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This article first appeared in The Edge Malaysia Weekly on November 6, 2017 - November 12, 2017

IN 2006, the Etiqa group was one of the first insurers to sell its products online. That has proved to be the right strategy as it now commands an 89.7% market share in general insurance and takaful in the online space, making it the No 1 digital insurance player in Malaysia.

“We were the first mover in the online channel back in 2006. The concern at the time was, why was it that people are comfortable buying goods via the internet but not insurance? Why can’t we do it online,” says Kamaludin Ahmad, CEO of Maybank Ageas Holdings Bhd. Maybank Ageas offers general and life insurance and takaful under the Etiqa brand.

While many other insurance companies had been looking at the online channel, concerns over channel conflict — namely intermediaries questioning whether the online platform would cannibalise their business — hindered their progress.

To mitigate this, Etiqa launched its online portal and called it motortakaful.com.

“By doing this, while the agency channels are aware of it, they don’t see it as a direct competitor. Of course, the challenge then was to kick-start [the portal] and make it known without relying too much on the Etiqa brand,” says Kamaludin.

The group’s current sales figure for the general insurance and takaful business in the online space is impressive, especially since there were barely any sales in the first two to three years after the launch of the portal, he says, adding that the achievement is thanks to the hard work and perseverance of its team.

From 2008 onwards, there was greater awareness among the public about purchasing general insurance and takaful online. This led to the group reporting a total revenue of about RM30 million for the first five years from the launch of the portal.

By collaborating with partners and offering customers the option to purchase from Etiqa via the Maybank2u portal as well as from MyEG, it helped generate exponential growth for the company.

“Between 2011 and 2015, revenue was RM300 million, and in 2016 alone, we generated revenue of RM120 million [through the online channel],” Kamaludin reveals.

 

Building trust

While Kamaludin believes being a first mover has given Etiqa a clear advantage, he says the ability to quickly process claims when incidents occur as well as the ease of buying insurance from the group have been crucial in building trust.

“A lot of times, when we talk about insurance, we talk about the distribution channel, which is important. But often, we overlook why insurance companies exist in the first place. By providing claims to our customers as quickly as possible, it helps to create a sense of security and trust in our brand name.”

According to Kamaludin, Etiqa is able to provide approval within 30 minutes of accident claims below RM15,000 at Premier Workshops, and claims below RM5,000 at standard panel workshops.

“The 30-minute fast-track approval for claims is much faster than Bank Negara Malaysia’s requirement of five working days,” he says, emphasising that despite Etiqa’s current position, he wishes to shorten the approval time further.

On this note, Kamaludin says he hopes that insurance technology (insurtech) players will go beyond providing an alternative distribution channel and focus on improving the efficiency in delivering solutions that can increase the trust level of customers.

“Distribution is just one piece [of the equation]. People are trying to be futuristic but what we are doing is simply moving human interaction to [the] digital [realm]. Another example is introducing telematics systems in vehicles to monitor driving behaviour. However, not everyone is comfortable with [being tracked] … unless there is a significant discount for drivers with good driving behaviour.

“If it (insurtech) only focuses on providing a direct channel to access and purchase insurance, we are already capable of doing that.”

Another element that is important is the ease of buying insurance. Etiqa allows purchases through the group’s direct channels, Pos Malaysia outlets and Malayan Banking Bhd branches as well as via the internet.

“We have improved the user interface on our webpage to make it easier for customers to purchase insurance or takaful from us,” says Kamaludin.

Despite the exponential growth of Etiqa’s online business since 2006, it contributes only a small percentage to the group’s total revenue, he reveals. He believes that it will be more difficult for life insurance and takaful to take off in the internet space due to the complexity of the products and the lack of urgency when it comes to purchasing such products.

“It’s still very hard to sell life insurance through the internet. Not everyone is comfortable with buying something online for between RM2,000 and RM4,000 a year. The smaller ticket items such as general insurance and travel insurance are easier [to sell]. Perhaps the term life insurance or takaful will entice people to consider buying online but it has to be affordable and it has to be a simple product that is easily understood,” Kamaludin remarks.

Maybank owns 69.05% of Maybank Ageas. The rest is held by international insurance group Ageas.

In April, news emerged that Maybank would be listing Etiqa. When asked, Kamaludin declined to comment, saying that it is a decision for the shareholders.

For the financial year ended Dec 31, 2016, Maybank Ageas recorded a 3.7% growth in combined gross premium and contribution to RM5.33 billion from the year before. Profit before tax rose 34% to its highest ever for the company at RM809.72 million.

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