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Peter Karl Grimes shares how FWD is rolling out its plan to change the way Filipinos feel about insurance
Business World: FWD Life is the first foreign insurer to enter Philippines in last decade. What made you decide to take this move?
Peter Grimes: FWD wants to change the way people feel about insurance. We see the Philippines as a tremendously exciting market that’s on the move with the country’s developing economy, a rising middle class and increasing disposable income; the future is really promising and there are vast opportunities for FWD to contribute to the country’s growth by providing financial security to the Filipino people and for us to grow into a leading life insurance player over the coming years.
BW: How was your first year in the business? Where did the company’s growth come from?
PG: I am happy to report that we have started strongly. I am delighted with our partnership with Security Bank; they are a great bank to work with and we share a common vision and I feel we are very much on track to delivering a market leading Bancassurance experience to SBC customers.
We now have over 1300 agents located across the Philippines and we opened our first provincial offices, which we call “Connect Centers”, in Cagayan de Oro and Cebu in 2015. Further offices are being opened in Metro Manila within the next few months.
Our first wave of technology is now deployed and we are already able to provide straight through processing and an entirely paperless sales experience to our customers. In the second half of last year, we launched the innovative Fight Plan cancer protection product to complement our range of Variable Unit Linked plans and there are a number of interesting new FWD products slated for launch in 2016 to provide our customers with affordable and relevant solutions that meet and protect the lifestyle and financial needs for themselves and their family.
BW: You aim to be one of the top five life insurers in the country by 2019. How do you plan to reach this goal?
PG: As we stated when we entered the Philippine market in 2014, our business objective is to become a leading player locally within 5 years, ideally breaking into the top 5 on new business metrics. To do that we must,
Build a strong, professional multi-channel distribution capability providing our customers with the choice on how and when they engage with FWD
Build FWD offices throughout the Philippines to broaden our distribution reach and customer service capabilities,
Leverage on our commitment to user friendly and intuitive technology and applications,
Develop innovative, customer-led propositions that resonate with Filipino consumers, and
Establish awareness and trust in our fresh, dynamic and forward-looking brand.
BW: You were quoted as saying that the company will focus more on health and protection products this year. What is your outlook for the health segment of the business?
PG: We see health protection as a critical part of our portfolio and a segment of the market that historically is underserved and will grow rapidly moving forward. There is clearly an increasing market need with health expenditures rising approximately 12% annually; nominal per capita health spend is increasing at around 10% yearly. Statistics show that more than half of health expenditure in the Philippines is still coming from the Filipinos’ personal funds or savings. In fact, research studies show that only 2% come from private insurance and only 7% from HMOs.
So with an emerging middle class, rising affluence, increasing awareness and accessibility, growing concerns about personal health and increased awareness of the need for financial planning for health-related expenses there is every reason to believe health protection will be one of the major growth areas in insurance.
BW: What will be the drivers of growth of the health segment?
PG: There are many drivers, but to highlight a few I would point to
Greater visibility and emphasis on health related issues and costs and the protection gap that exists globally and within the Philippines
Product value and innovation: offering products which are genuinely relevant to customer needs and concerns and provide value;
Customer experience: taking away the perceived (and sometimes real) hassles experienced historically from insurance providers, so that the consumer gets what they need and can focus on addressing their health concerns;
Cost optimization: we are working towards maintaining efficient and effective operations so that we can continue to develop quality products that are intuitive, relevant and affordable; and
Use of technology (e.g. wearables) to promote self-care / health prevention and provide personalised insights and offers to customers;
BW: Which of the two – corporate or retail – will drive growth in the health segment of your business? What are the growth drivers? Which industries look promising for the HMO business?
PG: I believe both segments will see significant growth. Inevitably there will greater provision of HMO coverage through employee benefits, but in many instances the coverage provided to employees will not be sufficient to withstand the financial impact of serious illness and/or major medical procedures. Individuals will need to ensure they have adequate and appropriate coverage to minimise the financial impact that a serious health problem can cause.
