What factors should customers take into consideration when purchasing a non-life insurance contract?
|Vo Manh Tin, deputy general director of AAA Insurance Company |
The elements that buyers need to pay attention to when participating in non-life insurance are similar to those in the life insurance market. Before investing in insurance, it is vital for customers to possess a fundamental understanding of the insurance products they intend to buy, particularly the T&Cs of the contract.
Customers must read the contract thoroughly, raise questions and express concerns regarding professional terms, T&Cs, interests, and responsibilities of both parties. If in any doubt, customers should seek clarification from the agent before signing the contract.
Importantly, customers must recognise that the purpose of a non-life insurance policy is to protect against potential risks in the future, rather than being a profitable investment. Hence, it is necessary to understand the nature of the insurance product and the content of the T&Cs specified in the contract. Specific aspects to focus on include the benefits that customers are entitled to when an insurance event occurs, exclusions, deductions, and refusals.
Moreover, buyers should understand and adhere to their obligations in executing the contract, procedures, and legal documentation as required by the insurance company when the insured event transpires.
Many say sales representatives and consultants in insurers need better training. What can be done to address this training gap?
Firstly, it is important to distinguish between unintentional and deliberate actions in terms of ethical business practices.
In the case of unintentional action, advisors may lack sufficient expertise and understanding of the insurance products they are advising on, leading to omissions or incomplete or incorrect advice.
In the case of deliberate action, advisors understand products and rules but may provide advice in their own way and overlook necessary T&Cs, or may answer customers’ questions dishonestly due to income pressure, KPI, and competition. To solve this issue, insurance companies must pay more attention to recruiting and training sales personnel.
In addition to expertise, companies need to consider the soft skills of employees, such as personality, attitude, ethical business practices, and communication skills. If the employee has worked in insurance companies before, the company should check their history and past performance before hiring.
Regarding training, generally, non-life insurance companies have not paid enough attention to training their sales personnel and agents. Typically, when recruiting a salesperson, the company follows the traditional method of learning from their predecessor. The training methods are not professional, and the trainers themselves may not fully understand the related business issues. Most insurance companies, especially small ones, do not have a systematic strategy or training method for both new and existing personnel.
To solve this issue, insurance companies must recognise the important role of training advisors, as they are the two groups directly involved in negotiations and explanations with customers before signing the contract. They must understand and be aware of their responsibilities to the company and customers. Their actions or words, whether intentional or not, can have consequences for both the company and the customer.
How is the Law on Insurance Business affecting the non-life insurance sector?
The Law on Insurance Business stipulates that insurance enterprises and branches of foreign non-life enterprises are allowed to take the initiative and responsibility for themselves in the construction, design, and development of insurance products.
This indicates that the management agency wants to maximise the potential of the non-life insurance market, so that insurance products can better penetrate the market and meet actual needs. Insurers are allowed to expand regulations related to the design and development of new insurance products, reduce administrative steps for early deployment, bring new products to the market, and gain fast access to customers.
In addition, the law also stipulates more closely contents related to insurance contracts, especially contents related to the legal aspects of them. Recently, litigation cases related to the signing, performance and termination of such contracts have increased rapidly. Therefore, it is important to clarify the responsibilities of the parties to the contract and the dispute settlement mechanism.
What is your projection for the non-life insurance sector in 2023?
Although the economy still faces many challenges, we see that there is a bright spot for 2023 in the growth momentum of two key business lines: auto insurance with 26.8 per cent of total share and personal insurance with 33.2 per cent.
Due to high demand, this year’s auto insurance business is forecast to grow at least 15 per cent over the same period. In the first quarter of 2023, these accounted for 33.2 per cent of total insurance revenue, growing by 24.3 per cent over the same period in 2022. The non-life insurance sector in 2023 is predicted to have a growth rate of 15 to 18 per cent.
What are some emerging trends in the non-life insurance sector?
Insurance companies will still focus on traditional services such as motor vehicles, people, marine, and technical assets. In addition, traditional and non-traditional segments have been formed in the development of new products and sales channels.
Insurance companies in the top 10 based on revenue, market share, IT, human resources, and sales channels are building and deploying insurtech, business-to-business, and business-to-consumer models. This type of business will bring a large amount of revenue in the future, so that companies can eliminate inefficient and difficult-to-control operations.
The remaining group, due to its smaller market share, weak re-engineering capacity, and inadequate tech, will orient to customers and operations that the above group does not focus on. In addition, this group will develop products to offer through retail channels, focusing on the market portion that big companies pay little attention to, and maybe practical products for the customer segment in remote areas or provinces.
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