Taiwan has the second-highest insurance penetration rate of any country in the world, which presents players with opportunities as well as tough competition. How should Taiwan’s life insurers transform before the advent of the super-aged society? To learn more, we spoke with Nan Shan Life Insurance’s Mr Fan Wen Wei.
We spoke to Nan Shan Life Insurance president Fan Wen Wei about the realities of doing business in the crowded Taiwan life market.
How do you go about maintaining your market share?
At present, Nan Shan has about 6.58m policyholders and more than 11.64m valid policies. This year, the accumulated profit for the first eight months is NT$45bn ($1.415bn), which has surpassed Cathay Life Insurance and currently ranks second in the market behind Fubon Life Insurance.
Our position has remained constant in recent years. We have been in Taiwan for 59 years and our 60th anniversary is soon to arrive. Integrity and service have always been the company’s values for a very long time. We emphasise service over sales because we believe that being honest with our customers is more essential than anything else.
How was the market – and Nan Shan Life – affected by COVID-19?
Since the COVID-19 outbreak, it has been difficult to meet clients physically. This has a significant impact on new sales. However, I believe that Taiwan’s industry responded just as quickly, and a number of easy-to-use digital tools have been created. A variety of digital channels are also used for customers making claims.
In addition to Taiwan’s high insurance awareness, the public’s need for medical insurance has grown as a result of the pandemic outbreak. Taiwan’s COVID prevention insurance is immensely popular, but because of increasing claims, insurers generally resist paying out.
Some customers will have symptoms long after contracting the virus, so we need to figure out how to provide long-term treatment and medical services. Diet and psychological counselling also become crucial. For example, some patients have suffered psychological trauma because of their long-term COVID symptoms. They need professional care and we must make sure that clients can access more support from us.
Taiwan changed its pandemic policy in October, what impact will this have on Taiwan’s health insurance industry?
Foreign research indicates that once the border is opened, the pandemic scenario may worsen. We will warn our customers to take additional protections on top of their standard travel insurance if they are travelling abroad.
They should also focus on protecting their health, as medical costs abroad are substantially higher than in Taiwan. Their health insurance’s coverage needs to be expanded accordingly.
Could you tell us about the health protection ecosystem you have launched?
At the end of 2020, Nan Shan Life Insurance established its health protection ecosystem. From the perspective of whole-person health, we want to offer services for the four health-related processes of managing health, sub-health, diseases and disabilities, as well as collaborate with third parties to offer their services too.
This concept is not to provide these services when the customer is sick or disabled, but to monitor their exercise and fitness, diet and nutrition, medical care and mental health and provide assistance and care when they need it.
To date, we have roughly 42 cooperative enterprises working with us. We are extending the value of insurance and health promotion, and our health promotion also integrates the design of some insurance policies.
What challenges and opportunities do you believe the ageing population and declining birth rate present?
Due to Taiwan’s aging population and low birth rate, a super-aged society is expected to emerge around 2050. Taiwan is likely to have the lowest birth rate in all of Asia. If the people are not well prepared for retirement, I believe this will have a significant impact.
The average age in Taiwan is increasing and is estimated to reach 84 years old. However, they may only be healthy until they are 72-73, which means that they may be unhealthy for more than 10 years, which could mean heavy medical expenses. It opens up opportunities for the long-term care and medical care sectors.
In the past two years, Taiwan has been promoting long-term care 2.0. We now encourage clients to buy more. They need better long-term care life in the future, a better quality of health care as they age. This presents a huge business opportunity.
How will you use digital tools to establish a health management ecosystem?
On the business side, we have made full use of technologies such as big data and AI modelling in pre-sales, claims settlement and after-sales. We are tapping into its potential and further empower our business development.
While we have a goal for the future, we can’t move forward without some legal assistance, which is lacking. We want to explore how the data can be shared further, but there are currently certain legal limitations.
If cross-industry data sharing is viable, then using the healthcare circle’s data will allow us to understand the customer consumption model better. This will make data analysis simpler and the data’s ability to predict the customer’s future demands for the right services and products more accurate.
How do you cope with macroeconomic problems like inflation and rising interest rates?
The media has generally reported that the recent economic situation has a significant impact on the net worth of Taiwan’s insurance industry, however in terms of its capital, real business-cycle, or liquidity, we have not seen greater risk so far.
The US’s recent spike in short-term interest rates is to blame for this short-term variation. After all, once the US addresses its inflation problem, interest rates will go back to a more stable level, prices for both stocks and bonds can return to a more balanced normal level, and the net worth issue can be resolved.
In the long run, I believe, provided that the business has a sound strategy for allocating its assets and liabilities, the real business cycle is under control.
What kind of innovations are you hoping to introduce?
Long-term protection products, health insurance and accident insurance will continue to be our main priorities. However, selling these products will become more challenging.
We will need to identify the best sales channels, digital empowerments and methods for more precise consumer selection and marketing. There are also various technologies that can enable customers to identify where their risk gaps are, helping to avoid tedious and complex analysis steps. These digital tools must be simple to use and easy to understand.
Protection products and health insurance are both significant in the long term. If a customer is in good health, the likelihood that they will need to contact the insurance provider again for long-term protection and health insurance products will decrease. How can you boost customer service frequency and increase customer stickiness?
To gather customer’s health data, whether through wearable devices or through physical examinations, we provide clients with cash returns, or increase their insurance coverage as rewards. A