Falcon Insurance to focus on online sales
FALCON Insurance is placing importance on selling its personal lines online, as it believes this channel will gain popularity among individual customers over the next decade.
“Ever since Falcon was established [in 2006], we have believed that the online channel would be the main one for selling policies. Therefore, we have no need to use agents, [company] branches or banks to capture individual customers,” company president Sopa Kanjanarintr said.
Even though bancassurance is on the rise, Falcon has no plan to rely on this channel as it acknowledges that the competition in bancassurance is intense and could reduce margins.
“We should [use sales channels] that have few players and offer high margins. Therefore we prefer to innovate in terms of products and channels to access digital-savvy customers,” she said.
Sopa believes that physical bank branches will eventually be transformed into financial advisories and places for lending more than normal transactions, which means the chance to offer insurance products to retail customers will be gradually decreased.
Falcon, a medium-sized non-life insurer, has expertise in commercial lines.
The low insurance penetration rate in Thailand and the expected growth of online sales channels encouraged Canada-based Fairfax Financial Holdings, the major shareholder of Falcon Insurance (Hong Kong), to set up a joint |venture with Thailand’s Wanglee family, the owner of Navakij Insurance.
For the commercial lines, the main distribution channel will be regional brokers, while personal lines will rely on online channels.
Falcon believes the trend towards online insurance sales is assured, and therefore is injecting a lot of money to strengthen this channel. Within 10 years, most people will use the Internet, whether computer or mobile based, for transactions, Sopa said.
“I think the online trend will play a crucial role in supporting personal lines of non-life insurance. Personal lines generate higher margins than commercial lines, so if Falcon expects to expand its portfolio into personal lines over the long term, we should invest a lot on developing innovative products with alternative [sales] channels,” she said.
Currently, 30 per cent of Falcon’s premium income is from personal lines. This year, the company aims to get that proportion up to 40 per cent, after aggressively promoting its “i-Sport” policies.
With advancements in technology, Falcon has started exploring the possibility of direct sales via websites and other online space in neighbouring markets once Asean integration presents the opportunity for the firm to expand its footprint regionally.
Concentrating on the online channel will also help solve the problem of a lack of human resources, Sopa said, as Falcon has a total staff of only 250.
Falcon Insurance will announce its 2014 financial performance next month, but already expects total premium income to be more than the Bt1.4 billion it reported in 2013.
Falcon’s Indian counterpart, which has more than 200 branches, has been gradually phasing them out.
“They [the Indian firm] suggested to us that we should not open physical branches. If we one day to go into Asean, where Laos, Cambodia and Myanmar are potential markets, we should develop online channels to service those customers,” she said.
In Asean, Falcon Group has footprints in Thailand, Singapore, Malaysia and Indonesia.
Falcon Insurance is conducting a feasibility study on how to deal with the Asean Economic Community, focusing on clients interested in logistic systems and transport connectivity within the region.
In Thailand, logistics mega-projects present opportunities for Falcon’s commercial lines of insurance. It aims to offer all-risk and fire insurance to private companies in industrial estates, while the new special economic zones in border provinces will open more doors for the firm, Sopa said.
