Hanoi (VNA) - Insurers should promote digital transformationrapidly as, compared to other financial industries, the insurance industry isconsidered to have slow digital transformation with limited economicefficiency.

Despite efforts being made, the digital transformation of insurance companiesis lagging, as most life insurance buyers still want to hold paper contractsinstead of keeping them online and seeing them on mobile devices.

Pham Thu Phuong, deputy director of the Ministry of Finance’s InsuranceSupervision Authority (ISA), said the biggest challenge for insurance companiesis an effective digital transformation strategy, as many companies, evenforeign-invested ones, have not performed digitisation synchronously but onlyin some stages.

According to Phuong, the economic efficiency of digital transformation of theinsurance industry remains very limited. ISA’s statistics showed at present,the insurance revenue through digitised channels of the life insurance segmentaccounts for less than 5% of the total premium revenue of the market. Thenumber of the non-life insurance segment is even lower at less than 1%.

The digital transformation costs are not small while the insurance businessrelies on the majority and statistics in order to have correct premiumcalculation, therefore the more rapid, comprehensive and effective the digitaltransformation is, the more insurance companies gain. Thus, insurance companiesneed to develop strategies and calculate reasonable investment costs to promotedigitisation effectively, Phuong noted.

According to insurance companies, changing the habit of using technology ininsurance activities is difficult, but the boom of digital transformation inlife as well as the increasing number of young insurance customers are makingit easier for users.

Naren Baliga, Business Unit manager at Manulife Vietnam, toldtinnhanhchungkhoan.vn that at first, when Manulife’s eClaims digitiser wasfirst launched, many customers were not used to submitting documents online,but now, 95% of the insurance claims of Manulife Vietnam have been sent throughthis tool.

For customers who are still using paper contracts, access to the benefits ofelectronic contracts as well as other paperless services is only a matter oftime, Baliga said.

In an era where digital interactions are applied to almost everything in dailylife, harnessing the power of digitalisation is important for life insurancecompanies to promote interaction with customers, Baliga said, adding that tobecome a leader in the insurance industry, competing with other insurers is notenough. The biggest challenge for all insurers is to provide a convenient andenjoyable insurance digitisation experience for customers like those of otherfinancial industries.

Digitisation is not only simply a driver for the growth of the life insuranceindustry alone, but also a contributor to transforming the entire value chainof the insurance industry. If insurance companies do not go digital soon, theywill quickly lag behind, Baliga said./.