LIA Singapore's president Patrick Teow talks of the worrisome protection gap in the city

Teow eyes bridging the US$330b protection gap and increasing collaborations amongst stakeholders.

As the new president of the Life Insurance Association, Singapore (LIA Singapore) elected in March 2017, Patrick Teow already has a lot on his plate. He acknowledges that there are awareness and perception issues that need to be addressed in order to get more Singaporeans adequately insured and financially independent. He notes that as of end-2011, the total protection gap in Singapore was S$462.1b (US$330b). With Singapore’s rapidly ageing population, bridging this gap is of utmost priority for industry players like Teow. He notes that the number of those aged 65 and above will nearly double from 220,000 in 2000 to approximately 900,000 in 2030.

Teow is the chief executive officer of AIA Singapore. He joined AIA in July 2013 as CEO of AIA Group Agency Distribution. He has been driving the company’s success
across multiple markets by boosting productivity levels and creating a strong Premier Agency culture focused on quality and professionalism.

Before making his move to AIA, Teow spent close to 28 years at Prudential, having taken on the role of regional chief agency officer for Asia, EVP and chief distribution
officer-Prudential Singapore as well as group financial services director. He holds professional Chartered Life Underwriter and Chartered Financial Consultant qualifications.

In this exclusive interview with Insurance Asia, Teow shares his thoughts on the current state of the insurance sector in Singapore, his plans and goals for LIA Singapore, his business philosophies, and more.

What are the latest trends and challenges in Singapore’s insurance industry?
Despite the maturity of our market today, the protection gap in Singapore still persists. The total protection gap in Singapore was S$462.1b (US$330b), as of end of 2011. This means that people have not been effective in their personal financial planning and will become increasingly more reliant on others for financial support.

In this respect, we recognise that there is segment of society who may not recognise the true value provided by professional financial advisers — which include tied agents, and independent financial firms — or they are being more cautious about getting help to better manage their finances. It is both an awareness and a perception issue that need to be addressed for us to get more people adequately insured and financially independent.

This is especially critical because of Singapore’s rapidly ageing population which, if not effectively managed, will increase the financial burden placed on our smaller economically active workforce and the government. Singapore has the highest proportion of older residents and the fastest ageing population in Southeast Asia, according to the World Bank. In fact, the number of those aged 65 and above will nearly double from 220,000 in 2000 to approximately 900,000 in 2030.

Tied to this is the pressing need for Singaporeans to keep healthy to avoid suffering from chronic diseases, and for all relevant parties in the healthcare ecosystem to better manage healthcare costs to ensure the affordability of medical treatments and sustainability of medical insurance.

Today, approximately one in four Singaporeans aged 40 years and above suffer from at least one chronic disease such as diabetes, high blood pressure, high blood cholesterol and stroke. In fact, in 2010 alone, diabetes cost the government more than $1 billion — a figure that is expected to exceed $2.5b by 2050.

Healthcare costs in Singapore will soon become unsustainable if left unchecked, a conclusion that the Health Insurance Taskforce (HITF) had in their recommendation paper launched in October 2016.

In the report, HITF highlighted that, for the ten-year period from 2005 to 2015, the Consumer Purchase Index (CPI) for healthcare, which includes cost of medical treatment and health insurance, increased by 30.6%. This is significantly higher than the 21.7% on prices of consumer goods and services, as measured by the Monetary Authority of Singapore (MAS) Core Inflation.

How does the rise of digital impact Singapore’s insurance industry?
The rise of digitalisation has vastly changed the way we live, work, and play, and disrupted traditional business models. In keeping with the changing times, the insurance industry is taking steps to rethink the way we do business. Leveraging the benefits of digitalisation will help us in the pursuit of sustainable progress in meeting the savings, protection, and investment needs of the community. Globally, the insurance industry has already been called out for lagging behind other industries when it comes to innovation and customer-friendly digital experiences. There is much that we can do as an industry, and there are three key areas which offer immense potential for us to explore, namely:

Data analytics to drive innovation
Data-driven innovations come from effectively coaxing treasures out of enormous amounts of data to uncover deep consumer insights to steer business strategies, product development, and sales efforts. Numerous members of the Association are already investing in innovation centres with research and development efforts and data analytics focused on innovations to improve risk management and provide greater value to customers.

Digitalisation to enhance customer experiences
Digitalisation offers a way for us to provide customers greater convenience, quicker response to their concerns, and more options in the way they choose to engage with
insurers — whether it’s how they purchase insurance and submit claims, or getting more information and seeking financial advice. Initiatives such as digital underwriting
systems and integrated financial advisory platforms are examples of how life insurers in Singapore continue to improve customer experiences as well as productivity and efficiency levels.

