That was the brave concept in back in 2007.
The agency system is one of the players in the middle of the supply chain selling the Insurance Financial Products – beside the brokers, the banks, and the media of the internet – of the latest example of Tune.com the brain child of Mr. AirAsia himself – Tan Sri Tony Fernandes. The way he bought RM 1 for Air Asia and turned it into a billion ringgit enterprise in just 5 years, like Godzilla walking in to destroy everything that is “high costing”, by end of 2007, Air Asia expects passenger volumes of 15 Million backed by an increase in the number of aircrafts and destinations.
We cannot under-estimate what he was going to do with Tune Money – likely to cut the costing of all Insurance Products by 25% to 30% for sale commission and return them to the consumers. By branding with a loyal captive market of online customers of 15 Million and with a superb interactive website, linked to Air Asia’s brand, he was going to crash into the insurance industry and destroy the status quo and whether he succeed or not, the consumers are not going to complain about this alternative channel of seamless information and thereafter the agency system cannot remain the same.
Example: AirAsia GoInsure [A Travel PA] From RM 6 premium for a RM 300,000 PA. Those are numbers that we don’t see in traditional insurance behemoths’ offerings.
That was a brave concept. He was out to disrupt the industry before the word disrupt was used in the industry.
Fast forward to 2019, 12 years later. The agency system, somehow, is thriving. Tune.com or Tune Insurance hardly left a dent to the choice distribution outlet of insurance products by the agency system of agents. It seems that this concept of middlemen agents for insurance products have outlast the siege, have avoided disruption, have proven that they are here to stay for the next thousand years of insurance.
How wrong they will be.
Perhaps the disruption did not occur with Mr Fernandes. But disruption, like everything, will come. As the famous world destroyer, Mr Thanos once said:
“Dread it, run from it, Destiny arrives all the same.”
Looking at another 12 years in front, nay, perhaps even 5 years, we have the social media platforms’ aggressive domination of the psychic of all the gadget users. With the IOT (Internet of Things) coming in, with the new generation of millenials coming out with their well spent money, with the traditional media of information replaced by the at your finger-tip info, with the prevalence of the mobile decision maker and knowledge acquirer – the scenario may not be the same like what Tan Sri Tony Fernandes cannot do with his Tune Insurance – cutting the costing of all insurance products by 25% to 30% for sales commissions and return them to the consumers.
This time with the Masters of the Universe of Amazon, Facebook, Google, Alibaba, Twitter getting into the act, after having flattered and revolutionized the banking industry, it would likely be that the insurance industry is next in line under the chopping proverbial block.
Alibaba had already crowdfunded the coverage of 100 Critical illnesses for 1 Policyholder to pay .6¢ for every claim settled for RM 187,000 in a participating group of 65 Million Policyholders. And this .6¢ cost will be lowered as the participating group of Policyholders increases.
And the Scheme was started by Alibaba only in October 2018.
When things move, it moves fast. The venerable agency system in the insurance industry is tottering, whether they know it or not. There is absolutely no respect to history, no sentimentality to traditions – when technology disruption hits you, it’s game over. Ask the taxi drivers and they will tell you the same.
Perhaps, for the agency system, the enemy are already at the gates. Change is imminent. Disruption is coming. Are we ready for it, when destiny does arrive?