Generali’s Leonardi on Malaysia M&A and the evolution of distribution

July 26 2021 by

InsuranceAsia News (IAN) recently caught up with Hong Kong-based Rob Leonardi, regional officer at Generali Asia, to discuss a variety of issues affecting the insurance industry in the region.

Topics discussed included the Italian firm’s recent high-profile merger in Malaysia and how the insurer is harnessing digital and physical distribution channels. Leonardi also shared his thoughts on India’s ongoing pandemic difficulties.

IAN: Generali has announced plans for a major merger in Malaysia, what is the rationale behind this?

Leonardi: The merger of MPI Generali and Axa Affin General Insurance is an important milestone in the next stage of our growth journey in Malaysia. We have a positive outlook on Malaysia’s insurance market and the move aligns with Generali’s strategy of growing our business in high growth markets.

Malaysia is home to a large and growing middle-class population and has an insurance penetration rate that is still relatively low compared to other more mature markets in Asia. In addition, several important initiatives have been taken in recent years to improve transparency, encourage product innovation and expand channels for delivering insurance and takaful products and services. This will help expand insurance coverage to other sectors and demographics of the population, improving the prospects for achieving the 75% penetration target set under the Malaysian government’s Economic Transformation Programme (ETP).

Our favourable outlook extends to the P&C insurance sector which is underpinned by robust capital adequacy and market players have enjoyed a track record of consistent underwriting profitability. Providing greater value to our customers is central to our growth strategy. Once we receive regulatory approval, we will integrate our businesses in a way that leverages the best of both companies to enhance our service for our customers and provide them with a more extensive range of products and points of sale. We will also be able to leverage the know-how and expertise from Generali’s strong management team in the region and globally, to further enhance our customer offering.

IAN: Has there been any change of Generali’s business plans for 2021 and is the three-year plan for Asia, which is due to finish in Q4 2021, on track?

Leonardi: Generali is on track to achieve its 2021 strategic plan which, given the unprecedented environment from the pandemic, underscores the resilience of our business and the effectiveness of our strategy. In Asia, central to this has been our people and their ongoing hard work, including stepping up during the challenges of the last 18 months with the pandemic, to ensure that we can continue to deliver on our lifetime partner ambition. Over the last few years, we have made solid progress on our business transformation plans across our seven markets.

Highlights have included: ensuring we have a distribution model that increasingly bends both physical and digital, having the right products to cover our customers across the different stages in their life, building a strong brand, growing our agency footprint, building a more diverse and inclusive culture to drive innovation, living the community, and strengthening our partnerships in the region – all of which has brought us closer to our customers. This transformation has also helped to grow our business in Asia which has also been strengthened by inorganic growth opportunities, such as our recent announcement in Malaysia.

IAN: How has the Asian insurance consumer been adapting to the pandemic and how has insurance been evolving?

Leonardi: We can expect insurance in Asia to emerge even stronger than before the pandemic with higher risk awareness and a greater demand for digitalisation, innovation and customer-centricity, and a better understanding of the need for protection. Covid-19 acted as a catalyst for an increased awareness of health insurance and the realisation of its importance for unforeseen health-related situations. Consumers are adopting healthier lifestyles, they are more concerned about nutrition and fitness, and there is more awareness of and focus on mental health.

For some consumers, their experience with the pandemic has encouraged them to be more open to considering life insurance. There is also an underlying appetite for greater financial health, driven by economic uncertainty and as some consumers seek to restore their financial well-being. This has presented an opportunity for insurers to innovate and build greater trust with customers. It has also been a significant driver for digital transformation, especially when it comes to customer interaction and distribution. Consumer expectations and demands are setting the pace of progress and the lockdown restrictions expedited the need to move to digital for many players.

Across all industries, the pandemic has accelerated the move towards adopting stricter and more defined environmental, social and governance policies (ESG). It has led people to see how interconnected everything is, like how the environment impacts the economy. Customers and investors are increasingly demanding greater ESG transparency, and it has been an important issue for Generali for a long time.

IAN: Unfortunately, India has seen a resurgence of the pandemic – can you give us any updates on how this has been impacting the market?

Leonardi: It has been devastating to see the worsening Covid-19 crisis in India and we are very concerned with the destruction it has caused to individuals, businesses, and the country. We have been carefully monitoring the situation and providing support to our customers, our people at Future Generali and our communities as best we can. In recent years, there has been a push toward digitalisation of India’s insurance sector which has been supported by initiatives from the Insurance Regulatory and Development Authority of India (IRDAI) to regulate the distribution of insurance through online, telemarketing, and virtual marketing means.

The pandemic accelerated the transformation already underway and the IRDAI recognised that digital was the need of the hour by introducing further measures to support. All of which has helped to widen insurance to under-served segments of the market. While the financial impact of Covid will take time to play out, we can expect the pandemic will give the Indian insurance market a boost, driven by this digital transformation and like what it is doing to many of the other markets in Asia – greater awareness of the need for protection and a focus on health and well-being.

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