INSURANCE SECTOR
Compiled by Prashanthi Cooray
LIFE COVER IN TRANSITION
Riznad Hussain lays out a viable pathway to engage, innovate and insure
Q: How would you describe the current state of the life insurance sector in Sri Lanka?
A: The life insurance sector is characterised by both opportunities and challenges, and influenced by the country’s economic conditions and market dynamics.
Although recent years have seen moderate growth, awareness of financial security and life cover remains low. The sector continues to face major hurdles in market penetration, innovation and adaptation to new economic realities.
Despite some growth, market penetration remains low in Sri Lanka, accounting for less than one percent of GDP. This is largely due to the lack of access to or awareness of insurance products, particularly in rural areas.
Economic instability – characterised by high inflation, currency depreciation and declining disposable incomes – has eroded the purchasing power of potential customers. This makes it harder for insurers to attract and retain customers, as individuals prioritise spending on necessities over insurance cover.
Additionally, a significant trust gap exists with many consumers perceiving life insurance as complicated or unnecessary; and past claim disputes have contributed to the scepticism.
Moreover, the sector faces a dearth of talent in areas such as actuarial science, risk management and digital marketing, making it crucial to attract and retain skilled professionals for future growth.
Sri Lanka’s life insurance sector is in transition, showing signs of growth and modernisation despite economic headwinds, low market penetration and operational challenges.
Addressing these obstacles will require public policy support, trust building efforts by insurers, and continued investment in digital transformation to enhance accessibility and appeal to a wider audience.
Q: And how have consumer perceptions of life insurance changed in recent years?
A: Before the pandemic, life insurance was viewed as nonessential with there being a focus on savings and investment linked policies. Over the past decade however, and especially since the pandemic, there has been a shift towards financial risk protection.
Consumers are increasingly concerned about health cover and financial security, with a heightened awareness of their own and their families’ long-term wellbeing. In response, many life insurers in Sri Lanka emphasise pure protection and savings products that offer guaranteed protection.
Life insurance remains a trusted tool for retirement planning, a trend that is likely to continue.
Q: What innovations do you believe will redefine customer engagement and retention in the life insurance market?
A: The life insurance sector is undergoing a significant transformation, driven by technological advancements and digital analytics. These innovations are reshaping the entire value chain from product development to claims.
For example, cognitive computing and predictive analytics are advancing automated underwriting, leading to higher processing rates and a better customer enrolment experience.
AI driven chatbots, self-service portals and mobile applications are revolutionising customer interactions, by speeding up claims and enhancing service quality.
Insurers are also integrating health tracking and reward based wellness programmes, encouraging policyholders to engage with their insurance beyond financial transactions. This creates meaningful customer relationships.
Q: Could you shed some light on trends that are shaping the marketing landscape in Sri Lanka?
A: There has been a significant shift towards digital marketing with social media and influencer marketing leading the way.
As of January 2023, Sri Lanka was home to 7.2 million social media users, representing 32.9 percent of the population. Influencer marketing is gaining traction as consumers seek more authentic voices and relatable stories online.
Marketing strategies are also becoming increasingly data centric, focussing on personalisation and consumer behaviour insights.
A PricewaterhouseCoopers survey of over 1,000 senior executives revealed that highly data driven organisations are three times more likely to report major improvements in decision making compared to those who are less reliant on data.
As consumers grow more eco-conscious, brands prioritising sustainability and social responsibility are gaining favour.
Patagonia for instance, has pledged one percent of its sales towards environmental preservation since 1985 and aims to become carbon neutral by 2025. This approach serves as a model for Sri Lankan companies looking to adopt purpose driven marketing.
Q: How do you foresee the role of traditional marketing channels changing?
A: Traditional channels such as TV, radio and print remain important in building mass awareness, particularly among certain demographics.
However, the future lies in hybrid models where traditional media complements digital efforts. In Sri Lanka, this shift is underway with traditional media establishing brand authority and trust, while digital channels provide immediacy and interactivity.
Traditional media will continue to excel in storytelling and delivering emotionally resonant content, which can then be amplified through digital platforms for broader engagement.
Q: What challenges do businesses face in integrating marketing strategies with CSR initiatives?
A: Companies often treat CSR as a box ticking exercise for short-term PR gains, rather than integrating it into long-term brand strategies.
Inauthentic CSR efforts can come across as insincere, which can damage a brand’s reputation. To be effective, CSR initiatives must contribute meaningfully to the broader social good.
Successful integration requires that CSR efforts resonate with the company’s core vision and purpose. CSR should feel like a natural extension of a brand’s values, not merely a publicity strategy.
