The year 2020 was expected to be a catalyst to economic growth, with even the World Bank citing the Philippines as having one of the most dynamic economies in the East Asia Pacific region, rooted in strong consumer demand, supported by a dynamic labour market and strong remittances. “Business activities are buoyant with notable performance in the services sector including the business process outsourcing, real estate, and finance and insurance industries,” reported the World Bank. These opinions were grounded on sound economic fundamentals and a globally renowned competitive workforce.
However, with the negative effects of the global pandemic on the economy, said projected growth has significantly slowed down in 2020. In fact, the Philippine economy fell into recession as GDP spiraled down by 16.5 percent in the second quarter of 2020 from the previous year, according to the Philippine Statistics Authority. Nonetheless, economic growth is projected to slowly rebound in the latter part of 2020, with an expected 7.3 percent contraction, and then further improving in 2021 and 2022 on the back of expected global improvements as well as the election-related spending boost in 2022.
The non-life insurance landscape
In 2019, total gross premiums written from the local non-life insurance sector grew by 13 percent to P92.479 billion from P81.469 billion in the previous year. However, as a result of the pandemic, the insurance industry, specifically non-life, is expected to be adversely affected by the decline in economy as well as its key industry drivers. With over half the net premiums generated from motorcar premiums, the non-life insurance sector is expected to take a huge hit on its premiums portfolio, especially with new motorcar sales taking a huge 39.5 percent drop as of August 2020, year-on-year. Similarly, other key industry drivers such as the property, stock market, tourism and travel sectors, among others, all suffered huge setbacks. Nonetheless, with lower claims incidences during the lockdown period and with continued work-from-home (WFH) arrangements until the end of 2020 for most companies, vis-à-vis, lower operating expenses, these may still balance off the expected drag in premiums, thereby resulting in continued profitable operations for the year. Further, with the mandated increase in capitalisation implementation in recent years, the remaining industry players are financially strong and are expected to survive.
We continue to grant full salaries and benefits to all, from the start of this pandemic up to the present day
Interestingly, the pandemic has forced insurance companies to embrace the changes of the new normal – digitalisation of operations was among its top priorities. As indicated in the past by the insurance commissioner, innovations in technology are changing the industry almost imperceptibly. At present, the industry has been thrown into a ‘black swan’ situation whereby most industries, excepting some establishments belonging to what we broadly now call the essential goods and services sectors, have been immobilised.
The insurance industry was considered non-essential and was thus not operational for several months, which propelled insurance companies to embark on more aggressive initiatives towards digitalisation of operations. The insurance commissioner has been pro-actively supporting the industry by extending submissions of regulatory reports and encouraging assistance programmes to employees and sales forces that are dependent on commissions for their livelihood. Equally important, the commissioner allowed insurance companies to implement sales initiatives through digitalisation, information and communication technology, or any similar technological platforms, subject to regulatory requirements.
Turning challenges into opportunities
While every industry and company is subject to shifts in political, economic, social and environmental conditions both globally and locally, it is the goal of Standard Insurance to continuously improve such that opportunities continue to open for us not just locally but globally, and not only in non-life insurance but in adjacent business as well.
Standard Insurance has always been prepared for catastrophic events, so when this pandemic happened, we were able to smoothly shift to remote working arrangements. Our in-house developed systems are all digital and integrated online. More importantly, all our systems are already in the cloud, which allows us to access systems from anywhere and makes the whole cycle of insurance operations possible.
We have assigned our management to one of two teams, each of which could run the entire company on its own, if it had to. As early as February 2020, the full cycle of operations was tested by these two separate management teams, with success, ready for implementation. Hence, Standard Insurance has been online and connected and has been one of only a few that were able to continue to work, immediately after the lockdown, and without a single day of missed operations throughout the pandemic. Continued interactions with brokers and intermediaries as well as internal communications coordination were done via video conferencing and other social media platforms.
To date, our digital analytics show that we are number one in terms of engagement in company websites and social media platforms compared to our competitors.
However, being a non-essential industry during the quarantine period, motorcar sales and insurance premiums generation have been a challenge. Collections likewise slowed down by approximately 20 percent of normal levels initially, but eventually picked up after implementation of the following measures the company mandated to mitigate the negative effects of COVID-19: We defended and increased our renewal ratios, we increased market share and we also maintained proactive collections.
