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s Asia increasingly becomes a global economic powerhouse, the complexion of the regions life insurance industry is also rapidly changing with it. This trend has been witnessed across Asia and particularly in markets, such as China, India, Indonesia, Vietnam and the Philippines, with tremendous growth potential, albeit, with a comparatively low insurance penetration compared to the West.

In a Boston Consulting Group study entitled Indonesia'€™s Rising Middle-Class and Affluent Consumers - Asia'€™s Next Big Opportunity, it highlighted that the Indonesian economy is growing rapidly, and a large portion of the population are now entering the middle-class and affluent consumer (MAC) socioeconomic category. As this group has evidently begun ramping up spending in certain key segments such as; household consumer goods and appliances, cars, consumer durables as well as financial services, this has also become an important market segment for consumer products.

As the study has shown too that demographic data are proof of the tremendous size of the market and the opportunities that go with it. There are currently about 74 million MACs in Indonesia, and this has been projected to double by 2020, to approximately 141 million, which translates into approximately eight to nine million entering the middle-income bracket each year. The growth of the MAC population is occurring throughout the country. As a result, many companies are keeping a close eye on this potential market segment, along with increasing presence.

Our question then is: What would the impact of these rapidly emerging middle class consumers mean on the life insurer? There will obviously be some important considerations as well as implications. Avatar Global Consult, has some ideas to offer concerning certain key factors for our readers to take away, in making the new giant market leap in the future of Asia'€™s insurance market.

Market segments

Changing economic trends, environment and lifestyles are clear indications that the middle class have begun to evolve into a more complex and distinct group of consumers. Growing numbers of professionals and white collar workers, small business owners, the new and younger workforce, are among the new categories that will move into the middle-class bracket, but with very different needs, perceptions, aspirations and behavior toward life insurance products and services. Some of them will opt for unit linked policy plans seeking higher returns. Others would prefer direct access to insurers, and the freedom to decide on their own choice of cover without intermediaries, based on available market and/or company information and data.

Market access

Given the sheer size of this segment and the geographical spread, insurance companies in markets like China, India and Indonesia will have to expand their sales force in engaging in the impending market share war. Suffice to say, building a large and professional sales force is no easy task. Life insurance companies in these markets will be forced to spend a very significant amount of money in recruiting, selecting and training of new agents. The inherent obstacles of Asian insurers at present are faced with the problems of low productivity, high turn over of agents, and potential problems of miss-selling and misrepresentation

Studies have shown that in emerging markets only 10 percent, and at best 20 percent of insurance agents have become successful and have made it their long term career, whether they work full-time or part-time. Similarly, the retention rate relatively poor thus adding to costs, and in particular business ethics violations and low persistency rates can normally be associated with low performing agents.

On the other side, Bancassurance has also grown from zero to between 30 to 45 percent in most Asian markets. Banks are now feverishly discovering the huge pay-off in retail and wealth management opportunities.

Therefore, establishments that will be richly rewarded are those with the appropriate insurance market support systems, and with innovative products to fill each market niche and sales channels that will thrive in this new era. Training and development, information technology and automation are increasingly being embraced.

Harrison Assessments International in its positioning paper, Best Practices in Talent Assessment pointed out that assessing people for jobs has become the most critical aspect of any organization. The quality of assessment ultimately determines the performance of newly-hired agents, as well as the ability of the organization to effectively develop its workforce.

It affects every important aspect of the organization'€™s success including, management effectiveness, sales volume, customer retentions and productivity. Assessment is not merely one of the functions of the Human Resource Department. It is the essential foundation for effective talent acquisition and talent management.

There is considerable benefit to be gained in grading selected candidates for training and other developmental processes and procedures, as all of these cost time and money. The saving gains comes from grading for such activities in accordance to their respective sales potential predictability with on going structured training and development of the sales force aim to raise the competence of the Agents. Promoting minimum annual professional development training hours including training Ethics, Rules & Regulations will enhance the competency and professionalism of agents to ensure that they are kept abreast of regulation changes affecting them as well as their ethical obligations.