Information-sharing and integrated digital platforms for greater collaboration within our ecosystem including insurers, healthcare providers, and policyholders.
Life insurers in Singapore are collaborating to share and consolidate health insurance claims data, making it easier to identify outliers overprescribing and/or overcharging for healthcare services.

What is your outlook for the insurance industry for the next 3-5 years?
We are cautiously optimistic of the life insurance industry’s opportunities for growth and contribution to Singapore’s ongoing progress, just as how the industry rose above to increase the level of protection in Singapore and record a healthy growth of 10% compared to a modest 1.8% growth in our nation’s GDP last year.

Whilst we expect uncertainty in the global economy from 2016 to persist into the year ahead, the Association’s priority is to implement our plan for 2017 focused on ensuring the sustainable growth of the industry and safeguarding interests of consumers.

Our top priorities and commitment for the year are in the areas of: managing the affordability of healthcare in Singapore, bridging the underinsurance gap, and prioritising consumer interests.

What makes you excited about your new position?
It is inspiring to be driving the industry’s transformation at a time of massive change. We are evolving rapidly and expanding our role beyond providing protection as it has been traditionally defined.

Today, Singapore’s life insurance industry is redefining “protection” with people-centric initiatives that include championing preventive healthcare for a healthier population, and facilitating greater collaboration amongst multiple stakeholders to address the national issue of escalating healthcare costs. And, in this era of the Internet of Things (IoT), it is our time to embrace digital disruption and introduce more innovations to truly make a difference in the lives of customers and the community at large.

What three goals are you focused on?
LIA Singapore’s vision of providing security, stability, and peace of mind for the community continues to be our true north. Accordingly, our focus now is to be the catalyst for change, empowering organisations, communities, and individuals to proactively make a difference to their lives, and that of others around them. Managing the affordability of healthcare in Singapore LIA Singapore’s work group is tirelessly putting together a plan with clear actions on what our industry can do to mitigate the challenge of rising healthcare costs following the LIA Study in 2015, and the recommendations put forth by the Health Insurance Task Force (HITF) in October 2016.

We hope that our efforts will be the first of many initiatives by all parties to take ownership of their role in keeping healthcare affordable and accessible because it can only be achieved through the collective efforts of all stakeholders within the ecosystem.

This was also concluded by the HITF — which had representation from numerous parties including insurers, healthcare professionals, and regulators — in their recommendation paper last year.

Bridging the underinsurance gap
This year, LIA Singapore is commissioning a fresh protection gap study as an update to the last study which we conducted in 2011 and subsequently released in 2012. The updated study will not only give us a sense of how much progress Singapore has made in bridging the underinsurance gap here, but it also provides a basis for us to prioritise our efforts to provide the community better security and peace of mind.

Having sufficient insurance coverage is especially important in a time of uncertainty, which is what we are facing today. In our last protection gap study, we identified a significant S$462b protection gap in Singapore, indicating that the average protection gap of a working adult then was 3.7 times his/her annual income — that level of coverage is significantly less than the recommended coverage amount of 10 times one’s annual salary to meet one’s protection needs.

Prioritising consumer interests
This is an ongoing effort for the industry, and our initiatives in 2017 include the introduction of new disclosure initiatives under the Financial Advisory Industry Review (FAIR), and exploring digital innovations to increase choice and improve customer experience for consumers

What will you do differently as president of LIA Singapore?
I appreciate that each leader has his unique leadership style and brings something different to the table. As the newly elected president of LIA Singapore, it is my commitment and that of the Management Committee’s, to build on the strong foundations laid down over the years by my predecessors and see the industry continue scaling new heights.

I would like to see, at the end of my term, success in narrowing Singapore’s protection gap, and greater collaboration amongst stakeholders for the benefit of society.

What are your key business philosophies?
I believe in the importance of integrity and courage to do the right things the right way, and for the right reasons. These philosophies do also apply to life insurance which really is all about people, and having their trust that we will safeguard their well-being and that of their loved ones. In keeping with this, one of the industry’s initiatives in 2017 is to step up on consumer education efforts to help individuals better understand the value and importance of health insurance coverage, as well as the complementary nature of Integrated Shield Plans (IPs) vis-à-vis MediShield Life.

What previous positions prepared you for this one?
It is the sum of our experiences that help shape who we are and how we choose to move forward into the future. Three decades of experience in the life insurance
industry across the region and in numerous functions are assets I will certainly tap on. Beyond that, I also believe that my personal experiences and interactions with
people — be it family and friends, regulators, colleagues, and other Singaporeans — ensures that our initiatives are relevant and provide value for the community.