Is the Taiwanese insurance industry set to dominate Asia?
Fubon Life Insurance executive vice president Tsai-Ling Chao explains why Taiwan's insurance penetration is the highest in the world
According to government statistics, Taiwan’s insurance penetration of 18.9 percent ranks number one in the world. Tsai-Ling Chao, Executive Vice President of Fubon Life Insurance, explains why insurance products are so popular, and discusses how the sector will continue to develop and grow.
World Finance: According to government statistics, Taiwan’s insurance penetration of 18.9 percent ranks number one in the world, showing insurance products’ great popularity among the public. Joining me to discuss how the sector is developing is Tsai-Ling Chao, Executive Vice President of Fubon Life Insurance.
Tsai-Ling, Taiwan’s insurance sector has developed hugely of late; why is this, and why is the penetration rate so high?
Tsai-Ling Chao: Taiwan is a mature market: most people are aware of the importance of life insurance. The acceptance of reinsurance products is very high – especially Taiwan is aging, so it’s a priority. The pensions provided by government and employers are not sufficient, and people have to save for their own retirement – which creates high demand for savings and annuity products.
The other reason is that liquidity in Taiwan is very high. The bank deposit rate is so low that people are willing to transfer their savings to higher return insurance products.
Banks are also waiting to sell insurance in order to earn commission income. That’s why the bancassurance channel grew substantially in recent years.
World Finance: What would you say are the challenges of Taiwan’s insurance sector currently?
Tsai-Ling Chao: The main challenge is regulation change. During the fast growth of bancassurance in the past few years, the FSC changed the regulations to force insurance companies to offer longer duration products, in order to differentiate it from bank deposits. Which makes new business sales more difficult.
The other one is the consumer-privacy protector act, which restricts insurance companies’ ability to acquire leads – and the telemarketing channel suffered the most.
The other challenge is on the investment side. It is very difficult for an insurance company’s investment team to manage risk – and in the mean time generate a decent return under the low interest rate environment.
World Finance: Taiwan’s government does have some policies in the works aimed at building up competitiveness in the insurance sector to expand business in Asia – how are you responding to this?
Tsai-Ling Chao: We feel very positive about the policy. Taiwan’s market is very mature, and we have to go abroad to pursue growth opportunities.
There are many countries in Asia still in the developing stage. They have pretty big and young populations, just like Taiwan many years ago.
Fubon has a lot of insurance management experience, and is keen to expand into other countries. We have been reviewing many cases, and are open to all possible investment opportunities.
World Finance: Fubon Life has been one of the leaders among Taiwanese life insurers – so what are your plans for future growth, and how are these responding to the sector’s needs?
Tsai-Ling Chao: Fubon’s strategy is focusing more on value than volume growth. We feel that there is huge demand for retirement products in Taiwan, and we are trying to meet customers’ needs.
In order to do that, we have to grow our agency force more aggressively. Fubon’s agency force is mostly concentrated in the north and the metropolitan areas. Our focus for the next few years is expanding into the south and rural areas.
Also, recruitment for the total industry has been pretty challenging in recent years. Fubon’s agency force is still growing at 10 percent per year for the past six years. We usually recruit new agents directly from campus, and have built up a reputation as the most desirable insurance company among young people. We try to keep them by providing good training and competitive products.
The back office support is also very important, to make sure we provide a good service to our clients.
World Finance: And finally, how do you ensure your clients receive the appropriate cover they need – and do you review existing policies for clients?
Tsai-Ling Chao: We have built up a needs-based sales process and trained our agents to identify clients’ needs before selling the right products.
We also have a call-out system from home office to make sure the customer understands the products they have bought.
For existing customers, we use our CRM to identify their needs and send the information to our agents, in order to approach them. We invite them to attend seminars or other activities to help them review their needs.
We also allow them to convert their policies to other products if they don’t fit their current needs any more.