Navigating a Storm: How the Team at Union Assurance rose to the Covid-19 challenge

Union Assurance had relaunched its brand only weeks before the COVID19 pandemic set off one of the most disruptive periods for running a business.

Economic crises, because they are sudden and disruptive, generally impact businesses negatively. Covid-19 and the economic impacts due to the lockdown had a negative impact on Sri Lanka’s private sector.

At Union Assurance PLC, a life insurance company, Covid-19 disrupted its operations. However, the leadership team led by Chief Executive Jude Gomes, who had taken the job only months before, were better prepared and adapted quickly.

Union Assurance had a formidable opportunity to live by its promise ‘Your Life, Our Strength’, offering much needed support to its stakeholders and demonstrating that being a responsible insurer can be much more than a slogan. Being in the risk management business meant that an opportunity emerged as people became more sensitive to risk and the need to manage it.

Union Assurance was the first company to offer all existing and new customers a free one million-rupee Covid-19 insurance cover. Gomes and the executive team soon started leveraging Union Assurance’s digital capability to stay connected to its policyholders and engage the team to emerge from the challenge in a stronger position. In this interview, Jude Gomes, who has 27 years of financial services experience working across key Asian markets before he took his new role leading Union Assurance, reflects on the months since the Covid-19 lockdown and how the company admirably rose to the challenge.

Union Assurance is an established player in the market. It is part of the country’s largest business group John Keells Holdings and has been around for over three decades. So, what was the rationale for the rebranding?

Customers are looking for faster processes that give them a better, more seamless experience. Today’s consumer is also very digitally aware and exposed to a fast-evolving consumer landscape.

Union Assurance embarked on a journey of transformation to position itself as a new-age, customer-centric, digital life insurer. Life Insurance has trailed other industries in evolving to meet the pace of our customers’ ever-changing needs.

Today’s Sri Lankan consumer is aspirational and wants more for themselves and their loved ones. Technology has entered their lives, exposed them to global practices, and brought the world so much closer. We had an opportunity to bridge the chasm between the tech-savvy, informed consumer, and the trailing industry, by transforming the Union Assurance brand to meet the demands of the new age.

Union Assurance prides itself in being a customer-centric company. What does the rebranding mean for the consumer?

Our bold new identity portraying a new logo and payoff line marked a new beginning for Union Assurance.

The evolved consumer was at the core of our repositioning strategy, one in which Union Assurance is placed as the trusted Protector of the Sri Lankan Dream. As such a Protector, it was our task to show people that they can dream bigger if they plan better, that their children can go higher if their future is stronger, that their lives can be richer if they thought smarter.

The logo depicts the circle of life, with the tagline Your Life, Our Strength. The new identity marks an exciting journey built on the teamwork of dynamic professionals to nurture relationships amidst the strong financial foundations we have established.

Standing (L-R) Senath Jayatilake General Manager, Distribution | Nalin Subasinghe General Manager, Actuarial | Rumesh Modarage Assistant General Manager, Life | Harsha Senanayake General Manager, Information Technology | Suresh Muttiah General Manager, Human Resources.

Seated (L-R) Jayantha Kumara Assistant General Manager,Distribution | Lucille Diaz Chief Marketing Officer | Jude Gomes Chief Executive Officer | Asha Perera G e n e r a l Manager, Finance & Planning | Bimanee Meepagala Chief Bancassurance Officer | Mahesh Jayasuriya Assistant General Manager, Logistics & Procurement

How important is innovation at Union Assurance? Can you tell us about some of your innovative products that serve to achieve these outcomes for your customers?

The life insurance industry in Sri Lanka has not witnessed significant product innovation, servicing capabilities, or distribution. But it is a growing market with enormous innovation potential. At Union Assurance, we are driving innovation to differentiate ourselves and create a niche for our products and services.

Innovation and customer satisfaction are a priority for us. Innovation can only happen in an environment where employees feel safe and trusted, and which enables out-of-the-box thinking.

