Cathay Life is the holder of many firsts in Taiwan’s life insurance industry – the first publicly listed life insurance company, the first life insurer in Taiwan to enter China and Vietnam, and the life insurer with largest market share. In 2012, Cathay Life’s 50th anniversary, we made a commitment to keep building on and maintaining our leading position over the next 50 years.
Many success stories in the financial industry turned sour in the past few years. As a result, a number of executives have recognised that good times do not last forever. Based on our steady and conservative operating philosophy, Cathay Life successfully came through the global financial crisis. In fact, in 2012 our growth in total assets exceeded 50 percent over 2008.
Firm footing in Taiwan
Founded in 1962, as of 2012 Cathay Life had total assets of NT$3.6trn, and approximately eight million customers holding 15 million in-force life insurance policies. It is the leading life insurer in Taiwan and has dominated the industry for more than 50 years. At the end of 2011, Cathay Life believed that global financial markets would continue to be volatile and mired in uncertainty. Further, a slow economic recovery coupled with high unemployment and fiscal contraction in the majority of European countries and the US resulted in weak market demand.
As a result, domestic economic growth was also adversely affected and added to the challenges faced by the financial sector. This was one of the reasons we decided to undertake a strategic transformation. 2012 also marked the 50th anniversary of Cathay Life, and was therefore a special year.
To set the foundation for maintaining our market leading position over the next 50 years, Cathay Life embarked on a three-year transformation journey in 2012. This transformation is focused on vision setting, performance improvement, potential strategic market expansion, and sales channel development strategies.
The project does not dismiss the efforts of the past, but instead builds on the success of the past to seek ways to improve and actively meet the challenges of the future. It started with analysing the internal and external environment, and the results are used to create and inform the visions and strategies for the next half-century.
From our analysis, Cathay Life confirmed its core values of “Integrity, accountability and innovation” while shaping a new organisational culture. In the face of an intensely competitive environment, Cathay Life led the market by reorienting its product strategies to those based on customer value, the protective nature of insurance, and an emphasis on customer needs in order to maintain long-term, steady growth.
Key decisions of the transformation
Before 2012, in order to achieve the largest market share, life insurers in Taiwan focused their efforts on selling NTD-denominated, single-premium traditional products. Although this product strategy allowed life insurers to gain market share, it was unhealthy for the insurance industry.
Due to the limited size of the domestic investment markets, the sudden and significant increase in premium income made it difficult to find the proper investment tools, and to execute proper asset-liability management.
With the goal of achieving long-term, stable income and maintaining a healthy financial position, Cathay Life adjusted its product strategy and operational direction. Instead of chasing market share, we seek to maximise the value of new business (VNB) and to optimise the balance between risk and return. Given our market leading position, Cathay Life influenced the entire industry, and the value-oriented strategy is leading the industry towards healthier conditions.
Also, in adjusting the product strategy Cathay Life also led the industry to pay closer attention to the customer need for protection and long-term retirement planning. As a result of the concerted efforts of our employees, we reported first-year premium equivalent (FYPE) of NT$92bn in 2012, with market share of 23.2 percent and growth of 14 percent over the previous year.
Our total premium income for the year amounted to NT$561bn, representing market share of 22.7 percent and growth of 8.9 percent over the previous year. Both results positioned us as the number one in the market.
To further implement customer value-oriented strategy, we urged our sales agents to visit customers regularly to truly understand their needs, and to carry out customer-segment marketing based on their attributes, so as to improve the quality of our service.
To enhance service quality, Cathay Life became the first life insurer to introduce mobile insurance services. The new mobile services platform offers streamlined processes that shorten the processing time greatly for new applications, underwriting and fee payment.
Satisfaction through positive numbers
The quality of Cathay Life’s services has been recognised by our policyholders. According to a customer satisfaction survey conducted by a professional polling agency in 2012 on behalf of Cathay Life, over 92 percent of our customers were satisfied with our service, which marks a significant improvement over 2011 and the best performance in customer satisfaction over the past five years. Moreover, through July 2013, approximately 31 percent of our new policies have been completed via our mobile insurance platform.
With respect to overseas markets, the company has managed to maintain growth and expand into larger markets in Asia. As the first Taiwan life insurer to enter China, Cathay Life began operating in Shanghai in 2005 and now has 10 branches – including the head office – in China.
Similarly, in 2008, Cathay Life was also the first Taiwanese life insurer to enter Vietnam and began operating in Ho Chi Minh City. There are now six branches – also including the head office – in Vietnam. Going forward, the company will continue to strengthen its presence in China and Vietnam, while evaluating opportunities to expand into other overseas markets as we seek to become a leading financial institution in the Asia-Pacific region.
After a year of hard work, the company’s performance was unanimously recognised by a broad range of global professional institutions. In 2012, it was the first insurance company in Asia to pass the SGS Qualicert certification and first insurance company in Taiwan to receive ISO 14001 certification. In 2013 Cathay Life won gold medals in all seven categories of the Taiwan Insurance Best Performance awards, as well as from World Finance, which recognises the achievements of insurance companies globally.
In order to reinforce the changes occurring within Cathay – Cathay Life’s parent company – Cathay Financial Holdings decided to renew the Corporate Identification System for the group. The tree logo was transformed from a solid and steady tree, to a more modern and dynamic tree, conveying Cathay’s mission to “Enrich your life”.
Shift in focus for more direct results
Looking ahead, Cathay Life believes the demand for regular-pay products will continue to grow because they satisfy the protection needs of customers. They also bring long-term, stable revenues to insurers and allow for the proper management of asset allocation and risk control in a low interest rate environment. Major insurers are all beginning to follow a similar strategy and are increasing their focus on selling regular-pay products.
Believing in new technology – such as mobile technology and remote-access tools – the company is introducing sales practices that are more widely used in customer service. Consistent with the trend of offering more efficient and convenient service, use of mobile technology has become increasingly important.
Major insurers are all starting to offer new technology services, with some building smart-phone insurance platforms for the agents and some providing applications for policyholders. As a result, customers are able to enjoy insurance services any time, anywhere.
We believe cross-strait financial cooperation will continue to grow deeper and broader, and this will benefit the development of the life insurance sector. For example, RMB-denominated investment-linked products were introduced in February this year, and now serve as an alternative financial tool to meet the RMB needs of customers.
The service trade agreement signed in June will further assist the financial industry as it expands in the cross-strait market. In the highly competitive and constantly changing business environment, Cathay Life will continue to keep growing with the times. As we stand on the foundation of our first 50 years, the company is committed to making the next 50 years even better, allowing our tree to continue to flourish.