Facing unprecedented challenges and economic downturns since 2019, Sri Lanka’s life insurance sector stands at a pivotal juncture, poised for remarkable growth as the economy recovers. With the industry growing by about 10% yearly despite reduced disposable incomes and shifting perceptions due to COVID-19, there’s an evident resilience and latent potential. Leveraging market-beating strategies, HNB Assurance, since 2021 has been growing at more than twice the industry growth rate whilst focusing on innovation and customer-centricity. Through expanded sales forces, enhanced customer experience, and technological transformation, the company envisions recalibrating itself, aiming for a 10% market share by 2026 and becoming a trendsetting outfit in a recovering economy, shares Lasitha Wimalaratne, Chief Executive of HNB Assurance PLC.
Life Insurance Industry Outlook:
Since 2019, Sri Lanka’s life insurance industry has navigated a tough environment, economic downturns, and reduced disposable incomes, challenging its growth. Unlike in developed markets, locals often view life insurance as a secondary need. Yet, COVID-19 has shifted this perception, highlighting the importance of insurance and aiding a modest increase in market penetration. Despite these obstacles, the industry has grown by 10% annually. With a current GDP contribution of just 0.7%, there’s significant room for expansion.
However, there are also challenges ahead with the sharp decline in disposable income, essential for boosting life insurance penetration and economic growth. Shifting the local mindset, which often views life insurance as non-essential, is crucial. In contrast, many in developed markets hold multiple policies, recognizing how important insurance is. To remain competitive and reach a wider market, including the Sri Lankan diaspora, embracing technology and data-driven customization is necessary. Additionally, retaining talent, especially in technology, is vital as we face a brain drain of skilled workers and potential customers, a dual threat to the industry’s future stability and growth. At HNB Assurance, we remain focused on both these challenges, investing in technology and innovation to create great experiences for both internal and external customers alike.
Leveraging Technology and Innovation:
We’ve made substantial investments in a state-of-the-art core insurance system, data analytics, and digitalization, a journey which I reckon is almost 50% done and once complete, will need constant refinement to ensure that our tech backbone is in sync with prevalent technologies. Our teams can work remotely, and we’ve started serving overseas customers. We constantly focus on ensuring that we understand that evolving customer and market and strive to refine our business model accordingly, aiming for a fully transformed company by 2026.
In Sri Lanka, individuals often choose a blend of protection and long-term investment when it comes to life insurance, necessitating financial guidance and forward planning. While customers may inquire online, most prefer personal advice before purchasing complex policies. However, there’s a growing trend, especially post-COVID, for buying simple, short-term protection policies online. Recognizing this, we launched eLife to cater to customers seeking straightforward coverage without hassle. Our focus is on selling these simpler products online, streamlining the process and meeting the evolving needs of our clients.
We’ve also adopted technologies that enable remote work and digital sales, significantly reducing operational costs and enhancing efficiency. Our focus now is on leveraging data analytics to offer more personalized and efficient services, predicting needs, and tailoring solutions. As we continue to innovate and adapt, we’re optimistic about our path forward in the life insurance industry.
Sustaining Growth:
Our growth, which we always target at double the industry growth rate, and our anticipated position in the market stem from three key strategies. First is sales force expansion. We’ve significantly increased both our agency and partnership channels, allowing us to tap into new markets and territories.
The second is enhancing customer experience. In an industry where trust is paramount, we focus on delivering promises and exceptional service. This involves ensuring timely claim settlements and engaging positively with customers, which in turn fosters loyalty.
Third is technological transformation. Investing in the right technology at the right time is crucial for staying ahead and understanding market trends.
Additionally, we’re exploring expansion and targeting the micro and SME segments with tailored offerings. We aim to cater to various segments, including those abroad, by offering innovative online products and operational solutions, thereby broadening our market reach and solidifying our position in the industry.
Vision for the Future:
Our vision is to elevate our company to new heights with a robust plan set for the next three years. By 2026, we aim to transform into a leading entity with a 10% market share, excelling in technology and customer service. The impending introduction of the new IFRS17 accounting standard in Sri Lanka will change how we recognize profitability, emphasizing the protection element of our business. This shift necessitates a transition towards protection-focused products, aligning with the new regime to enhance revenue and benefit all stakeholders, especially our customers. By 2026, we anticipate a fundamentally different and more advanced company.