In line with this, the company initiated several critical initiatives that will further improve its renewal business and get more switchers (business from competition) as well as other sales-related initiatives. Aggressive collection initiatives were likewise stepped up and cost-cutting measures have been put in place. In worst case scenarios, the TTC complex in Naic, Cavite, with housing facilities, telecommunications and wireless fidelity facilities, serves as a key business continuity planning (BCP) site outside Metro Manila. Further, all our affiliated companies’ business process outsourcing (BPO) offices can be used as BCP sites and we have in fact tested this possibility, with ease. These are offices of the Insurance Support Services International Corporation (ISSI) and Petsure, whose offices are located in Taguig, BGC and Quezon City, a total of four separate offices within Metro Manila, all well equipped with connectivity and space.
To maximise our online reach, our systems design and development team made our company website an e-commerce site, over and above the usual company information, products and services, among others. Our front office is able to sell e-policies to our clients and file claims online. All filed claims are automatically uploaded to our claims module and our claims front liners are notified immediately via our online platforms.
MyStandardOnLine (MSO) is a platform where all existing clients from the front office, or any intermediary platforms, can register, monitor, renew and pay policies. We have also launched Standard Prime, a loyalty membership programme that provides our clients exclusive offers, freebies and discounts.
As a game changer for our sales intermediaries, agents and sales associates, Standard Insurance launched ISSIoffice, an internally developed insurance office application linked to our major systems. It is an application software, using a smartphone or any telecomputing device, where the whole insurance cycle can be done, from negotiations between an intermediary and the client, to consummation of transaction and payment of premiums, as well as filing of claims and servicing of claims filed. ISSIoffice has an iteration capability where updates can be made online. Ultimately, we hope to gain market share with this tool’s prevalence and ease of use.
Cybersecurity in a pandemic
With WFH the new normal, the use of different technological platforms have increased the risks of cyber-attacks and data security issues. Hence, the cybersecurity team was elevated to play more important and visible roles to keep the business online without disruptions, to combat and protect the company from possible operational risks.
The team extended the use of our CATO mobile VPN software to both company-issued and personal computers and laptops to ensure safe usage. An alternative VPN portal from the Amazon Web Services (AWS) cloud is likewise provided for our business partners to use. Company-issued laptops come with our standard security configurations and endpoint security software, capable of detecting and stopping malware, as well as preventing the resurgence of dangerous ransomware that had victimised businesses even prior to this pandemic.
Furthermore, since online meetings are also part of the new normal, there is a surge in the use of video conferencing platforms in conducting collaboration meetings and training sessions, as well as internal and external communications.
Email communication now requires bigger storage, as all transactions, documents and files go through this medium. As such, the infrastructure team regularly reviews usage and upgrades user accounts as and when needed. Even with security measures in place, hackers are still finding ways through cyberspace to destroy, steal or cause harm. To combat this, the team regularly sends its security advisories to all company users, reminding them to be vigilant and strictly follow recommended protocols. By regulating the behaviour of our associates with reference to the use of devices, network and the internet, the cyber security team steadfastly endeavours to protect our company assets, our systems and our data.
Crucial role of human resources
Similar to our cyber security and systems group, our human resources department was also in full gear from day one of the pandemic. They were tasked to oversee the initiatives relating to the health and well-being of its more than 1,400 associates nationwide, thereby avoiding any operational breakdowns. These included extension of monetary assistance well within the first month of lockdown. During this time, some of their family members were on ‘no pay, no work’ arrangements so that aggregate family finances were drained and insufficient to meet their respective family needs.
Teleconsulting services and other related services, co-ordinated with our health insurance provider, were given. There was close monitoring of any suspected COVID-19 cases, and support for this, including contact tracing and assistance during quarantine, was immediately implemented. Shuttle services for associates working from the office as well as protective equipment were provided. To date, WFH arrangements are still highly recommended. More importantly, we continue to maintain a full complement of associates, without the need for retrenchment. We continue to grant full salaries and benefits to all, from the start of this pandemic up to the present day. On the whole, Standard Insurance has been able to continue business operations, maintain the team’s productivity, protect the well-being of its people and provide financial assistance to them when needed.