Utilizing Technology to Attract Enthusiasts of Life Insurance Products: PT AIA Financial Indonesia Case

PT AIA Financial ranks among the top 10 life insurance firms in Indonesia. Nonetheless, like other
Indonesian insurance firms, PT AIA Financial Indonesia faces challenges in market penetration that have
impacts on its sales revenue. The limited literation and inclusion as well as low trust levels among the
Indonesian population towards life insurance is the most significant factors. The underlying cause of
both issues can be traced back to numerous instances of scams and the unethical selling of insurance
products by some unscrupulous life insurance agents. Therefore, what strategy can PT AIA Financial
Indonesia undertake to attract more customers to buy and use their life insurance products? This paper
will give PT AIA Financial Indonesia a recommendation involving digital transformation as their marketing
strategy to build customer attraction and trust on PT AIA Financials’ insurance products and services.
This goal is achieved by creating customer experience excellency which leads to a sales boost. This paper
will explore digital technology terms and theories such as four digital transformation methodologies and
chasm model of technology adoption while discussing the impacts of it on the society.

I. Digital Transformation of Mobile Applications Implementation: A seamless and integrated digital life
insurance service solution to provide a human-less experience, ensuring customer comfort.

I.I Drivers of change

The requirement for face-to-face interactions with agents during the process of purchasing a life
insurance policy further discourages potential buyers. This supported by the massive complaints that
Indonesia Financial Service Authority (OJK) received towards the mis-selling practices that is done by the
mischievous agents. PT AIA Financial Indonesia, along with other life insurance firms in Indonesia, still
employ an aggressive marketing and agency approach, which can make potential customers feel targeted
and uncomfortable. Consequently, many potential buyers actively avoid interactions with these agents,
both initially and during negotiations. The changes of customers behavior and preferences that is very
close with technology also another reason that PT AIA Financial should adopt the digitalization.

Therefore, this event shows that insurance firms in general are lagging other financial institutions like
banks that have been utilizing digital technology in their business serving. PT AIA Financial Indonesia can
create the benchmark from the success of “Digital Bank” in Indonesia.
Figure 1: rate of Insurance literation and inclusion
Furthermore, in alignment with the efforts of the financial institution regulators and the Indonesian
government to promote financial inclusion and advance the digital economy, there has been a notable
push. Presently, the OJK is actively promoting the digital transformation of the insurance industry. This
initiative is governed by the Financial Services Authority Regulation (POJK) Number 4/POJK.05/2021,
concerning the Implementation of Risk Management in the Use of Information Technology by Nonbank
Financial Services Institutions. The figure below shows the Government efforts on digitalization of
financial institutions and in addition, POJK Number 28 Of 2022 Concerning Changes to Financial Services
Authority Regulations Number 70/Pojk.05/2016 Concerning Business Organization Insurance Brokerage
Companies, Reinsurance Brokerage Companies, And Insurance Loss Assessment Companies.
Figure 2: Integrated regulation for Financial Instituton digitalization

I.II Digital Transformation Methodology: Envisioning the Future

Hence, this highlights a significant opportunity for PT AIA Financial Indonesia to pioneer digitalization.
Embracing digitalization will undoubtedly enhance PT AIA Financial Indonesia's competitive edge. To
effectively capture on this opportunity, it is advisable for PT AIA Financial Indonesia to develop an
integrated mobile application, incorporation every facet of consumer’s life insurance activities. This
integrated mobile app should facilitate everything from registration and policy purchases to claims
processing and policy closure within a single, user-friendly platform. This technology, although it has
been implemented in Indonesian banking, has never been utilized in the insurance sector. Thus,
according to the chasm model, PT AIA Financial is now positioned as an early adopter in the realm of
digital services for life insurance policy registration.
 Figure 3: Chasm Model of PT AIA Financial Indonesia on Mobile apps

Furthermore, as part of an increasing customer literacy initiative, the AIA Financial Indonesia’s mobile
app should integrate educational videos, informative materials, and regularly updated articles pertaining
to life insurance. These resources aim to improve customers' comprehension and familiarity with life
insurance products, services, procedures, and regulations. In addition, the mobile app should
incorporate interactive tutorials and demonstration videos, guiding users through the processes of
insurance registration, claim submissions, and reimbursement, thereby reducing the need for traditional
face-to-face interactions between customers and insurance agents.

Moreover, to transform conventional agent-customer engagements, customers should be offered the

choice to connect with their preferred agents, whether through virtual or in-person channels by
appointment. The integrated mobile app can also incorporate features that enable prospective
customers to virtually select their designated "agents" to guide them through their life insurance
journey. This approach in fact has already been similarly demonstrated by peer-to-peer lending company
named Asetku and has shown its effectiveness. Thus, PT AIA Financial will include technology as chat bot
that serve set menu of data, algorithms data to detect the face profile for registration confirmation
purposes, and also big data to analyze the data collected.
 Figure 3 and 4: Examples of the on-apps menu

I. III. Gap Analysis

The implementation process of insurance digitalization should not be overly complex given the existence
of mobile phone applications for business processes in financial institutions. However, for PT AIA
Financial Indonesia being an early adopter for insurance industry entails conducting a thorough gap
analysis for this digital transformation. Firstly, addressing the people aspect, particularly the agents,
involves the need to justify and adjust their working behavior, transforming their client interactions and
approaches. Additionally, a shift in the working culture may be necessary, leading to a realignment of
work objectives. Secondly, with the policies purchase registration process moving online, the company
must reevaluate its conventional business processes to expedite the creation of new insurance members,
as waiting times are now digitally recorded. Online customers will expect faster policy services compared
to the traditional methods. Lastly, to facilitate this seamless insurance mobile application, enhanced
technology is required.