The need for health coverage is not really industry specific as everybody needs it, but obviously employees of BPOs are considered a major growth area, given the sector’s continuing expansion and growing contribution to the economy
BW: With regard to protection, what is your outlook, and what will be the drivers?
PG: I am very passionate about promoting the need for protection. Too much emphasis is placed on wealth creation and not enough on wealth protection. So in life, you can do all the right things, work hard and save for your future needs and, ultimately, retirement and then along comes an emergency or crisis and everything just gets wiped out if you are not covered. It’s essential as an industry we get this message out there, so there is a healthy balance for people between long-term savings and investments and having protection plans in place that enable you and your family to continue with one’s lifestyle, no matter was curveball life throws at you.
Hence at FWD, we see it as critical that we deliver on our vision of changing the way people feel about insurance by educating and undertaking genuine financial reviews and planning, delivering solutions that are relevant to and valued by our customers. In addition, we strongly feel that customer experience will play an increasingly important role and we want to continue to build on this as our key differentiator in the market.
BW: Your company is also focusing on the millennials this year. What kind of promotions will you engage to encourage policy takeup among millennials?
PG: We do considerable research on millennials because it is a segment that we feel is not fully addressed by traditional insurance companies. We areworking hard to connect with millennials through relevant and authentic engagement and propositions as millennials are typically intelligent, socially aware, and have access to and are comfortable with technology. However, it is important to be constantly listening and validating research and findings to ensure you remain in tune with this “multi” generation.
I think we put extra effort into our Internet and social media presence compared with other insurance companies. Technology is now a fundamental part of all of our lives and FWD recognized this from Day 1. One obvious way FWD Life engages with Filipino millennials is through social media. We have our official Facebook, Twitter, Instagram and YouTube channels developing current and relevant content and conversations around millennials’ passions and interests.
BW: What is your distribution strategy for the millennial market?
PG: Essentially, FWD plans to be where the millennials are. Since we launched, our approach has been targeted towards connecting with this segment and building communities, particularly online, which we feel is one of FWD’s strengths. We aim to build ongoing engagement and deepen relationships with them via various life stage and passion point initiatives. As an example, our #GetReadyToLive campaign has always had this market at its core, highlighting their many passion points in life.
BW: The Philippine insurance industry’s recent growth has been driven by the brisk take-up of variable life insurance/ unit-linked investment (VUL). How different is this from the traditional life insurance product?
PG: VUL has been for some time the major product focus in the Philippines and represents by far and away the largest portion of sales of new business.
VUL serves the dual purpose of providing both investment and protection benefits. There is an opportunity over the medium to long term to grow one’s money by participating in investment funds offered through VULs, but it is important to look at whether the protection coverage within the plan is sufficient to protect you in the event that an unwanted event occurs.
BW: What’s FWD Life’s plan/target with regard VUL?
PG: FWD will continue to provide a comprehensive range of VUL products with a variety of underlying funds that are suitable for people at different stages of their life and covering different risk profiles. It’s obviously an important part of our suite of propositions and will have a significant share in FWD’s portfolio moving forward, but we will also ensure FWD and our customers have a balanced portfolio offering a combination of unique, innovative, and affordable protection and health products alongside the VUL product set.
BW: FWD Life entered into an exclusive bancassurance arrangement for life insurance products with Security Bank Corp. Can you tell us how this business model works for you and Security Bank?
PG: We have absolutely found the right partner in Security Bank, since they share FWD’s vision of changing the way people feel about insurance and we have developed an excellent working relationship focusing on how we can serve SBC customers better. Security Bank’s strong retail network and established local presence will allow us to reach more Filipinos, while our customer-led technologies and insurance propositions will support the Bank in delivering attractive and appropriate financial products and services. Together, we will provide an engaging and intuitive experience for the banks customers when purchasing insurance.
BW: When does your lockout period end? And when it comes to pass, which other entities are you eyeing for partnerships/tie-ups?
PG: We are entirely focused on developing our partnership with Security Bank and building a world-class Bancassurance solution for SBC’s growing customer base.
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