This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on November 2 - 8, 2015.

Only when life, limb and assets are at stake do people seem to realise the need for an insurance policy suited to their needs. With this in mind, AIA Bhd’s new CEO Anusha Thavarajah is leading the charge in changing the way insurance is perceived and sold.

INUSURERS have made great strides in promoting the importance of life insurance, but there are still inroads to be made, says AIA Bhd’s newly appointed CEO Anusha Thavarajah. That is because some people have a perception that the agents are pushing the products just to make their monthly quota, rather than because the policy is beneficial or is tailored to their lifestyle and needs.

“People see insurance as product-centric and sales-centric. Often, people buy insurance because they are trying to help a friend or someone comes over and speaks to you, and you figure that it sounds like something you need. Many people in the past know that they have a policy from somewhere, but they don’t really know what it entails. And some of them have policies from many companies — that is the reality,” she says.

These issues, among others, shed some light on the challenges insurers are facing today in promoting awareness of insurance as a planning tool that can keep people from financial ruin, says Anusha. 

She also laments that there are people who have purchased policies as a gesture of goodwill from family members or friends, who work on commission to make ends meet, but do not necessarily understand what they have purchased and face obstacles when trying to cut through the thicket of fine print and jargon. This leads to the problem known as insurance protection gap.

“In the past, people treated insurance as [something that is] just there ... ‘I bought it and I’ve put the policy away’. But 20 years later, if something unforeseen happens, they go digging to find out what coverage they have, only to realise that it is inadequate for their needs. This has happened to the people I know personally,” says Anusha, who was appointed the insurer’s first female CEO from Asia-Pacific in June.

She knows first-hand the issues related to promoting awareness of the importance of life insurance — she bought her first insurance policy only a decade ago. Having started out as an actuary, Anusha, 48, says she had treated insurance as a numbers game and had not given much thought to its pertinence.

“I bought my first insurance policy 10 years ago ... it took me that long,” she jokes. “But today, insurance is absolutely important, with the multitude of lifestyle-associated problems and complex individual needs as affluence grows.” 

Amid the economic turmoil and ballooning cost of living, life policies often become the first casualty when personal budgets are tightened. But this can be solved by buying a policy that consumers can afford, says Anusha.

“It is about buying the right product at the right level and making sure they can afford what they bought. They should not have to stop it once they are in. At the end of the day, it is not a commodity. It is really something of a necessity in life to make sure that when something that you cannot control happens, the insurance kicks in and makes a difference in people’s lives.”

Anusha first joined AIA in 2002 as vice-president of the actuarial division before leaving for ING. She re-joined her former firm in October 2011 as deputy general manager of finance and actuarial before taking the helm from Bill Lisle, who had been appointed regional chief executive to oversee the Malaysian, South Korean, Cambodian, Indian and Sri Lankan markets, in June.

She recommends that individuals evaluate their finances and approach financial planners, if necessary, to ensure that they get the right advice on saving and investing as well as planning for the unforeseen. “If there is a [protection] gap, take the first step to buy and invest in the right type of product that will help them close that gap, and ensure that what they are spending on is consistent with what they can afford — because it is not about buying a policy today and then not being able to afford it later, and then dropping it.

“Buy something you can afford and keep it going throughout your life so that when you retire, you have peace of mind — if you need medical treatment, you have the right type of cover to support you; or when your children pursue their education overseas, there are enough funds for them to follow their dreams.”

According to the Life Insurance Association of Malaysia (LIAM), life insurance and family takaful currently provides insurance protection for 55.5% of the Malaysian population. However, the industry body, together with the government, is aiming for at least 75% of the population to be insured by 2020, as envisioned in the Economic Transformation Programme. 

AIA sees this as an opportunity to up its game. Anusha says insurers need to look beyond the middle-income group and high-net-worth individuals to achieve this target. “I think it is important to reach all levels. It is about the right level of cover, the right product and the right level of distribution,” she adds. 

Another area of opportunity is in the digital space. “Consumers have become savvier, their demands greater. They want greater flexibility, greater choice. With the advent of smartphones and tablets, and as technology advances, I think the digital space is going to become more and more important,” says Anusha.

“With the digital space becoming more important, people will start comparing. And they have the access to be able to compare ... comparisons of products will become even greater and with that, consumers will get to make better choices for better value.”

The two airline tragedies last year left many Malaysians shaken, but they also created greater awareness of the need for insurance, Anusha says, adding that AIA covered more than 90% of the Malaysians on board flights MH370 and MH17.

“The payout was made immediately after the incidents. It is important to make sure family members are protected. It is really about having peace of mind,” she says.

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