Manulife is shifting the focus of its digital transformation from operations to sales.
Guy Mills, Hong Kong-based CEO of Manulife (International), says the firm is readying products in line with new policies recently announced by the local government that will be digitized from sales to claims.
“This is the first time we’re rolling out products on our new I.T. stack,” he told DigFin.
Manulife launched its first digital offering in Asia in January 2018, when it began allowing clients to submit claims online. Policyholders upload a photo of relevant receipts, in a process that takes about one minute.
Claims are not automatically paid out, but the firm has automated the journey by sending customers periodic updates to their phones via SMS. Mills says now about 50% of claims are submitted electronically.
In terms of automating payouts, some areas of cover, such as hospitalization and outpatient services, are now up to 90% of claims filed – because Manulife felt comfortable enough to approve larger claim amounts in this segment.
This is the first time we're rolling out products on our new I.T. stack
Guy Mills, Manulife
Although not every customer wants to interact digitally, Mills says most people find online more convenient because they can file at any time of day, without scheduling an appointment with their agent. Internally, digitization is making the insurer operationally more efficient.
Mills says the firm will never reach 100% automation of claims, but says it can always improve; the impediment, beyond customer preference, is size of transaction, rather than a particular type of policy.
The capability was developed internally in Hong Kong, and the firm is now rolling out e-claims to Japan and Vietnam.
New products: VHIS
Next, though, is to automate the rest of the lifecycle of a policy, which means working backward to sales. The company is not attempting this with its existing policy suite. Rather, it is looking to launch new products that cater to changes being fostered by the Hong Kong government.
Specifically it will launch products around the government’s Voluntary Health Insurance Scheme (VHIS) and a new tax-deductible voluntary contribution to Hong Kong’s state pension scheme, the Mandatory Provident Fund.
VHIS was announced last year as a means of shifting up to 1.5 million people to use private healthcare. The government is worried about an ageing population, inflationary costs of healthcare, and a public health system strained to capacity.
We are further digitizing all processes
Guy Mills, Manulife
VHIS lets people get a HK$8,000 tax break if they register for the scheme. But users will still face high premiums, and VHIS doesn’t cover many high-risk individuals. It is generally targeted at younger people, many of whom may lack traditional insurance.
Mills notes that about 50% of health expenditures are currently financed by the taxpayer, while 7.5% are protected by group schemes and 8.5% by individual health insurance – leaving 34% of the population without any protection, and paying out of pocket.
This is the segment VHIS is meant to address, and where Manulife will launch new products.
“We have 625,000 health-insurance customers, many of whom will want to take advantage of tax-advantaged products,” he said. “We will have a totally digitalized sales process.”
New products: MPF
The second area is investments. Manulife claims 23% market share of the MPF industry, with HK$187 billion ($24 billion) of assets under management (the total industry size is HK$858 billion, or $110 billion. Separate to this, investment-linked products generated HK7.7 billion ($99 million) in new premiums last year, giving Manulife 58% of the local market.
The government last year announced new tax deductions for individuals making voluntary contributions (TVC) to their MPF accounts, on top of what they contribute as employees. Again, Manulife is preparing investment products for MPF that will target people looking for a tax break – and will deliver these digitally.
“We are further digitizing all processes,” Mills said.
This is possible because the firm has invested in a new, global technology stack. Products like VHIS are specific to Hong Kong, but the firm’s I.T. now relies on microservices on top of its traditional core systems. This means it can plug these in anywhere. Manulife developed a pensions microservice in the U.S. for fund selection that is easy to fit for Hong Kong purposes, Mills says.
“TVC and VHIS are actually the same customer journey,” he added. “They draw from the same data lake.” The challenge to make digital work: “It involves a lot of global and regional coordination.”