25 July 2019

Has Insurtech killed the advisory model?

In an age of digitialisation, are agents and financial advisors still relevant? The short answer is Yes, now more than ever.


These days, you can’t open a newspaper or website without reading about a new digital development. And this seems to be true across all sectors, from key international financial hubs, like Singapore and Hong Kong, opening up their markets to welcome digital banking challengers, to property transactions and cross-border trade documentation going electronic.

Similarly, the insurance industry is currently undergoing massive changes in the digital era, especially in places like Singapore where digitalisation is widespread and insurance penetration is deep.

Tech is re-defining the insurance consumer experience including one-click shopping, same day delivery, round-the-clock access, and greater personalisation1.

It is also reducing barriers to entry with new disruptors shaking up traditional models across products, sales, service delivery and distribution. They are also upping the game by providing a more immersive digital experience.

But I believe this is a good thing.

Whenever innovation and new competition ‘gate-crashes’ an industry, consumers are often the ultimate winners, which is something all businesses should want.

Consumers increasingly prefer to self-manage across the purchasing life cycle. Instead of simply relying on advisors to suggest products, they prefer to do their own initial research. They are increasingly turning to online channels and live chats for product evaluation and post-purchase service.

As a result, consumers are now engaging with advisors later in the process and for a shorter time.

When consumers own the product evaluation and account management of their policy choices, an agent’s ability to offer targeted and informed outreach becomes even more important.

This changing technology landscape is something which insurance providers can and should embrace.

The caveat I put on this though is that it cannot be at the expense of agents or advisors.

In fact, people-to-people connectivity is perhaps even more relevant than ever as Singapore society grapples with an ageing population, careers being re-defined by technology and expectations on family caring changing.

Indeed, a survey by Deloitte has found that a majority of insurance buyers still prefer to speak to an agent before purchase2.

While Insurtech does provide some clarity, Artificial Intelligence has not yet developed to the point of understanding certain nuances. For example, a machine will be hard-pressed to answer a question like: “If something were to happen to me, how do I want the world to be for my family?”

Walking you through one of the most important decisions for a family leader to make, professional advisors have the ability to ask the right questions and the empathy to ask them in the right way.

But that does not mean that insurance advisory models should remain the same. Advisors need to adapt to the times.

To effectively engage modern-day consumers and embrace digital disruption, insurers must aim to provide a complete omni-channel experience.

Insurers need to develop tools and services that provide consumers with easy methods to evaluate their products and a direct and efficient connection to agents to finalise purchase decisions.

One way to do so is to equip financial advisors with the right hardware, like tablets, that can instantly generate e-quotes and contracts for greater efficiency.

Customers now feel more in control of the process, with financial advisors acting more as a guide and sounding board.

In many ways, digitalisation is a boon for the insurance business that could lead to more satisfied customers and lower costs across the value chain, thanks to automation. The faster processing times, and ease of use that digitalisation delivers, also leads to higher customer satisfaction, which is itself a driver of profit through increased customer retention3.

The goal of any company should always be to meet – and even exceed – customers’ expectations, even in periods of transformation. Fulfilling this is fundamental in building a long-term and sustainable business.

All of this has underpinned why HSBC has begun to transform our insurance business by adopting a more customer-centric approach, from the way we shape our business for the future to the adoption of technology. Our recent investment into CXA Group4, a leader in the Health and Insurtech space, is reflective of our approach in leveraging technology and the opportunities it presents, to drive a customer-led growth.

Not forgetting the power of the human touch, we are also expanding our distribution channels by partnering with key Financial Advisory firms to provide relevant and compelling solutions to meet their customers’ needs.

The fact is, digital disruption has changed how consumers buy their insurance products. To adapt, insurers need to not only increase their digital offerings and use data tools to give more customised and easily accessible information to customers, agents must also be equipped and adapt to give compressed advice in a digitally enabled ecosystem – whilst maintaining the empathy that is needed for such an important life decision.

If we are able to do so, the digital wave will be a win-win situation for everyone.

Technology helps advisors compile complex information more efficiently, streamline the process and helps people understand complex products more easily. Has Insurtech killed the advisory model? Absolutely not. But will it help advisors be better at what they do. That would be a resounding yes.

A contribution piece by Carlos Vazquez, CEO, HSBC Life Singapore. A version of this piece was first published in The Business Times on 25th July 2019.

1 https://www.forbes.com/sites/stanphelps/2017/01/27/mind-the-customer-expectation-gap/#3fc110107cb7

2 https://www2.deloitte.com/content/dam/Deloitte/us/Documents/strategy/us-cons-life-insurance-consumer-study.pdf

3 Alex Rawson, Ewan Duncan, and Conor Jones, “The truth about customer experience,” Harvard Business Review, September 2013, hbr.org.

4 https://www.cxagroup.com/cxa-group-raises-usd25-million