In 2021, the insurance company Ageas decided it needed a digital plan, and it settled on encouraging its various local entities to work with platforms.
“We had tried B2C, we had tried aggregators and other models to distribute,” said Valer Merenyi, regional director for digital, who recently moved to Hong Kong from the Netherlands to oversee the Asia side of the business. “We realized there is a new breed of strategic partners: the digital platforms.”
Speaking at a recent conference, Merenyi noted that technology now allows an insurer working with such partners to achieve meaningful scale. “These are the next-generation partners after banks,” he said.
That represents a notable expansion of Ageas’s business model. The firm provides both life and non-life insurance through local bank distributors. In Asia, these include Etiqa, MeungThai and Taiping Life, among others.
Following the banks
Ageas is based in Belgium and has roots that go back via the old Fortis business more than 190 years. (“I like to tell people that our firm is older than Belgium itself,” Merenyi joked.)
It operates a federated (locally decentralized) business, so each country team determines its own relationships, but the overall model has always been bancassurance. Most of its business is in Asia, as it only operates four markets in Europe.
“All the banks have gone digital,” Merenyi said. “The traditional bancassurance model is at stake. If we don’t follow banks into mobile, we won’t touch their customers.”
The firm identified five verticals where new platform partnerships can work, but its initial efforts have focused on just one, digital financial services, although it is also working its way into e-commerce, travel, health, and telecommunications.
Many questions
There is one drawback to Ageas’s model: because it is federated, it leaves business and partnership choices to local executives. That makes it easy to embed deeper with local banks or other partners. It makes it hard, though, to work with cross-border platforms. Part of Merenyi’s brief is to work on developing assets Ageas can use at the group level across markets. This will take time, but it allows Ageas to own the intellectual property, instead of giving that control to local bank partners.
Other big questions Ageas’s entities are grappling with as it explores embedding insurance into others’ services include:
- How to get an exclusive distribution deal from a non-bank partner?
- How to negotiate with your bank partner when you want to forge a new deal?
- How to embed a traditional product into an online journey, and how to price it?
- How to optimize the user experience and sales, when each partnership and model is unique?
- How to nudge users into opting in?
- How to develop products for reinsurance?
There are also various models to consider when working with next-gen partners, all of which fall under B2B2C – that is, designing products for distribution partners who on-sell it to their customers. Merenyi categorized these into four types, and gave examples of how Ageas is using each.
Bundled
The customer purchases something or uses a service that comes with an insurance component baked in, with no option. The platform partner pays the premium to Ageas up front, because the insurance gives it a product differentiator.
In Malaysia, Ageas offers free life insurance bunded into junior savings accounts at Etiqa. The higher the savings balance, the greater the coverage, so the insurer and the bank are aligned.
In Portugal, the insurer bundles life insurance on top of credit cards issued by local bank BCP, as a benefit to cardholders.
Embedded
This is an opt-in journey, such as insurance on top of purchasing a flight or credit on a loan.
Ageas offers embedded travel insurance on train tickets purchased in India. The premium is a tiny Rs0.5, but Ageas is issuing 500,000 policies a day. “It’s micro-micro,” Merenyi said, “but for digital platforms, scale is different.”
In Turkey, the firm embeds life insurance into personal loan applications at its bank partner. The bank makes two loan offers, one with credit insurance, one without, with more attractive price quotes and interest rates if the insurance option is chosen. Ageas can also offer a rider for borrowers who are unemployed. Merenyi says this complexity goes against the grain of digital insurance, but the lower interest rate means most people take the loan that comes with insurance.
Standalone
This is putting an insurance product on a bank’s display shelf within the bank’s app or online portal.
This works for simple, commoditized products. For example, in Turkey, there are tax-driven products for pensions that people regularly purchase annually. Ageas now offers these via the mobile app of Akbank. It just launched this year and already accounts for most of Ageas’s sales in that country.
In Thailand, KBank’s mobile app includes shelf space for Ageas life and non-life products. These are simple products designed for online, but with some scope for adding a sales call, although there are regulatory constraints.
Both of these standalone examples have potential to bleed into the fourth B2B2C model, which is:
Offline-to-online
Converting offline customers to digital ones. Merenyi calls this model “the jewel in the crown”, because it can be used for complex, big-ticket policies. Here, an online portal creates a lead, but converting it into a sale requires a human touch. Merenyi says O2O will be critical for bancassurance as banks reduce their branch networks, because it can replace some of that lost foot traffic.
Ageas is just getting started with these. Last year in India it launched an O2O micro insurance program with banking partner AFLI. Microfinance is a cash-based business, but through AFLI, Ageas can embed insurance by automating the review of underwriting, simplifying products, and adding a middle office supported by vendor eBao Tech to design customer journeys. Products incluce microinsurance, group credit, and group term life (relevant because micro-finance lending is usually to groups of village women).
Another O2O example is with Banca in Portugal. The bank is undergoing its own digital transformation, and it is compensating its relationship managers for loss of walk-in business with supporting bancassurance via online channels. This works in an aging society where some people are still uncomfortable with mobile services, but it requires tweaking the RM incentive structure.
Finally, Ageas has recently signed an exclusive three-year deal with SingTel to provide insurance to its millions of customers. “There is no way we can do this purely online,” Merenyi said. But the size of SingTel’s customer base enables Ageas to crunch data analytics at scale, to create models to suggest how likely a given customer will purchase insurance.
Furthermore, Ageas is leveraging generative AI to personalize marketing pitches and content to generate leads, which eventually will be passed to human advisors. Training the advisors on how to handle genAI-related leads is a new job in itself, given the myriad ways the AI can generate personalities and wording.
The SingTel deal is crucial to proving the technology, Merenyi said. But regarding all of these B2B2C projects, he says while they vary in their traction, they all show signs of demand. In some markets, digital partnerships are recording double-digit growth rates for new premiums. Along with bancassurance and agency, Merenyi said, “These new sales channels are viable.”
DigFin is writing about embedded insurance. See our introduction and our insurtech case study with Yas Digital.
