Friday 29 Mar 2024
By
main news image

PHILIP-SEAH

The insurance industry has continued to evolve to meet the changing needs of consumers. In the final part of a two-part series, Prudential Assurance Malaysia Bhd CEO Philip Seah talks about the company's plans, as well as his views on insurance and consumers, with Personal Wealth. The following is an excerpt from the interview.

 

Personal Wealth: What are some of your observations about Malaysians and insurance?
Philip Seah: Malaysians are underinsured. They should be covered 10 times their annual salary. This means it should be at least RM350,000 for someone who earns a monthly salary of about RM2,900. But many are only insured for RM50,000, so they are underinsured.

It is a tragedy that the average amount of coverage is only about RM50,000. That is less than the insurance of a car that many people drive. The car is worth more than the lives. We need to be able to do more for Malaysians in terms of insurance. 

They are also undercapitalised when it comes to retirement. The Employees Provident Fund found that 69% of Malaysians, 54 years and above, had less than RM50,000 in their accounts as at Dec 31, 2013.

So, they are one year away from retirement and they have RM50,000. The poverty line is about RM800 a month. You divide RM50,000 by RM800, and it tells you that they only have to survive for the next five years.

Many are underinsured and underfunded when it comes to retirement. Everything that we do [at Prudential], we bear this in mind. Every product we have is a solution, whether it is their protection gap or their funding gap. And for all our people who sell insurance, we remind them that this is what it is all about.

It is all about the journey. I mean, you think about the long road you and I travel. At the end, there is a rainbow, and that is where we want to get to. That is a long road. Along the way, there are many side roads. Some we want to get onto, some we don't. There are those things called hospitalisation, sickness and critical illnesses. We don't want to get them, but we need to get protected in case it happens. There are some who say marriage, children, children's education and investments are those we want to visit. Therefore, we need to have all these products.

What is your advice to consumers when it comes to insurance in the context of wealth preservation and estate and retirement planning?
The most important thing to remember is that when it comes to insurance, it is the acronym CAFE. 

First, C is about being comprehensive. Don't just tell the agents you want to buy a product. I fully advocate that consumers find a good agent and divulge as much information as possible to the agent. This allows the agent to do comprehensive financial planning. If the agent is not asking questions regarding the clients, their risk profile and assets that are insured, people should want to know why they are not asking these questions. There must be a proper diagnosis. In other words, comprehensive financial planning.

The A is that it needs to be affordable because consumers need to keep a policy. They should buy their insurance and forget about it. Even if it is savings or investment in nature, it should be thought of as [something] for retirement. It must not be something where you can withdraw money here and there. They should do that with their own savings. Insurance is something that should be affordable and can be put aside.

F is full-time agents. People should always ask the agents if they are full-time. If they are not, consumers should ask themselves this question: Do I want to entrust my full-time concerns to somebody who is a sometime agent? I think you know the answer.

In this journey in life, we need somebody travelling with us because we don't remember it. Nobody here woke up this morning saying I think today is the day I want to buy some life insurance. I think today is the day to review my policy. Nobody does that. You need to have a full-time career agent who regularly calls you up to say, 'Let's sit down and review your policies'. It is not about giving out diaries or angpows as these are just tokens.

Lastly, E is as early as possible. Insure yourself as early as possible. I think everybody wants, God willing, to live to retirement age. We want to be comfortable. I say comfortable because it doesn't have to be a Ferrari and it doesn't have to be a cruise on the Mediterranean. However, we want to have that peace of mind. The tragedy is that people only start to think of that when they are nearing retirement. It is too late. That is when you hope for a windfall, buy some of the big sweeps, whatever the case might be, but that is too late.

Also, when we talk about retirement, we often speak of how much money we have accumulated. There are two parts of it that is important. One is actually how you de-cumulate. It is not how much lump sum you have; it is how you are going to manage that month by month, year by year for the period of time you are going to live [in retirement]. People don't know how to manage a lump sum. Most of the time when they have a lump sum of money, it goes very quickly. So, the de-cumulation is very important.

The second is that you must have sustainable medical insurance because retirement is often the time when a person requires hospitalisation and medical care. Without a policy that is sustainable, you will find that whatever money you save for retirement, a lot of it will go towards hospitalisation.
 
How does Prudential stand out from its peers to remain an industry leader?
In terms of competition, we do have our strategy and tactics. Within our own environment and culture, we need to execute our strategy as perfectly as possible.

Last year, we recruited a number of well-educated young career agents. We recruited over 6,000 agents. We recruited more than 4,000 agents in 2013. It is like a 31% growth over the previous year. It is a massive jump.

When I think about the number of agents we have, I don't think we have enough, given the size of Malaysia. We only have about 15,000 agents. We need to double that number. We want our agents to be educated and to be full-time career agents. Our proposition is that people's needs are full-time. They cannot be met by a part-time person. 

We also want every agent to be able to do financial planning. It is what we call needs-based selling. This is important because with consumers becoming increasingly sophisticated, the traditional role of an agent has changed from merely selling insurance to providing proper financial advice at a more professional level. Agents also play a role in educating customers and helping them make informed decisions on financial planning matters.

Another thing I really believe in is that people don't care how much you know until they know how much you care. Whether it is making a sale, a person is not going to buy something from you unless they feel that you have their interests at heart. It is just about knowing that you care. 

You mentioned earlier that Prudential is known for product innovation. Could you give us some more examples?
We also have a policy called PRUmy child, where we — if you can pardon the cliché — insure a person from the womb to the tomb. We are insuring them before they are even born. I don't think the other companies have come out with this kind of product.

We also came out with a policy called PRUcancer plan, where a person with cancer is able to buy life insurance. Obviously, we don't cover the cancer, but if it is another illness that can develop, we still insure that person. Previously, it was subjected to underwriting. Now, we have made it a policy.

I just want to be clear that while we have innovative products, for people, it shouldn't just be about buying products. Products are merely a solution to their needs. People really need to understand what their needs are.

What are some of Prudential's plans?
Our mission is to offer financial freedom and peace of mind to all Malaysians. We say that because we have a community outreach programme called PRUkasih. It is where we reach out to the urban poor, and our aspiration is to reach 50,000 households over the next four years. We have budgeted RM50 million for that. What we do is put food on the table and a roof over their heads when they enrol for the programme. It is free. We do not charge them for it. All they need to do is be a part of the community in that project and sign up for it.

 

This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on April 20 - 26, 2015.

 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.

      Print
      Text Size
      Share