HONG KONG (Reuters) - Sun Life Financial Inc (SLF.TO) expects Asia’s contribution to its income to rise to about 25% in five to six years, from 18% now, driven by its push to sell insurance products via digital channels and higher demand after the coronavirus pandemic.
The Canadian insurer has recently ramped up its digital capabilities in some Asian markets, helping it cushion the impact of a slowdown in physical sales by agents amid virus-related lockdowns, the president for Sun Life Asia said.
It will further bolster its digital capabilities to tap into a growing awareness of life and health insurance products in a region where insurance density is quite low, Léo Grépin added.
“We think that is, and that’s going to be even more going forward, a competitive advantage,” Grépin said.
Sun Life has a presence in seven markets in Asia, including China, Hong Kong, India, and the Philippines.
Insurance firms in Asia mainly rely on their army of agents for sales, but regulators are now encouraging the use of digital tools to ease the challenges posed by the pandemic.
Asia is a promising market for global insurers due to the low penetration of insurance and fast-growing economies.
Insurance premiums as a percentage of gross domestic product in emerging Asia Pacific markets was 3.89% on an average last year, versus 11.43% in the United States and 10.30% in Britain, a Swiss Re Institute report shows.
While an economic slowdown and a drop in income has created near-term challenges, the pandemic has also raised awareness about the need for insurance in Asia, Grépin said.
“The awareness will stay (and) the economic side of the crisis will resolve itself,” he said, adding Sun Life was already seeing a rebound in sales in China and Hong Kong.
Sun Life’s underlying profit from Asia rose 27% in the first quarter, with most of the earnings coming from before lockdowns were imposed in March, versus 8% and 7% in the United States and Canada respectively.
It will report April-June results on Aug 6.
Reporting by Sumeet Chatterjee; Editing by Himani Sarkar