Insurers should promote digital transformation rapidly as, compared to other financial industries, the insurance industry is considered to have slow digital transformation with limited economic efficiency.

Despite efforts being made, the digital transformation of insurance companies is lagging, as most life insurance buyers still want to hold paper contracts instead of keeping them online and seeing them on mobile devices.

Pham Thu Phuong, deputy director of the Ministry of Finance’s Insurance Supervision Authority (ISA), said the biggest challenge for insurance companies is an effective digital transformation strategy, as many companies, even foreign-invested ones, have not performed digitisation synchronously but only in some stages.

According to Phuong, the economic efficiency of digital transformation of the insurance industry remains very limited. ISA’s statistics showed at present, the insurance revenue through digitised channels of the life insurance segment accounts for less than 5 per cent of the total premium revenue of the market. The number of the non-life insurance segment is even lower at less than 1 per cent.

The digital transformation costs are not small while the insurance business relies on the majority and statistics in order to have correct premium calculation, therefore the more rapid, comprehensive and effective the digital transformation is, the more insurance companies gain. Thus, insurance companies need to develop strategies and calculate reasonable investment costs to promote digitisation effectively, Phuong noted.

According to insurance companies, changing the habit of using technology in insurance activities is difficult, but the boom of digital transformation in life as well as the increasing number of young insurance customers are making it easier for users.

Naren Baliga, Chief Operation Officer at Manulife Vietnam, told tinnhanhchungkhoan.vn that at first, when Manulife’s eClaims digitiser was first launched, many customers were not used to submitting documents online, but now, 95 per cent of the insurance claims of Manulife Vietnam have been sent through this tool.

For customers who are still using paper contracts, access to the benefits of electronic contracts as well as other paperless services is only a matter of time, Baliga said.

In an era where digital interactions are applied to almost everything in daily life, harnessing the power of digitalisation is important for life insurance companies to promote interaction with customers, Baliga said, adding that to become a leader in the insurance industry, competing with other insurers is not enough. The biggest challenge for all insurers is to provide a convenient and enjoyable insurance digitisation experience for customers like those of other financial industries.

Digitisation is not only simply a driver for the growth of the life insurance industry alone, but also a contributor to transforming the entire value chain of the insurance industry. If insurance companies do not go digital soon, they will quickly lag behind, Baliga said. — VNS