The Asia InsurTech Podcast was speaking with Ala Ahmad, the CEO of MetLife in Bangladesh, about insurance innovation in Bangladesh. As one of the fastest-growing economies in Asia and with an insurance penetration of 0.5 % of GDP, Bangladesh presents lots of opportunities for insurers and InsurTech.
Find the transcript of our conversation below.
Michael Waitze
Hi, this is Michael Waitze, and welcome back to the Asia InsurTech Podcast. This is the only podcast in Asia focused on insurance that gives entrepreneurs, thought leaders and investors a platform to discuss how technology is reshaping the insurance industry. Today, I am super happy to be joined by Ala Ahmad, the CEO of MetLife in Bangladesh, Ala it is so great to have you on the show today. How are you doing?
Ala Ahmad
I’m doing good, Michael, thank you very much for having me on your show.
Michael Waitze
It is my pleasure. Before we get into the meat and the main part of the conversation, what do you think is the biggest trend from your perspective in insurance and in InsurTech in Bangladesh today?
Ala Ahmad
I think we’re seeing a few prevailing trends going on here. The first one you can think of is rising income for the Bangladeshi economy. People are getting wealthier over the last couple of years and it’s one of the fastest growing economy in the whole world, and also seeing good GDP growth, despite the challenges from COVID. And the second piece, I think, with the economic growth comes the newer need for the customers. They want, they have more income, they have more disposable income, and they want to do things to protect that income when they’re not there. So a lot of you know need for protection and also health. And then actually, you know, comes back to the Covid situation, to the Covid rising, people are seeing need for protection and need for health coverage. And with this, with this issues with the Covid people are adapting to technology a lot. So we see a surge in adoption of technology, which would not have been possible without Covid to be frank.
Michael Waitze
Interesting. Can you talk a little bit, just for my edification, if I look at a chart of GDP per capita growth in Bangladesh, it looks like it really started to accelerate between like 2010 and 2013. And continuing now and actually accelerating even more. Can you talk about what’s driving that growth for people that are not familiar with the Bangladesh economy?
Ala Ahmad
All right, so GDP growth is coming from three main areas. One is agriculture. And you have remittances. And third part is obvious the most important one, is export of ready made, ready made commerce. So these are the three driving forces for the economy, which is pushing our GDP to higher level. And if you look at like each one of them, despite the COVID agriculture sector is doing very good, which is helping, you know, keep keep the economic growth.
Michael Waitze
I would presume so. Right? I mean, people need to eat to be fair. You have talked a little bit about technological adoption in the country. What is driving that? In other words, I do understand that as GDP per capita grows, people do want to have protection, but they also adopt new technologies. And I think we’re getting really close to a point in Bangladesh, where the as the GDP per capita accelerates that that adoption of technology is going to keep getting faster. But talk about it in the context of COVID, as well, we’ve seen across the whole region is that COVID has basically accelerated what we’ve called Digital Transformation across the board. Are you seeing the same thing at home as well?
Ala Ahmad
That’s right. And we have some good fundamentals, right? If you look at the mobile penetration, half of the population are using phones, and 1/4 of them are using smartphone. And two thirds of the population actually using mobile internet, and there is a huge development in the mobile financial services. So 60% of Bangladesh is now have access to mobile financial services, which is, you know, more efficient than the banking for the people to do small transactions here and there. So that with that background, right, when COVID hit, all those digital technologies are being used to high extent, if you think about vaccination, right, you’ll be amazed to know that all the vaccination program are done by the government through an app. So if we have a national ID card, which all the people above the age of 18 years have, so you can go into the website, government website and register user for the vaccination. And you get is as simple as like taking an old few buttons and you get registered and you go to the vaccination center on a designated date and place and you get vaccinated. In this way government has already administered about 24 million doses, which is huge, might not be a major portion of the population yet, but you know, people are getting used to using those technologies and with COVID a lot of people are used online shopping facilities, ordering things, when you lock down at home that you have no other option to go for ordering online and getting things delivered at your doorstep. So I think these are the few things that are driving the digital adoption so far.
Michael Waitze
Tell me what benefit Bangladesh has, particularly in Dhaka from just the pure population density from a digital transformation standpoint, what are the benefits of having that type of density? Do you think?