In the most challenging of times, we were swift to adapt to unfamiliar territory and change our operating model largely because of our innovative mindset and digital preparedness. We made every challenge a formidable opportunity to live by our promise, ‘Protecting Ambitions, Lifestyles and Relationships’, offering much needed support to our employees and our customers and demonstrating that being a responsible insurer can be much more than a tagline, making for a robust workplace culture.

How is digital technology transforming Union Assurance? Can you give us examples of how digital tech is helping the company realise efficiencies and gains, and how customers benefit as a result?

Union Assurance has been at the forefront of technology advancement in the insurance industry in its 30 years of operation. “Digital” is a way of life at Union Assurance, for our employees, our advisors and our customers, who all benefit from our digital capabilities. We are the first insurer to have a 100% digital, paperless submission process to issue policies with fast turnaround, straight-through processing, digital claims, submissions, and servicing capabilities.

We do this through a recently modernized cloud-based 4G (4th generation) insurance platform, which is the first such one in the region. Celent (a division of Oliver Wyman), a global research and advisory firm for the financial services industry, recognized this platform and awarded Union Assurance with “Model Insurer” recognition at a recent event in New York, setting a new benchmark for the industry in Sri Lanka. Our digital capabilities were further tested during the Covid-19 pandemic and propelled the organisation to provide uninterrupted services to our customers and further instilled a digital culture in the organisation.

Digital payments doubled during this period. Over 350 employees worked from home, we delivered training online, over 300 advisors created online advisor pages to reach customers, and our island-wide leadership used digital dashboards and web conferencing during this time. This level of remote operation would not have been possible without deep digital adoption before Covid-19 was first detected. To remain relevant, we are investing in new digital channels and advanced analytics to improve customer retention and drive efficiency. Further, we have added a modern self-service app rewarding a healthy lifestyle.

Jude Gomes Chief Executive Officer

What is the outlook and your strategy for the year ahead for insurance premium growth and profitability?

A relatively low level of insurance penetration as compared to regional markets, expected rising income levels and an ageing population bode well for the growth prospects of the insurance industry in the medium to long term.

In the shorter term we remain optimistic about the industry’s prospects with the rising need for protection. We are strategizing along several lines. The first is to transform the agency function.

We have an extensive branch network and a field staff of over 3,000. Our focus now is to embed the digital operations model at the core of our operations here. Besides digital transformation we are focusing on our people, starting from recruitment, building capability and retention.

Overall, we think a motivated agency cadre is crucial to navigate the climate we are now in. Consolidating and optimizing partnerships will be a key focus along with an agile sales force that can drive performance and leverage our distribution platforms. Initiatives around profitability in the current climate are critical for all stakeholders because sustainable growth is a long-term aim. Several initiatives are underway falling into two categories, digitisation and cost-optimal operation. We will digitise and create efficiencies around our processes.

 Can you tell us how the company did in the first two quarters of 2020 specifically?

Union Assurance was the only life insurer to record growth in regular new business premiums during the first half of 2020. This is a tremendous achievement. Of course, Union Assurance declares surplus from the life insurance business at year-end, therefore it is only realistic to compare earnings at the year-end. Union Assurance recorded above Rs.500 million regular new business premiums in Q2 of 2020.

The Capital Adequacy Ratio has increased from 387% to 405% in Q2 of 2020 which further strengthens the financial position of the Company. Effective cost management resulted in positive cash flow for Q2 of 2020, too. It is strategically important for us to continue to maintain a strong Capital Adequacy Ratio whilst undertaking future expansion plans.

Despite a lower interest rate trajectory, Union Assurance recorded an 11.57% annualised yield excluding equity losses during the first half of 2020.

What is your investment strategy for the life fund in this low-yield environment?

Investment returns are constrained by low-interest rates. This reduces the ability to meet investment guarantees and weakens earnings. However, Union Assurance is looking at investment opportunities to maintain and improve investment returns whilst adhering to investment policy and regulatory guidelines.

