CEO in Vietnam… on internet insurance millionaire agents
Just landed in Hanoi International Airport….. I just woke up to my senses when the airplane finally glided down on the runway with a loud thud, realising that I am now the CEO of VietB Insurance Co Pte Ltd.
About two hours later I was seated in front of two senior officers – Vietnamese….., the male officer being the Marketing Manager and the female officer, the Manager for Operations. I stare down at the marketing reports in front of me – the figures were bad! I do not know how am I to report this bad stuff back to Kuala Lumpur. There are 28 non-life insurers (19 domestic) in Vietnam and we are currently hanging in last position… what a drag…
The Vietnam non-life insurance industry has approximately RM2.2 billions in premium and we are just getting a miserable RM500,000! That’s crazy when we are having more than 10 staff in the office.
After listening to the Marketing manager explained the current difficulties in recruiting the larger agents, I wonder if ever VietB did have any chance of move up the industry value chain. He claimed that we are new brand and established agents don’t look at us too kindly. He further stressed that we need to put in some forms of enticement to get them to be with us – perhaps the only solution is to pay commission between 40% and 50% on the gross premium.
This does not stops here, according to the manager, if we are going to push our limits we may end up suffering losses. In 2008 and 2009 because of premium undercutting beyond technical rating and with the widening of coverage, this had led to substantial losses to the industry.The operation manager chipped in saying, even if we keep our premium base at this level or even with single digit growth, it is still not possible for VietB to stays afloat.
She further adds, more than 50% of the non-life insurance companies is making losses since 2008 and they are relying on investment incomes to offset those portfolio losses especially the motor and personal accident sectors.
Charting VietB’s future
I took a long hard look at the figures. Perhaps the only way that we can go forward in saving our skins is taking a brave leap into internet marketing. This is one area that I can surely relates to – it is certainly better than trying to entice the more established agents to come into our fold. We might as well use the best Search Engine Optimisation (SEO) methodology to intensify traffic to our website and entice the public to buy in or at least get a quote done with sizeable discounting, ie. 25%… is this enough? Surely better than giving 40% to 50% agency commission!
Vietnam has a population of almost 90 million and about 23 million of them are internet connected, that’s a huge number and currently ranked 7th in Asia. It may even overtakes Philippines in no time.
And, Malaysia is standing at 9th spot… Surely taking steps to engage the potential customers through the use of internet media makes real sense.
Having said that my marketing manager protested citing that agents are still very much in control and the public is not about to embrace the internet to make purchases like insurance online.
Why? His reasons were very simple – insurance is always sold in Vietnam and the public would prefer an agent so that there is someone who can handle their claims on their behalf. He further stressed, insurance has always been perceived as something very technical and is best left to the agent. Furthermore…. Vietnamese do not usually possess any credit card, thus buying online is a real challenge!
Together with the operation manager, he cautioned me that by carrying out this internet insurance marketing project, this will surely anger the market agents and whatever chances that VietB have in recruiting them would have immediately evaporated!
The Internet Insurance Arguments
Frankly speaking, I was amazed with their shallow thoughts – Vietnamese do not buy on line, no credit card and may anger the agency force…. Aren’t these the common arguments back home in Malaysia? Let’s see if this could be addressed…
- Vietnamese do not buy online is a fallacy – according to a marketing research company, TNS, Vietnamese can really spend and this is on an uptrend, especially in the entertainment, hi-tech consumer products and health & beauty care products. Spending are found to be driven by female folks. I am sure with enough marketing and reassurance from VietB, the Vietnamese public should be flocking in, especially where a 25% discount is the ‘give away’ – maybe we can even include some free e-books on how to buy insurance and filing in a claim with VietB….
- Vietnamese do not normally possess credit cards – although the percentage of Vietnamese in possession of credit card is lower (perhaps less than 500,000 users) than the other Asean countries but this should not be a hindrance to work out payment on premium online. Moreover many of the banks do issue internet cards for the public to buy after activating it over the internet. Moreover debit cards are actually issued in millions, and VietB can strategies from this penetration angle. Thus there is no real reason why this should be a stumbling block to our VietB’s B2C project. Furthermore VietB can even work on the following methodology:
- VietB can adopt the internet to draw in the interest and then utilise the off-line contact centre to finalise the payment
- Customers can buy in through the internet and then the designated internet agent works on the collection
- Work on payment via debit cards – they are probably more than 16 millions debit cards issued
- Angering the market agents and VietB will surely lose all possibilities of recruiting them – this is really shallow thinking! If VietB is to implement this project surely our first priority is to the agents – holding their hands in implementing this project, so that they can be a bigger part of it…. I supposed agents would be calling on us to work things out and not being angered once they know that we are implementing this on a win-win situation for all parties.
Having my two managers thinking so much on the negative side given the fact that they have no solution at all for the current predicament that VietB is in, I can’t help but thinking on how am I going to replace them and put them into a lesser position!
When we are in the negative and problematic state, we are already having enough “cannots” so do not keep on thinking about cannot anymore – we should be thinking about formulating solutions, solutions that have that “thinking-out-of-box” concept!
Suddenly there was a sharp thug on my shirt…. I just woke up to Malaysia!
What a relief, I need not have to deal any further with those two Vietnamese managers (nothing against Vietnamese….. just those two buggers!). But then,………….
I just lost my CEO job!