Another article earlier in my career by three years was called Morton’s Meanderings … and it chronicled my feelings towards the emerging markets of Asia Pacific. AP, as its affectionately known in insurance circles, albeit small circles, took up a great deal of my time from January 1990 and through to 2002. My experiences were many and great. Farmer Ross meets the wisdom of the Orient cultivated by the harrows of local and current talent. Again Marketing Options published a version of both the earlier writings and this current one. Steve of MO wanted my up to date view especially if there were changes.
Long plane rides made for the perfect environment to write until the batteries failed. Now I am spoiled with “plug ins” to keep the electrical juices flowing.
If I write an update much more has changed. Some good. Some bad. Regardless it has changed to the point it is almost unrecognizable to anyone who has been away for the decade.
Will I go back is the often asked question. In a heart beat, for the right person and at the right time.
Ross
2004-04-12
Marketing Options
March 1994
Three years is a long time. The number of changes that have occurred in the life insurance industry in Asia Pacific, relative to North America, is phenomenal. Remember, I referred to it as Pacific Asia? Now I know that people there take offense if the continent isn’t named first – something to remember if you’re from America North.
In Issue No. 89, I wrote on the emergence of a much more aggressive market of the life insurers in various parts of Asia Pacific with particular reference to Indonesia. A lot of water has run under the airplane since then and a considerable repositioning has occurred in several of the region’s countries. The issues that were not previously evident, but common in North America, have reared their ugly or pretty little faces (depending on your perspective.) Let me explain as I take you along on a speaking tour of six countries in 10 days.
Toronto to cities such as Taipei, Hong Kong or Singapore requires patience, lots of good reading material and pilots who can fly without sign posts. Twenty hours of travel is almost a day, regardless of who is counting. Even the most comfortable seat and pleasant on –board amenities cannot lessen the mental fatigue. Depending on my mood, conversation with the individual sitting next to me is either encouraged or discouraged. Mentioning that I am in the insurance business often abruptly ends dialogue. On this trip my language shortcomings prevented any depth to conversation and so I communed with my laptop.
After surviving the loss of my precious luggage (it wanted extra time in Vancouver) by buying the only size 17” neck shirt in Taipei that had a body long enough to cover my upper torso [Ross is six foot four – editor], I proceeded to visit local insurance officials. Traveling from the hotel to the speaking engagement in this capital of Taiwan involved one of the most harrowing taxi rides of my life.
My presentation was about large case underwriting and once I hit question period I felt right at home. The most prominent questions being thrown at me (politely, of course) were the same as I would have had to field in the U.S. Or Canada. This is a mature market with mature issues that pointed out that communication deficiencies between underwriter and agent knows no geographical boundaries. No, I did not instigate the issues to prove a point!
Sharing of information and trust were high on the agenda as we wrestled with how to bring peace and prosperity to the insurance world. I was looking for an answer more than contributing a solution. The definition of large case was the same as in North America, just the number comes up smaller. Most purchased of life insurance are for under 100,000 (local currency) and a large case is a million (local currency again for those not keeping up). Perhaps here the influence of North America has been too great – the minority of agents there who know how to beat the system are matched by a number of home office underwriters who know how to shackle the seller when necessary.
One question addressed lifestyle underwriting because of the number of accidental and unusual deaths in the initial policy years here. Early mortality in North America has often been attributed to lackadaisical underwriting of occupation, avocation, aviation, driving and lifestyle options. Combining any or all of these, even when anyone looks borderline standard, with mild or greater abnormalities of blood or medical findings warrants extreme caution before agreeing to issue. Early deaths, of which recent large case studies show and abnormal number, can be prevented if risk selection is stringent where adverse lifestyle issues are evident. There is no substitute for agents working closely with underwriters to ascertain the degree of any lifestyle issue for proper risk selection. I speculated with the audience that extreme price competition in the market plus poor liaison between pricing and underwriting realities also contributed to early claims.
Hong Kong raised the specter of blood, urine and guts. Participants asked why so much blood is being drawn. Was it true that it was being used to fertilize corn fields in Kansas? Blood testing has been growing in stature here with the increasing concern over AIDS. At the same time, North American companies perceive and escalating need to screen for Hepatitis B. For the latter there is growing concern that premiums shrinking to levels only half justified in North America are going to be unjustified when the Hepatitis B starts playing havoc with insured mortality. In truth, “havoc” is a term unused by local experts but referred to frequently by many visiting insurance practitioners. The other side of the coin (there are coins here however don’t let them encumber your pockets when you come home – currency traders in Toronto refuse to accept them) is that the rates of mortality in the pricing will always reflect the total mortality of this colony. It is only three more years until this place of my wife’s birth reverts back as the lease is nonrenewable. Perhaps it is this truth that is dogging the actuaries.
Is urine HIV testing a substitute for blood HIV testing? This question was posed by both home office underwriters and agents. The answer, of course, rested in the world’s experience that alternatives to blood testing are available and in use to make everyone’s life easier.
During a session with underwriters and claims personnel, a heavy discussion on what is truth and what is a lie on applications developed over an actual case. This is a world wide issue. If an applicant states they saw a doctor yesterday for the infamous “checkup”, what are the repercussions if the underwriter waives the attending physician’s report only to learn that the checkup was for pain or symptomatology that eventually led to death? Ws the underwriter wrong for waiving a perceived routine APS? Was the applicant wrong for failing to declare the real prompting for the checkup? The answer was a simple, yet complex, “yes”. Underwriters get paid for making value decisions based on information garnered from agent, medical examiner, attending physician, etc. The information trail is a delicate one and if trust is involved most underwriters start by believing the applicant. Regardless of country and product description the issues are the same!
