Distribution of Insurance in the Disruptive Era

Tags: asia/pacific, bancassurance, distribution, financial services, insurance, online aggregator

A very cliché statement “Insurance is to be sold, not bought” highlights the eminent role of distribution channels in the growth strategy of insurance firms. The ability to utilize these channels to reach the firms’ target audience is often the key differentiator in a competitive landscape.

However, as new disruptive forces such as evolving customer preferences, maturation of modern technologies, changing regulatory standards and unpredictable global economic conditions become the new norm, the distribution channels of insurance firms must keep up to take on new challenges.

Bancassurance: From Alternative to Mainstream
With lower revenue expected from interest-based activities, banks will be keen to further explore this alternative revenue stream to derive a stable flow of commission income from distributing their insurance partners’ complementing financial solutions.

Supporting this statement, figures from Life Insurance Association (LIA) in Singapore indicate that the popularity of insurance solutions distributed through bank channels is rising. Between January to March 2012, tied agents contributed 42% of weighted new business sales, while the bancassurance channel was almost on par, accounting for 41% of all new sales. [Source: LIA Singapore press release, dated 7 May 2012, http://www.lia.org.sg/node/313]

With most banks entering into exclusive partnerships with insurance firms, bancassurance has matured and progressed as a mainstream distribution channel. However, the challenge would be to ensure a cohesive working relationship between the carrier and the bank. Aside from having a superior range of products, working out the commission structure, embarking on joint marketing promotion and providing dedicated middle office support, insurers need to be bold and creative in using technologies as a leverage to provide a more efficient support to their banking partners.

Similarly, the partnering banks need to be open to new communication links from their insurance partners – this will serve as the service differentiator which fits into the current customer-centricity movement.

Proliferation of Electronic Channels and Consumer’s New Buying Preferences
The changing customer demographic and proliferation in Internet connectivity have led to a shift in customer engagement models, affecting how information is being consumed. The next generation of customer is perfectly comfortable in scouring the Internet, forums and their social networks for advice on insurance solutions, hence leading to the rise of an emerging channel – the online aggregator.

The role of the aggregator fulfills the requirements of the customer, namely pricing transparency, ease of comparison between multiple providers and self-service transactions. While the aggregator provides another channel for insurers to distribute their solutions, it does pose other challenges such as impacting carriers’ branding, and potentially cannibalizing existing distribution channels (an example is the firm’s own e-commerce portal). Both parties - the insurer and the aggregator - also need to work on efficiently integrating data between their IT systems in order to provide real time, updated quotations on the aggregator site.

Striking the Right Balance and Mix
The advent of alterative channels such as the online aggregator is increasingly used to supplement traditional channels such as tied agents, bancassurance, financial advisors and international brokers. Hence, there really is no one-size-fits-all distribution strategy for carriers to address the disruptive conditions; they will need to adapt and harmonize the various distribution channels in order to ensure profitability.

For more insights on how insurance distribution is evolving in the current market environment, join us at the IDC Financial Insights’ Asian Insurance Congress 2012 on the 28th of August in Singapore as we hear from the industry’s leading thought leaders on this topic. Some of the speakers include:
Dr. Owen Young, Group Head, Insurance, Standard Chartered Bank

• Jeffrey Manuel, Head of Asia Bancassurance & Partnership Development, Manulife
• Calvin Foo, Asia Regional Head, Financial Advisory & High Net Worth Development, Manulife
• Douglas Hudson, Chief Partnership Distribution Officer, AIA
• Angie Tay, Operations Director, CompareXpress
  

For more information on the Asian Insurance Congress 2012, please visit our official website at http://to.idc.asia/aic2012

IBM Study: Changing Role of CISO, from Technical Officers to Business Strategy Leaders

Tags: business strategy, byod, ibm, security

Over the past several years, security has gained a lot of importance. Organizations now pay more attention to security than they did a couple of years ago. To make an organization secure, several factors must be in place. They include efficient collaboration between the security department and management, budget, creation of security awareness within the organization, technology and many more. Among the other factors, the role of the Chief Information Security Officer (CISO) of an organization is important in deciding a complete security solution. With the increasing demand and expansion of the global role of security, the role of a modern CISO is evolving from simply being a technical officer to a leader in business strategy.

IBM's Center for Applied Insights conducted its first study of senior security executives, and interviewed more than 130 security leaders globally. The study’s core concentration was on the role of CISOs and many interesting findings were laid out.

Changing role of CISO and Security in organizations

According to the IBM study, security leaders today are under intense pressure, faced with the protection of some of their firm's most valuable assets – customer data, intellectual property and brands.

Nearly two-thirds of the CISOs who were a part of the study said that their senior executives are paying more attention to security today than they were two years ago. This is due to a series of high-profile hacking and data breaches that convinced them of the key role that security plays in a modern enterprise. Rather than just reacting and responding to security incidents, a CISO's role is shifting more towards proactive–intelligent and holistic risk management–from fire-fighting to anticipating and mitigating fires before they start.

Although this change in role of a CISO is a positive sign that some of the organizations are already witnessing, there are a large number of organizations yet to implement some of the best security practices in Asia/Pacific region. Many organizations still continue to actively deploy security policies; however, a lot of organizations do not put a high enough priority. Some of our recent IDC Asia/Pacific studies show that in organizations in Asia/Pacific, CISO’s still lack the understanding of the significance of collaborating with management in devising business-strategy-driven security solutions.

Further, the role of CISOs has been changing with a growing demand for a new skill set. The responsibility of a CISO is not only to drive a strategy of security and ensure its proper implantation, but also drive a culture of security with the company at all levels. IDC sees this is an encouraging sign as IT security is a growing part of organization's risk management strategy.

Consumerization of BYOD  

In this assessment conducted by IBM, another interesting finding was that more than half of the respondents cited mobile security as a primary technological concern over the next two years.

There has been a major increase in the adoption of Bring-Your-Own-Device (BYOD) across several organizations. IDC expects that nearly 40% of the employees in Asia/Pacific will be mobile workers by 2015. We believe this trend will accelerate as more organizations are now inclined towards the BYOD trend keeping in view an employee's productivity, quick turnaround time, customer satisfaction etc. It is not surprising that mobile security will be a cause of concern for most of the CISOs in the coming years.  Organizations need to wake up to this trend that will hit them in the near future as even now, as data is scattered across within and without the walls of organizations in different forms.

With the advent of any new trend and its adoption in organizations, such as BYOD, there is a growing need for organizations to embrace some of the security practices to ensure there are no disruptions in business operations. IDC thinks that businesses will benefit from adopting some basic steps to ensure that the organization’s mobile security features are well deployed and maintained. These include the following:

• Using Risk Assessments to enable business decisions
• Having a mobile-security policy
• Educating its employees on security policies
• Implementing remote-device management systems

Overall the role of the CISO and IT security will need to evolve more. The changing security environment, where more and more businesses are demanding flexibility, is increasingly making the IT environment complex and diverse. Trends such as BYOD are driving IT infrastructure towards optimization and renewed flexibility. Organizations need to be more agile in dealing with change and understand the security implications that come with this agility.