Ala Ahmad
Yeah, if you look at our population, right, it’s quite young population. So the median age is around 27 years. So people at that age are, you know, more savvy to technology, they’re using it more. And if you think about the schools, right, since COVID all the schools and education institutions are closed, not open yet. And students are having classes online. So actually are getting our next generation ready to incorporate the new way.
Michael Waitze
Interesting. Can you talk about the adoption of insurance at scale in Bangladesh, and maybe couch it in terms of percentage of GDP, which is the way most of the rest of the world looks at it?
Ala Ahmad
Yep. So the insurance penetration is relatively low in Bangladesh. So it stands at 0.5% compared to around 3%, in neighboring countries and even higher in some of the advanced markets, right? I think the double digit, so it’s historically very low. I think with with rising income, right, people have more disposable income. So there is a relationship with insurance penetration and the level of income of the population, right. So I think, with the rising income, the penetration is going to rise. And other piece is 99% of the insurance are sold in Bangladesh are face to face through traditional agencies. So we are looking at new channels like bancassurance, which most of the countries in this part of the world have, once we have that it will be easier for us to reach out to a larger population to the bank customers, and insurance, most importantly, life insurance can be positioned as a part of the whole financial planning for the people.
Michael Waitze
Right. So one of the things we’ve talked a lot about on this show are what I call alternative forms of distribution, right. Bancassurance itself actually, in the rest of the world as you know as a very traditional form of distribution as our face to face agents. But with mobile finance actually becoming more popular in Bangladesh, and with 50% of the population, I think you said, have access to mobile devices. Are there other forms of distribution that are now becoming more prevalent are starting to grow? And in other words, like in Southeast Asia, Grab has their own insurance business, frankly, their own Financial Group? Do you see that type of transformation happening as well?
Ala Ahmad
Yeah, so the difference in Bangladesh is that the insurance awareness is pretty low. So a lot of people don’t know what insurance is. And secondly, those who know sometimes equate life insurance with any other savings like. So with that low level awareness, right, you don’t expect to, you know, have your products or have the solutions on the internet, and people go and buy it on their own. So still a lot of education needs to happen. That’s why no face to face is one of the you know, this too, is still to reach out to the customers. What we are focused on taking advantage of the technology is that instead of going online, right away, at this stage, we are making our distribution channel enabled with digital. So our when our agents meet their customers, they use instead of paper forms, they use their tab to give a good presentation to the customer to the needy analyzes right and do the sale on the spot and have some straight through process coming back to our main system. So this is one area, other area is that, you know, with this dense population, right, you have a lot of customers they had to reach out to right? How do you make the connection with people using social media or other other available new technologies, right. So what we are doing in that area, we are, you know, using social media to generate leads that we are putting contents in our Facebook page, so people go there, click there, if they’re interested, they get to know more about the solution that they can buy from and then we connect them with one of our financial advisors or financial associates who reach out to the person and you know, add it or do it. We do chat or face to face as the situation permits and make the sale. So we’re looking at kind of hybrid solution, where it’s not entirely online. Considering the low level of, you know, awareness, and also complexity of the product, right?
Michael Waitze
What is it like being at a incumbent insurance company, and strategizing around using Facebook, Instagram and other social media channels? The reason why I asked is because I did an episode last week, actually, with a startup in Indonesia. They’re just an insurance broker. And they have 4 million monthly average users on their blog and 500,000 people follow them on Instagram, and it just sounds like they have a similar strategy to you. And they’re trying to, they’re trying to use the that as lead gen into their products, right? What is it like by sitting in, you know, MetLife is a company that’s, I don’t know, 150 – 200 years old? What are those conversations like internally when someone says we should use Facebook? And we should use Instagram to do that? It’s fascinating for me.