I left with the comforting thought that not only are pampered palates of Canadians susceptible to occasional and distressful turmoil in the guts (stomach, upper and lower intestinal tract or acute and painful assault on the duodenal area for Larry of The Underwriting Edge fame). When one of the doctors in attendance from Indonesia told me he was under the weather (my translation) due to the food adjustments he had to make in Hong Kong, I felt I was not singled out for tummy upset and subsequent eructations. Must be common to all us worldly travelers as a genetic shortcoming for which insurance companies will soon be testing as part of their zillion-part laboratory protocol.
First time for Ross’ big adventures to enter into China’s mainland, if only for a 30 hour visit. The time of my visit was chiseled out of my speaking tour and thus its hallmark was brevity. Exciting thoughts of exotic pushcarts, sameness of dress (gray, turned collar, militaristic jackets) and true Chinese foods had filled my bedtime moments the night before. All my delusions, shaped by countless hours of ancient stereotypical movies, however, were squashed forever in the first few hours.
As the train rapidly took us to the border crossing, I steeled myself for all forms of potential episodes I would hopefully live to convey to my great-grandchildren. Like in Calvin and Hobbes, my imagination was running wild and then the bell rang and I faced the tedious reality of an uneventful border crossing.
Stepping into a Mercedes taxi to take me from the train station to the hotel was also a lunch bag letdown. It was to become one more of many. Exotica was nowhere to be found as the trip was spent counting BMWs and Mercedes while seeing a town of 10,000,000 – hustling and bustling, not unlike Hong Kong. As I entered the charm of the local Hilton, I wondered if this was all a ruse and my erstwhile Manulife colleagues (plug for the company that pays for my worldly ways) was playing a practical joke on a grand scale.
Bottom line, after 30 hours I came to understand that modern China in the areas where there is encouragement of classic growth is like boomtown Canada of the 70s. The biggest exotica was adding sea slugs to my list of lest favourite objects to that are put on my dinner plate. Right up there at the top with ducks feet, pickled, steamed or fried! For those unaccustomed to any delights of foreign cuisine, neither the feet nor the slug fit McDonald’s idea of crowd-pleasing fast food. I must add, however, that there are times when I do thank my dear wife’s passion for Chinese food and the use of her culinary skills to entice me to explore this new cuisine after growing up on potatoes, cabbage and red meat (never really red by the time my Mom was through with it).
The visit was too brief with the local insurance experts and leaders of a company that is doing quite well in a market that has more potential than anyone can imagine. The topics were, of course, reinsurance related and as such I was in my domain. I hope that as policy size grows because of stock-redemption policies, key-man insurance and estate protection, so can the role of the reinsurer, especially this Canadian reinsurer. In the interim my ‘Special Risk’ colleagues can provide immediate reinsurance capacity and council as the market for personal accident coverage is here and growing.
After two days of recovery (recovery is a recurrent theme of my Asia Pacific trips), I entered the vibrant economy of Malaysia and its extremely well organized insurance industry. The host was the Malaysian Insurance Institute and one could not help but be impressed with the dedication to improvement that the Institute portrayed. I got to lecture on hold people and large cases with a smattering of both mixed, when appropriate. In such an immense economy, the number of large cases is increasing and the education provided is from one source. Both agent and underwriter get their education from the same body – the Institute. The knowledge for both is combined. Their text books the same. Their goals the same – good business for agent, customer and company.
The Malaysian Insurance Institute is an impressive operation and one that has a good thing going in my opinion. Questions were brief but they were able to convey the depth of understanding the Malaysian insurance staff have of the issues. They know how to avoid agent and underwriter discourse from the outset. Lance Secretan, author of The Way of the Tiger and Managerial Moxy, has written about it and Jim Burton of PPI renown has lectured about it and its called mastery, chemistry and delivery of the subject, regardless of industry. I left Malaysia with the strong belief that the insurance industry is united in its conquest of these three disciplines.
Singapore is Singapore. There is no country like it. Everything went without a hitch a the sophistication shows all the earmarks of British formality and Singaporean efficiency. The subject matter here was again the oldies (not rock and roll nostalgia but mature applicants and rich people). With an audience of pure unadulterated home office life underwriters I was safe from the harsher slings and arrows. There were a few barbs as one Singaporean expert wondered how we North American underwriters could have allowed poor large case early mortality to happen. The old adage, “to err is human”, brought very little solace from this audience.
Last stop and the on where my two hour dialogue is rewarded with 16 hours of lectures from experts flown in from around the world. The seminar was sponsored by a local reinsurer, MAREIN, who spared no expense in putting on a top-notch educational affair. Issues were training at all levels, lack of capacity and price wars. A review of the program gave no hint that I was in Jakarta since the topics were universal – people, productivity and competition. A review of software for insurers added to the seminar’s international appeal (and not just because I was speaking on underwriting by computer).
The time at this conference just flew by because the content and attendees’ input was thorough and one never seemed to have enough time to digest every new point or opinion. Excellent dialogue from every perspective made me realize how much more there is to learn about a business that can be so very simple yet appear to be so complex. As always, Indonesia and the friends I have made there never cease to amaze me with the intensity they exert towards this business of life insurance.
Quickly home (if 24 hours traveling could ever be considered quick) was the last leg. Uneventful other than convincing customs that I don’t smoke (thus no cigs), don’t drink much (thus no booze), faint at sight of needles, bought a T-shirt for my daughter and the horse was a gift from a benevolent host in Indonesia.
Why a horse you ask in closing? It’s a beautiful gesture that means Good Luck to both the receiver and the giver and that summarizes the trip. Can’t wait to go back for Trip Nine.
