Bank Negara launched yet another attack on the insurance industry a few days ago and rightly so. Governor Tan Sri Muhammad Ibrahim scathingly said current industry business models are “essentially broken”. This is on top of the gov’s previous call for the insurance industry to explore new cost-efficiency delivery channels and to “wake up from its slumber”.
It’s really fascinating how incumbent players don’t see the writing on the wall that change is at hand because policyholders have been duped for a long time. Hands up how many of you know exactly what kind of policy you bought into? Was the buy made on an objective assessment or from relentless cajoling of the agent?
Insurance companies are themselves very much the problem. There is a sense from speaking to the startup community that the insurance players have been lobbying strongly to slow things down a little when it comes to price disruption and product literacy.
This is the same with the unit trust industry. There seems to be this penchant for making things mysterious and magical. Insuring and investing shouldn’t be more complicated than buying a car. People understand what they are getting into when they buy a car.
This is so bad that BNM has pushed the industry’s hand, by kind of JV’ing with it, to launch an affordable product for 8 million people. Coupled with a few other smart ideas which I’m sure are brewing in BNM’s sandbox programme, we should soon hopefully see cheaper and better insurance products which we can understand.