Insurance agencies aren’t doing enough to attract millennials

Compiled by Insurance24

HARARE, Work-life balance, opportunities for advancement, and a stable career path – who wouldn’t want to land a job with these qualities? And yet, millennials are still not entering the insurance industry in the numbers needed to replace a retiring workforce.

“It’s a great field, but I really don’t believe that the industry does enough to promote just how good a field it is,” said Robert Pettinicchi (pictured), executive vice president and chief lending officer at InsurBanc, which specializes in insurance agency perpetuation, acquisition and debt consolidation transactions.

Agencies especially aren’t grabbing the attention of students graduating from risk management programs who often end up being quickly picked off by carriers. It’s a lost opportunity, says Pettinicchi, because a young agent knows their demographic well.

“What the young agent can bring to an agency is how to market to a young person or to younger people,” he told Insurance Business, adding that stats show the world of agencies is populated by employees from older generations. “There’s a tremendous opportunity if the right talent is brought in to step into those roles.”

Getting exposure to the work done at an agency is key in the development of a young person’s sales skills, which are crucial to succeed as an agent. Though insurance is something that everybody needs, it does involve a sales process, says the executive VP. It takes people who can present well, work collaboratively, and, when all is said and done, make the sale. As new entrants to the industry, millennials need a hand in cultivating those skills.

“They’re good with problem-solving, collaborating, working in groups, and working in teams, but when it comes to that one-on-one sales process, that’s where they’ll need the development and there’s no greater place than an insurance agency to do that and learn that,” said Pettinicchi.

For young people with an entrepreneurial drive, working at an agency can open doors for business ownership later on. Many probably don’t set out with a clear goal of starting their own insurance agency, even though this doesn’t necessarily require a high capital cost of business, but that first job could be the start of a long and rewarding career that eventually leads to owning an agency. Nonetheless, that journey can’t start if young agents aren’t walking in the door to begin with.

“You’ve got to get your feet wet and see how it’s done, and be in a position where you could model some behaviors from people who are real top performers,” said Pettinicchi.

Insurance ‘slow to join fintech party’ but is rapidly gaining steam, says FinTechNZ

By Insurance24

HARARE, Fintech has taken off massively in the insurance space in recent months, and the industry faces an ever increasing demand for swifter and more efficient solutions.

The New Zealand Financial Innovation & Technology Association (FinTechNZ) recently created an Insurance Working Group (IWG) in response to interest from the industry. It aims to identify key issues and themes, promote refinements to insurance-focused technology and ‘lead the insurance transformation journey’ in New Zealand.

FinTechNZ general manager James Brown spoke to Insurance Business about some hot talking points within the sector, and what the future of InsurTech might hold.

“Our working group is now a strong mix of innovative start-ups and recognisable large incumbents,” says Brown. “The idea was for them to come together and table the challenges they were facing in their own businesses and consider if there were any consistent themes. Things like robo-advice, data privacy and the practical applications of blockchain technology have been the central talking points; there’s a lot happening in this space, from new technology to regulation change, and it’s not just the smaller organisations or innovators that are involved – it’s the bigger companies too.”

“Insurance was a little slow to join the party,” he continues. “But now that it’s at the table, it is really ramping up.”

The IWG strongly utilises its global network, and regularly connects with InsurTech hubs across Australia and Europe to bring New Zealand to the forefront of global innovation. According to Brown, Suncorp’s blockchain solution deal with ANZ and IBM was a key milestone in New Zealand’s growth, as it was the first time that the FMA and Inland Revenue conducted a joint presentation to an open forum to address the subject of blockchain and cryptocurrencies.

“All of this has driven us to really try and understand what the opportunities look like and what the barriers are,” says Brown. “Barriers are important to figure out, especially when it comes to new and emerging technology.”

Such things are primarily aimed at streamlining existing processes, and Brown says emerging tech is far from imitating a human response when it comes to certain, more complex areas. This will be especially relevant for advisers, he says, though it’s something the overall industry should bear in mind.

