“Insurance sold through digital platforms is here,” said Curtis Chen, chief strategy officer and head of business development at Aegon Asia.
But how this plays out remains up for grabs: “How big a disruptive force will it be for insurers, how big will insurance be for ecosystem platforms, and who will dominate?”
Insurance companies are jostling for position among Big Tech, e-commerce companies, and superapps. “Everybody’s chasing new platforms, including us,” Chen said. “It’s about how you make a partnership work.”
The Hong Kong-based Chen made these remarks from stage at a recent Finovate conference, where he outlined how Aegon is going all-in on digital in the region, starting in India, where it is licensed to do business in life and health.
Aegon is a nobody in that market, at least as far as retail-facing business is concerned, ranking 22nd out of 23 licensed life insurance companies. It has nothing to lose so it is putting all of its chips on the table in a bet on total digital immersion.
Because it has no agency force or other channels in India, Aegon has no conflicts of interest, so it can commit itself wholly to e-commerce and other partners.
This is why leading Indian technology companies including Paytm (digital payments) and MobiKwik (mobile phone wallets), as well as child-focused platform called FirstCry, have backed Aegon’s new business, which has just launched in the country with licenses for life and health insurance, with protection and wealth management on the horizon. (A fourth partnership with a leading Indian e-commerce company is also in the works.)
For Ageon, this is a turn away from the usual corporate strategy of accelerators and innovation labs, which Chen argues have merely wasted money. Instead, the insurer is embedding itself with a variety of tech companies. “That’s the only way we’ll transform,” he said.
The right partnership brings something to customers they can’t find among incumbent insurersCurtis Chen, Aegon Asia
The trick though is to work out what parts of an insurance policy’s lifecycle to leave in the hands of a partner, what parts to retain, and where both can combine to add value.
“The real magic happens in the intersection of how we use data to take risk, or to position a product, or do customer onboarding,” Chen said, “and the digital partner’s proxy data, and insight into purchase patterns. That could be a useful, compelling proxy for what insurers do traditionally.”
Some functions like marketing and lead generation are best left to e-commerce partners, while insurers should remain in charge of risk, asset-liability matching and reinsurance. But other areas can benefit form combining both parties’ expertise, such as claims service.
“We don’t have this all figured out, but the right partnership…brings something to customers that they can’t find among incumbent insurers,” he said.
New operating model: all about scale
“The new operating model has to be 70% to 80% different, not 80% the same,” Chen said, capable of far better customer service at a much lower operating cost.
“If your unit cost today is X, you need to think X divided by 100, or X divided by 500, and create something so scalable that we can deliver service at a cost no traditional insurer can imagine,” while also constantly innovating, he said.
That means serving far more people with a lot more policies, even if those ticket sizes are also miniscule.
But it also means the insurance company needs to figure out its value proposition in these ecosystems. If Aegon is merely providing balance sheet, how does it protect its brand? How does it ensure the values the company stands for are embedded in the new venture?
If India is a success, Chen says the model can extend to other Asian markets where Aegon has a license but is a small player.