Allianz Malaysia Bhd plans to offer simple, affordable products and more specific insurance policies to help drive the business, especially during difficult times brought about by Covid-19.

CEO Zakri Khir said that while businesses have been impacted by the pandemic, Allianz Malaysia will remain focused and continue to push for business agility and do better than last year.

In the first quarter ended March 31, 2020 (Q1’20), Allianz Malaysia was defensive in its strategy as the company focused on managing its books. Its net profit fell 19.6% to RM79.5 million from RM98.92 million a year ago, mainly due to the volatile financial markets which resulted in lower valuation of investment and changes in insurance contract liability arising from interest rate movements.

However, revenue jumped 10.4% to RM1.48 billion from RM1.34 billion due mainly to higher gross earned premiums and investment income. Its total gross written premiums increased 12.9% to RM1.36 billion from RM1.21 billion in Q1’19.

Zakri said the insurer wants to make products more affordable as people largely cannot afford to buy expensive products, especially now that Covid-19 has resulted in job losses and people holding back on spending. The company will also craft products that customers are keen to buy.

“If we have 10 covers in the product, we sell you one, so we make it cheaper, easier and simpler for you to understand. That’s the way to go,” he told SunBiz in an interview recently.

He explained that making products “easier” means fewer forms, more digital, less complex, and simplification. Allianz Malaysia will also offer more “specific” or single peril insurance policies.

Recently, the company introduced its enhanced Smart Retail Shield product to allow SMEs to build on their fire insurance coverage with customisable coverage. SMEs make up 98% of businesses in the country, provide jobs for nearly two-thirds of the Malaysian workforce and are among the hardest hit by the Covid-19 pandemic.

Zakri does not see consumers shifting to online purchase of insurance significantly or rapidly.

“However, we’ve tested with our digital partners that non-traditional products sell a lot better online. Things that you cannot sell through your agent – smaller, cheaper products, are those you should sell online. We think people are interested to buy roadside assistance, travel insurance, short term house insurance coverage online. These are the things that we’ll be looking at this year, especially in the distribution (via online),” explained Zakri.

Allianz Malaysia is working with more than 50 digital partners to leverage on their digital capabilities to innovate solutions and improve customer experience.

Zakri said its new and existing relationships with digital partners will be relevant to its growth this year, both for life and general insurance. It also expects growth from the agency channel.

“We don’t believe that people will switch (from agents to online). Of course there is a small group that will buy online, but it’s small.”

To date, insurance bought through the Internet is less than 1% of the market, Zakri said, adding that takaful companies have been providing online motor insurance for years but it is still not popular.

For general insurance, Allianz Malaysia expects to see flatter or single-digit growth in earnings with the slowdown in the corporate segment and declining rates in the fire segment. It will diversify and rebalance its product portfolio to non-motor protection coverage segments to extract higher margins from various insurance products, including real-estate, individual and commercial protections.

It noted that the current environment of the motor insurance industry is not so sustainable as the margin is lower with stiff competition, but it will continue efforts to cull bad business and secure business from its profitable motor segment.

For life insurance, Allianz Malaysia’s earnings will be higher mainly from strong contribution from protection business and the impact from the lower interest rate.

The group expects to continue to be profitable but anticipates the market will remain challenging with the subdued economy which will largely affect the general insurance sector and entry of new players disrupting growth in the life insurance segment.

Zakri said the business climate remains challenging, as it has been in the past five years, noting that Allianz Malaysia’s business is tied to the country’s economy, which is currently feeling the impact of Covid-19 and other uncertainties.

Zakri says Allianz Malaysia wants to make products simpler and more affordable. – HAFIZ SOHAIMI/THE SUN