“We’ve cautioned in the past to be wary of statements like ‘half of New Zealanders will soon be out of a job due to technology,’” he explains. “When things start to become more complex, that’s when the human touch is really miles away from being replicated by emerging tech. We’ve seen some companies try to utilise AI for more complex issues, and it’s not been as effective as was expected.”

“Eventually we’ll get to a point where AI can answer simple questions,” he concludes. “But we’ll ultimately still want and desire that human touch.”

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Chinese Insurers Seeking Better Returns Turn to Shadow Lending: Reuters

By Insurance24

Chinese insurers are channeling funds through shadow lenders to real estate and local government infrastructure projects in a bid to boost returns, six insurance and trust sources told Reuters.
The practice undermines Beijing’s efforts to cut local debt risk and curb a property bubble, highlighting the difficulties regulators face

in reining in shadow lending and applying regulations uniformly across
China’s $15 trillion asset management sector – a key task for the country’s newly merged banking and insurance regulators.
The amount insurers have allocated to alternative assets – trusts, asset management plans and bank wealth management products – has

surged rapidly since authorities relaxed investment rules in 2012.
Analysts warn that the complex and opaque structure of such products makes it difficult for insurers to see the ultimate borrowers and to

then gauge their real exposure – a risk magnified by the long investment periods involved.
China’s banking and insurance regulator did not respond to a request for comment.

“Our first concern is insurers don’t fully understand the risks involved in what they are investing in because those products are not transparent,” said Qian Zhu, a senior credit officer focusing on insurance at Moody’s. “Those products are also causing liquidity problems for insurers.”
Insurers are allowed to allocate up to 55 percent of total invested assets in alternative investments. Those investments accounted for 40

percent of invested assets in 2017, but the number has risen sharply
in recent years. In 2012, the proportion was 9 percent.
Of the 40 percent recorded in 2017, the largest proportion was in debt investments, where the funds mostly end up as loans to infrastructure and real estate projects, Reuters analysis of insurance asset management product data shows.
In the three years to the end of 2017, insurers’ investment in loans for infrastructure nearly tripled and nearly doubled for real estate.
Higher yields are the main attraction for insurers. Trust products posted average returns of 9.42 percent as of the end of 2017, while

those on top-rated Chinese corporate bonds were around 5 percent, market data show.
“Companies have to fight for high-quality non-standard investment projects,” Zhu of Moody’s said of insurers. For less established ones,

“it’s mostly about chasing yield.”
Insurers’ interest is showing few signs of abating even as Beijing acts to cool an overheated real estate market in major cities and to

reduce system-wide local government leverage, insurers and trust sources told Reuters.
In fact, insurers are finding they can demand higher rates for their loans because of the government crackdown as banks – traditional

financiers for trust and asset management schemes – are placed under close regulatory scrutiny and have to dial back, sources said.
The products also have a long maturity – often between five and 10 years – which helps insurers match the duration of their assets to

their long-term liabilities, sources and analysts said. Insurers typically have liabilities extending 15 years or more.
China Life, the country’s largest life insurer, more than doubled its debt investment products, including trust and asset management plans,

to 301.8 billion yuan ($47.45 billion) last year from 2016, leading to a sharp rise in overall investment yield to 4.55 percent from 2.43 percent, its annual results show.
China Life’s new investments last year included a 7 billion yuan trust plan funding the development of Guangzhou’s development zone, a 8

billion yuan trust plan funding Tianjin’s Binhai new economic
development zone, and a 10 billion yuan trust plan funding state-owned Aluminium Corp, a source with knowledge of the matter told Reuters.
China Life did not respond to a request seeking comment. Ping An Insurance Group Co., the country’s largest insurer by market

value, is leaning toward working more closely with trust firms as a general policy direction, said a senior employee in its compliance department.
The insurer’s investment in debt, trust plans and bank wealth management products reached 335.9 billion yuan in 2017, accounting for

14 percent of total investment, according to a Reuters calculation based on its annual report.
Ping An said in an email to Reuters that its insurance investment decisions were made based on market value and asset-liability matching.
Michelle Hu, partner at Boston Consulting Group, said that in places without mature and sophisticated fixed income markets, insurance

companies facing earnings pressure “pretty much don’t have much other
choice.”
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