I. IV. Implementation roadmap

PT AIA Financial should implement this as early as possible to become the pioneer or early adaptor. The
scope of this digitalization at the first stage is providing customers with a user-friendly mobile app that
has the main function of research, purchase, claims insurance policies online, simultaneously,
implementing options for secure payment gateways. Strategically, PT AIA Financial should widely
advertise their new service to the public. Subsequently, there should be an ongoing and continuous
effort to enhance the app's functionalities to avoid bugs and glitches. The IT helpdesk teams should be
more intense to avoid customer dissatisfaction. These implementations can be constructed
independently by PT AIA Financial internal IT teams since they have strong IT system and foundation and
backed up by their group (AIA Group) as well as capable in financial. In the first year of implementation,
it is estimated that revenue could potentially increase by up to 30%. This projection number is based on
the assumptions that many tech-savvy individuals in Indonesia will be intrigued to subscribe. This
estimation takes into account of the sizable population of tech enthusiasts in Indonesia and the
favorable reputation of the company. Moreover, with this digitalization, PT AIA Financial Indonesia
stands to gain an improved reputation from both the government and Indonesian society since it
harmonizes the Government effort for financial literation and inclusion. Thus, this factor can be
considered as additional non-monetary benefits.

II. Impact on Insurance Mobile Applications Implementation

PT AIA Financial on digitalization, especially transform the life insurance policy registration indeed will
gain the accessibility and inclusion on their customers as their main stakeholders.

II.I Accessibility

The new adoption of online registration for life insurance policies is extending the reach of life insurance
distribution channels. This indeed increase the accessibility of life insurance policy since the service is
now served online and majority of Indonesian has mobile phones that they engage daily. The evolution
of the digitalization mentioned is urgent. This is because In Indonesia, individuals were still required to
visit physical branches or agency offices of life insurance companies to firstly register the policies which
give little convenience to the customers. Alternatively, individuals (as new customers) had to arrange in-
person meetings with the life insurance agents to obtain policies. In most cases, these agents are family
or friends with the new potential buyers. Therefore, for those who lack such connections with the life
insurance agents, may harbor high levels of skepticism and might reconsider their purchase decisions
due to the discomfort associated with personal interactions and approaches.

The main target demographic for this innovative offering comprises millennials and Gen-Z individuals
who are tech savvy and heavily rely on their mobile devices. PT AIA Financial intends to gauge the
increase in accessibility by monitoring the number of app downloads and the number of online
registrations of new life insurance policies. Therefore, through digitalization, accessibility to own life
insurance policy is significantly broadened. Especially for those Individuals who first, have been enticed
by the marketing and advertising of PT AIA Financials’ newly launched mobile app and second, those
who has been always consider having a life insurance, are likely to promptly download and explore the
application. This shift towards digitalization eliminates many of the barriers associated with traditional
methods of acquiring insurance policies.

However, there might be a challenge for PT AIA Financial Indonesia to capture the number of downloads
as they are the first to introduce this digitalization in Industry. Therefore, PT AIA Financials need to plan
marketing tactics to introduce their new features. Firstly, they should issue a press release with the
objective of garnering media attention and coverage. Furthermore, they must strategize the installation
of booths at public events to directly present the app to their target audience. Additionally, they should
extensively promote their new releases across various advertising channels.

II.II Inclusion

This digitalization shifted the concept of life insurance sales industry to become more inclusive to the
society. This evolution has become a main aspect for society inclusion since the existence of mobile apps
bring life insurance to all social status. This contributes to customer inclusivity through several key
factors. Firstly, mobile apps eliminate geographical limitations, unlike the traditional approach that
required visiting physical branches and in-person meeting with agents to acquire new policies. As a
result, individuals from any region, including those in remote areas, can easily access PT AIA Financial
Indonesia insurance. Secondly, the adoption of technology can dispel the public misconception that
insurance is exclusively for individuals with moderate to high incomes only. This misperception persists
despite the availability of various insurance packages tailored to different financial capacities. Lastly, this
digitalization enables consumers who have no or limited prior connections to insurance agents to
independently research and purchase their chosen products.

The importance behind this inclusivity is also to increase the customer’s financial capability by the
uncertainty by owning the life insurances as protection. This adoption, therefore , become advantage to
Indonesia society to strengthen their mindset and becoming society that aware of the importance of
having life insurance. Overall it contributes to Indonesian Government’s effort in financial inclusion in
general.

The achievement of this inclusiveness will be pictured by the number of downloads who purchase the
insurance. However, there still might be a challenge for PT AIA Financial Indonesia to ensure the number
as they bad image of life insurance products is still exist.

Therefore, PT AIA Financial still need to introduce the feature by physically approaching those who are in
remote area as well as those who re in middle to low income customer segments to educate them again
in mission on diminishing the misperception of the life insurance exclusive price and ownership. PT AIA
Financial should also bring the awareness of their various products and price bundling to those society.

II. III Social and ethical implications regulation

The new paradigm of life insurance market eliminates the traditional agent-customer dynamic, making it
more about offering insurance to the customer. In essence, instead of feeling compelled to buy life
insurance, it's now about having the freedom to choose the insurance that suits them. Therefore,
overall, it contributes to social implications positively by shifting illiterate and un-insured society to well
literate and insured society.