows as the insurance company regularly participates in social activities that allow it to contribute towards the advancement of Malaysia as a whole.
Malaysia’s central bank recently announced that it has set the country’s performance target for full-year growth to around five percent for 2011, with foreign direct investments expected to surge. The insurance market has observed a gradual yet steady development due to globalisation which has brought about many market opportunities and fuelled healthy competition. Lonpac has expanded in tandem with the growth of the Malaysian economy and its performance has proven superior to the average growth of the country’s insurance market. Based on industry figures by Insurance Services Malaysia Berhad for the January to March 2011 period, Lonpac grew its gross premium income by 27.07 percent compared to the total market growth of 6.11 percent. The group ranked as fourth largest insurer for that quarter and has maintained its status with unrelenting positive results.
Lonpac recently announced half-year net profits of RM56.27m compared to RM47.17m for the same period last year. The major contributing factor for the significant increase in the net profit for the half year period ending June 2011 was its improved underwriting result, according to its chairman Tan Sri Dato’ Sri Dr. Teh Hong Piow. “We achieved significant improvement in our underwriting surplus, by 19.3 percent, to record an underwriting profit of RM60.5m compared to RM50.7m in the corresponding period the year before. This was on the back of an increased gross premium income of 22.9 percent from RM389.8m to RM479m. Our underwriting results over the past years were superior to those of the industry average due mainly to our stringent underwriting standards and the various business strategies adopted in selecting and targeting preferred risks,” he says.
Following the results in July, Teh Hong Piow announced that in view of Lonpac’s positive performance a single tier interim dividend of 25 Sen per share would be paid. According to the chairman the increased interim dividend payout was part of the insurer’s endeavour to reward the company’s loyal shareholders for their continued belief and support.
A high priority is placed on strong risk management of assets and liabilities as well as strict in-house control in managing the group’s operations. International rating agencies gave it an A- credit rating, reaffirming Lonpac’s financial strength and reliability in the insurance market. Teh Hong Piow believes the recognition by the agency points towards Lonpac’s ability to maintain an encouraging underwriting performance, in spite of the competitive operating environment in its core market place. It moreover reflects the group’s adequate capitalisation, broad distribution platform, and its aptitude to manage profitable growth.
“The results mirror our progress positively. They are evidence of the diligent and active implementation of business plans drawn up for both the short-term and long-term goals and objectives of Lonpac. The group’s gross premium production is growing in line with its target currently, and we believe that the underwriting results will also be achieved by the financial year-end,” the chairman says.
The recognition afforded to Lonpac by the ratings agency A.M. Best has not only assisted the group in securing several international accounts but allowed them also to be considered as partner for multi-national insurers for their global-wide business. “Currently we represent the RSA Group in the UK, FM Global and Chubb Group of Insurance Companies in the US, Fubon Insurance in Taiwan, and NIPPONKOA Insurance Japan in Malaysia,” Teh Hong Piow notes.
Products and services
Lonpac engages in underwriting a broad variety of general insurance products and services in Malaysia. It prides itself in offering outstanding customer service that goes the extra mile to garner the satisfaction of its customer base. Chairman Teh Hong Piow believes clients deserve to have a pleasant experience when interacting with Lonpac on every level. In his opinion this can only be achieved by making all transactions straightforward, transparent, convenient and friendly for them. The chairman notes: “We have our KPIs for policy issuances, claim resolutions and enquiry responses. In order to guarantee standards are always complied with we conduct audit to make certain that the set parameters are observed.”
Covering the full gamut, it offers business and personal coverage within divisions such as health, fire, liability, motor, accident and scheme insurance. All of these are easily accessible for clients who can also use Lonpac’s complimentary 24-hour E-assist service. The facility offers emergency motorcar and home assistance programmes and is just a phone call away to policyholders.
Lonpac’s key business line is in the fire property class however, where it ranked in second place in 2010 nationally and commanded an 11.2 percent market share within the industry. Teh Hong Piow says: “We continue to develop strongly in this sector. For the first quarter of 2011, Lonpac grew 19.44 percent for fire compared to the overall market growth of 1.5 percent.”
Despite its achievements the company does not rest on its laurels and understands the importance of continuing to work hard to attain new successes. In light of that the company has made it its priority to focus on some of its newer business arms to ensure it offers the best service to its clientele. The emerging products in their business package entail marine, engineering and bond insurance, and are all thoroughly thought through to provide the most comprehensive coverage to entrepreneurs. “Lonpac’s new area for growth concentrates in the marine cargo business, as we aim to build this sector into a substantial contributor for our gross premium income and underwriting profits,” the chairman says.