Further, we will invest in fresh cash inflows and maturities in these investment opportunities while continuing to pursue cost savings.

How did the Covid-19 lockdown impact the business? And what measures did you take to minimise its impact on operations and clients?

The lockdown and social distancing protocols disrupted physical interaction of life insurance distribution, which initially affected our new business. Pre-pandemic, much of our renewal collections came through physical channels as digital payments were not so popular. This affected our renewal collections during the lockdown’s early stages.

The fall in new business and collections during the initial months affected the income and earnings of our agency force. To address this, we introduced a special income bridging scheme to provide income support during the lockdown, and we were the first in the industry to offer this for two consecutive months. We witnessed the awareness amongst both existing and potential customers on the benefits of being protected through life and health insurance policies. This created a greenfield demand for our products.

There was also a vigorous switch to digital platforms among the public, which meant that we had to be prompt in adapting to the changing environment. Within days following the lockdown, our new business-related document submission and processing functions completely shifted online. We launched a versatile digital payment link enabling our customers to settle their new business and renewal premiums from the safety of their homes.

This enabled us to collect over 90% of our renewals via digital payment platforms and bank transfers. Our readiness in digitization augured well for promptly adapting online training for our agency force on conducting new business and servicing customers using digital platforms. An online recruitment program was also launched during lockdown, allowing many individuals to take up new work and expand their sources of income. We implemented working from home the day following lockdown to ensure uninterrupted service to our policyholders, along with a 24/7 trilingual call centre, a web chat option, an innovative digital system to submit claim documents and other service-related documents to make engaging with us convenient during this time. Engaging our workforce at different levels of their career cycle was a challenge during this time of uncertainty which activated the launch of STEP (Strive Towards Excellence Programme), a platform for career acceleration which provides exposure and interaction with the corporate management, live business projects and role modelling opportunities.

MDRT100 was another initiative launched to drive our top achievers towards the most coveted recognition, invigorating a challenging and performance-driven environment. Other initiatives included virtual townhall meetings, CEO sessions, virtual department meetings, interactive online events like an online Avurudu Uthsavaya, and competitions which served to engage and update our teams in an environment where physical interactions were limited. For our customers, we were the first company to offer a free Covid-19 cover.

During the lockdown, we tied up with o-Doc to provide telemedicine services and pharmacy delivery, an essentiality during the lockdown. We also ensured our cashless claim facility (hospitalization cashless claim settlement) functioned uninterrupted during the lockdown as it was crucial that customers did not have to fend for themselves during that trying time. We further rose to the challenge to support the communities impacted in the wake of the lockdown by providing essential food items to 2000 families with the assistance of the Colombo District Secretariat and the Asia Pacific Alliance for Disaster Management.

Weathering the Covid-19 storm we launched our newest product, Sisumaga+, to address an unmet market need; an education protection plan designed to help parents manage the cost of higher education for their children. Although Covid 19 brought about many changes to our operating environment, we remain committed to keeping our services accessible to our customers while ensuring efficient platforms and safe working environments for our employees. We also look forward to the new possibilities that will emerge post-crisis and will continue to accelerate our journey to meet the future needs of our customers.

 How will Covid-19 impact the insurance industry?

There will be a negative impact on Sri Lanka’s economy, affecting the disposable income of customers. This will no doubt negatively affect the industry. However, there are inherent favourable factors for the Sri Lankan insurance industry. Lower life insurance penetration compared with other regional markets, favourable demographic factors such as an ageing population, urbanization and an increase in non-communicable diseases are a few of these. In the last five years (2014-2019), the compounded industry growth topped 15%.

In the first six months of 2020, the growth was over 3%, and the growth in the second quarter of 2020 was also 3%. Covid-19 will surely impact the industry’s past growth record. However, we are confident that our continued investment in people, products and processes, will drive growth and penetration in the market and further strengthen Union Assurance’s position as a resilient and responsive insurer driving change amidst the uncertainties of the environment.