Ala Ahmad
Yeah, that’s really interesting. And MetLife is here for 152 years, right. And Bangladesh, our presence can be traced back to 1952. So we are about like, in the 70 years in this country, and we have, we are leading in the market, we have about 20,000 financial associates, 1.2 million customers, and about 800 corporate customers. So it’s kind of, I would say, old organization, right, where you have a lot of systems, processes in place for a long period of time. And that means a lot of, you know, transformation, right, moving away the new technology platforms that can be, you know, integrated with the systems that we have, right? So this is huge history for us. And we correctly pointed it out that, you know, with that background with that setup, with that operational capability, right, when you think about integrating social media, and giving people customer experience of being on boarded seamlessly, right, easily that you can think about those kind of capabilities for a company, which is relatively new, they don’t have any statistical a cleane slate, right? I mean, they start everything afresh. So this is challenges. So that’s why we look at what we can do internally to, you know, build up our capabilities, right? developing the foundation. So we are in the process of, you know, changing and moving to a newer and better policy administration system is the basic right, have the core engine so that you can integrate other ecosystems or other capabilities into it. So that’s in progress right now. And other capabilities. So we have the advantage of being a global company. So we know what is happening in other places, especially in neighboring countries. So something good happening there. We take them and we just learn and do some experimentation, and it makes sense. So the adaptation is fill it up. So that’s how actually we got into this hybrid digital concept.
Michael Waitze
Are you excited? Personally, and also as the official CEO of MetLife, in Bangladesh, are you excited about the possibility of using technology in a bunch of different ways to sort of change the face of insurance in Bangladesh?
Ala Ahmad
Oh, definitely. I have been with this company for about 20 plus years. So it’s quite long. And I started my career here, also to different markets MetLife took me to Nepal, Malaysia, and my last assignment was Hong Kong. I moved to Bangladesh earlier this year. And being a Bangladeshi, I’m super excited to the potential that the country has, right. You have young population, uprising income, penetration level is low, what else you can expect, right? Yeah, with all the things and COVID is actually you know, it’s definitely affecting in a number of ways, but it’s also opening up opportunities for us and the customers to do at, you know, different angles differently that we never thought before. So a lot of opportunities in terms of meeting the customer needs, doing it differently and going beyond the product, concept of insurance, right? We want to position insurance as a solution. If you think about, you know, someone’s health needs, especially in the corporate situation, people want to see that. It’s not only having a life insurance coverage, where you go back to the company and claim, submit your claim and get the money rather, we want to be partnered with a person starting from an early diagnosis, prevention, providing access to the medical facilities and then ultimately the you know, financial part of this giving the financial protection in case of any medical situation. So we are looking at it holistically and there are a lot of opportunities in the market because not many companies are doing it or thinking in that way. And we have the advantage of you know, having experienced in other places where we can learn from there and you know, you’ve given tours in the country?
Michael Waitze
When was the last time you lived in Bangladesh, and you said, you traveled around a lot. You said you came home? When was the last time you live there full time?
Ala Ahmad
2013. So it’s about seven to eight years from now.
Michael Waitze
Okay that’s eight years ago. And I just for reference, and I’ll tell you why I’m asking. When I moved to Bangkok, in 2011, the state of the tech and sort of startup ecosystem here was still really nascent. And that was 10 years ago for you. It’s eight years ago. So not that different, right? What types of changes? Have you seen, if you don’t mind me asking sort of in the overall technology, digital transformation, maybe startup scene, theere. Things that in 2013, were just so different than they are today.
Ala Ahmad
It’s very, very different. I would say that the customer’s expectation, it has changed significantly, right? We’re getting used to, you know, ordering things in few clicks and getting it delivered in few few minutes, right. But it has changed the expectation a lot. And so when you have a good experience in dealing with one of the players, right, maybe not in the insurance, but when you interact with your insurance agent, our insurance company, we expect the same level of efficiency. So that’s petitioner has gone up significantly. And we are doing our best to see how we can identify those needs and probably try to stay ahead of that expectation and prepare ourselves. So what I know signature program that we have is for our agents, we call it agency of the future, right? When you see that I mean, we still feel that in our country, people still need to go to an agent or agent needs to have the conversation and explain them explaining the solution to them. And it can’t be easily replaced with any other digital solution. Right? So then how do we prepare them? How do we equip them with proper training? So we are you know, we have a standard, let me go into details on the agency front, because this is our main channel, and I’m very passionate about it, right. So we have built some capabilities, where we, we reach out to potential candidates who wants to build their career in life insurance. So we reach out to them through social media and other means. So if they’re interested, if they like the proposition, they click and get into the journey for us onboarding, right. So we give them a send them manager online, they can have interactions, and then go for mandatory trainings and go for licensing, and the contracts and everything is going to end. So if I am interested, especially as you get in the middle of my carrier losing my job, I need some extra money, I want to be a carrier in the insurance, right? I can sit on my desk and get enrolled as an agent, financial associate, by some clicks, right? directly from home. So it can’t be imagined, right? I mean, when, when a lot of things are still manual, right? We have done that. So with that, we are able to recruit about 5000 people in last 12 months. And all of them like on boarded went through the training program that we have actually and started selling, they can start finding commission in two weeks time. So this is a big transformation, right? I mean, and then if you can combine that with providing the people with the leads so that they can have easy access to customers speak to them and you know, close the deals, what best can be done?
