Bernardo M. Villegas
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AEC and the Insurance Industry

           A good number of the manufacturing sectors in the Philippines have included in the road maps that they have submitted to the Department of Trade and Industry (DTI) the preparations they are making for the advent of the ASEAN Economic Community which is envisioned to allow the freer flow of goods within the ASEAN through the elimination of tariff and non-tariff barriers.  Especially concerned are those in car parts, sugar refining, chemicals, and garments.  Among those in services, there has been much discussion about how ready are Philippine banks for competition with their much bigger counterparts.  A bank from Malaysia is already showing much interest and zeal in expanding its operations in the Philippines.

          I asked my colleagues in the insurance industry what they are doing to prepare for the AEC.  Since I sit as an independent board director in the largest Philippine insurance company, the Insular Life, I am privileged with an inside view of this very important component of the service sector.  My conclusion is that the impact on the insurance industry will not be very significant because the country is already dominated by global players such as Sun Life, AXA, and Prudential Life who are also major players in the insurance industries of the leading ASEAN countries.  As the top management of Insular Life commented in a brief:  "...the threat from regional life insurance players is expected to be muted since major Philippine life insurance companies...are already exposed to global best practices and have had to learn to operate at par with the major regional players.  Even without the AFTA, the revised Insurance Code allows the entry of new life insurance companies, subject to increased capitalization requirements as well as to Insurance Commission approval.  It should be noted that many foreign insurance players entered the Philippine market in the early 1990s but eventually withdrew.  It is not easy for new companies to compete with existing ones, especially those which have established nationwide distribution presence and/or partnerships with the leading universal banks."  These comments remind me of how difficult it is for the large multinational retailing companies like Wallmart, Carrefour or Corte Ingles to compete with SM, Robinson, Puregold, etc.  This is another reason why the "Filipino First" mentality still prevalent among some local industrialists does not make sense.

          Let me cite the specific case of Insular Life, about which I am more familiar for obvious reasons.  It has already been competing effectively (it ranks third in total assets) in an industry where seven out of the top eight (accounting for around 70% of total premiums) are foreign companies which are also operating in the ASEAN region.  As early as 2008, Insular Life underwent a corporate rebranding to be in a better position to venture into new markets and to be competitive in a more liberalized business environment.  The rebranding program was an organization-wide business strategy aimed at delivering a consistent brand experience throughout the organization.  The strategic move included the physical renovation of its nationwide network of offices, retraining of employees and agency force, product development, and customer service enhancement initiatives.

          Insular Life combines the advantages of corporate longevity (it is 103 years old) and a dynamic flexibility to adapt to advances in technology.  Not to be outdone by its foreign competitors, Insular Life has devoted much attention to digital marketing.  The company's website has been rebranded and content has been boosted not only to be more informative but also to be interactive.  To meet head on the technological platforms of its multinational competitors, Insular Life has strengthened its sales and servicing capabilities by launching various online portals  that serve the needs of its clients as well as its own sales force.   To ensure its commitment to digital marketing, Insular Life has conducted training programs for its key personnel as well as hired specialists in this field.  Its advances in digital marketing will enable the company to service better the insurance needs of the Overseas Filipino Workers (OFWs) in such countries as Singapore and Malaysia in the ASEAN with the greater liberalization under the AEC. 

          The greatest advantage of Insular Life in competing with both existing and potential foreign competitors is the very personal touch given by its sales force even in a digitalized world.  For local customers who still prefer face-to-face servicing, they can go to any of Insular Life's 61 offices nationwide, capable of handling policy transactions over the counter.  Insular Life has streamlined its processes, thus enabling it to issue insurance policies within three days from the time an application is submitted.  The company is able to issue over-the-counter policy benefit checks for any amount in any of its regional and district offices nationwide.  It is also able to process requests for policy loans and dividend withdrawals received online.  Because the offices are inter-connected, customers have the option to submit their request in one field office, and receive the fulfillment of the request in another field office.  For those who choose to transact from their home or office, Insular Life also offers various facilities such as a call center, including a toll-free number for customers in the provinces.  Its Interactive Voice Response System is a telephone facility through which customers can access their policy information.  For those who prefer to communicate online, they can enroll in the i-EAGLE Customer Portal where they can access their policy information, receive notices on policy benefit payments due, submit requests for policy loan or dividend withdrawals, pay premiums online, and chat online with the Customer Care Representative. The case of Insular Life then illustrates the very important point that the dawning of the AEC will pose no  insurmountable obstacle to local service companies in competing with their counterparts in the  nine other companies in the ASEAN.  For comments, my email address is