More specifically, marine insurance covers against damage or loss to goods during the course of transit by air, sea, land, and is designed to fit the requirement of each policy holder. Customers can choose from a selection of insurance options such as the “all risks” provision under Institute Cargo Clauses A or C. Clause (A), which is an all-encompassing service, covering theft, pilferage, non-delivery, fire, grounded or sunk vessels, water damage, and explosions. Clients may only require Clause (C) however, where merely major casualties such as fire, explosion, capsized and grounded vessels need to be insured.
As cargoes are shipped to destinations internationally, Lonpac has secured the services of international–class surveyors and settling agents to assist customers and their buyers in case of loss or damage while the cargo is en route to its destination. Although the group provides a comprehensive service, Lonpac is now reviewing various strategies to tap further into the marine insurance market. “We are continually re-evaluating the work processes such as connectivity and ease of application for the benefit of our customers,” the chairman says.
The team’s commercial awareness and business acumen assist the company in staying in line with market expectations and surpassing those on behalf of its customer base. Lonpac is expanding its analytical infrastructure by upgrading its business intelligence system. Significant progress has been made already, Teh Hong Piow explains: “Our business intelligence system has enhanced our business analytical capability and has made it possible for us to review our business strategies in a more informed and detailed manner at a shorter interval period.”
In addition, the chairman also believes that his clients would further benefit if given the chance to fully comprehend what the risk exposure and the necessary risk mitigation for their businesses would be. “The timely information provided by our business intelligence system allows both parties to analyse and assess the required risk improvement methodology.”
Corporate responsibility plays a vital role to Lonpac, which is fully committed to fulfil its CSR and contribute to the realisation of a sustainable future by drawing on strengths based on its core activities. This is reflected in the company’s dealings with clients, employees, shareholders and the community as a whole. The team focuses on the responsibilities emphasised in its corporate philosophy, to maintain high integrity through ethical business conduct, outstanding corporate governance practices and the enhancement of the shareholders’ value. Lonpac creates an encouraging and safe working environment on behalf of its employees by getting involved in ensuring their welfare, safety and health. Furthermore it minimises the ecological impact of its actions by implementing environmental friendly work processes.
Initiatives with the aim to preserve the environment are undertaken throughout the year by the group. In addition, Lonpac encourages an environmentally friendly working atmosphere through efficient recycling practices but also by participating in communal events. Some of the most high-profile campaigns included a jungle walk at Hutan Pendidikan Bukit Gasing to help raise awareness for the appreciation of green surroundings and the conservation of nature. Most recently the insurer organised a project to elevate alertness within the community about nature. The event, “Lonpac Go Green, Let’s Hunt” was a treasure hunt for the public, and was yet another example of the group’s commitment to the country. In line with this the company also launched the “I Love the Earth. Reduce-Reuse-Recycle” campaign at Berjaya Times Square, in collaboration with the China Press, Berjaya Times Square, Oriental Food Industries Holdings Berhad and Spritzer Berhad.
Caring about the community
Continuous dialogue and engagement with its people, be they employees or members of the community are key to progress, the company believes. Interaction is considered invaluable by the group which relentlessly pursues new ideas and responds to market feedback. Lonpac’s employees are encouraged to participate in external programmes, local industry seminars, and a range of workshops organised by relevant institutions including the Malaysian Insurance Institute and the General Insurance Association of Malaysia.
The insurer has been true to its promises as an organisation and has since its incorporation never disregarded its role for Malaysia. Lonpac fulfilled its function as a socially responsible corporate citizen in the community through a range of activities that aided in the well-being of society at large. In 2010, alongside the Ministry of Transport Malaysia, it launched a road safety campaign themed “Buckle Up, it is the Law.” It was organised in support of the government’s drive to reduce intercity road accidents and aimed at reminding Malaysian drivers of the significance of road safety. Over a year ago Malaysia changed its law on rear passenger seatbelts fastening, making it obligatory for everybody to wear them. Lonpac believes there is still a need to regularly remind Malaysians to buckle up for their own safety.
In spite of Lonpac’s swift development and astounding progress the insurance group does not take anything for granted, and continues its diligent pursuit for the top. The insurance company is perpetually preparing for any legal and future changes within the insurance market. Improvements and growth are constantly on the chairman’s mind when thinking about which steps to take next on behalf of Lonpac’s clients, employees, and shareholders. “The main focus for the company is to strengthen its technical skills further and to expand by ‘quantum leaps’ in the medium term. We need to prepare and be ready for the eventual liberalisation of the insurance industry. Moreover, we need to build even further and continue to fine-tune our strategies in line with the current market development to capture an even more sizeable share of the preferred risks. We will achieve this through investment in human capital and a continuous enhancement of work processes, risk management, delivery system and capital management,” Teh Hong Piow states.