Michael Waitze
Yeah. So financial literacy, which is something that you’ve alluded to, to me is really a two sided market. Right? So awareness is one is one part of it, you said there’s not a lot of awareness of insurance, but there are two sides to this market. The agents themselves and the people providing the financial services advice. They also need to be financially literate so that when somebody has a question about a product, or even that holistic relationship with them, those questions can get answered easily and quickly. Right. Like you said, that experience should be just like one click buying of something on Amazon, that comparison is no longer. How do I compare with other insurance companies? It’s how do I best compare with, you know, child, Dell, or the whatever the best online experiences? Right. And the other side of that is that the people that are no law that are not policyholders also have to be financially literate. Right. So how do you handle both of those things at the same time, because at point 5% of GDP, you just have massive growth potential, right. Massive and in the country of 165 170 million people.
Ala Ahmad
Yeah, yeah. So if I understood your question correctly, that how do we make sure that the people that are talking about financial planning with their potential customers with that, right, yeah. So you have a financial associate with managed by a unit manager, and is to a branch manager. And these people start their career with us as financial associates. So here’s the old carrier agency model. Why are we telling you mentored by your coach, the manager, and the person takes you to the field and shows you how to read the customer, an art the need of the customer? and position the solution, right? And how to how to handle the objections and how to answer the questions the person may have for the financial planning. So he’s kind of you know, self learning, through digital tools, and also being helped by a mentor. So the whole structure is kind of, you know, pyramid. So you have good mentoring system and coaching system in place so that people learn on the job and no price gets used to handling the questions that the customer may have.
Michael Waitze
Right? It’s very interesting, what needs to change, you think on the customer side, besides GDP per capita growth, which I know is a big driver of just the acceptance or the use of the adoption, excuse me of financial service, Paul, I mean, excuse me, products across the board. But what else needs to change? Do you think to have insurance more widely accepted or more widely used in Bangladesh.
Ala Ahmad
So insurance is currently seen as savings to people think about buying insurance for 15 years, 20 years, and at the end of the term, you get the maturity and use the money for retirement or other purposes, right. So far, that has been seen as the major, major vehicle to what we want to see. And this happening in other places in neighboring countries, is interest to be seen as a production tool. So when I have some financial crises and meet some accident, I’ve no longer able to work insurance is there to step in and provide the necessary financial protection to their family. So this aspect of insurance is not widely known in the market yet, right? So we take it as our responsibility and use our here’s our brand, use our large Phil force to bring that message out to the market and educate people about insurance so that people don’t see this as alternative investment. Right. So that it once that is done, I think that we much easier to move into the health aspect of it. In addition to the prediction, is
Michael Waitze
It is really interesting as well, within a country like Bangladesh, where agriculture is such a big part of the economy, and as we talked earlier, growing part as well, in relation to GDP per capita. Do you see a place for index based and parametric insurance similar to you know, the two biggest companies that I know Parametrics out of Israel and Riskwolf out of Zurich? Do you see a place for index based insurance in Bangladesh as well?
Ala Ahmad
I have to think about it. I think index based insurance, there are some pilot and tests run, and the outcome or the results are still mixed. So there’s some work going on in the country to see how that can be fit into providing the production part or the cultural sector.
Michael Waitze
Once you get this sort of financial knowledge and financial literacy out there, what are some of the products that you would want to introduce going forward, that maybe you haven’t been able to until now.
Ala Ahmad
So we are continuously interacting with our customers to identify their needs. So we do some research at a certain interval. And we already have some idea about what we’re going to do with those competitors. So the first one he had brought few months back was pilgrim insurance, right? hygiene home regimen. So he found out that the customers who are getting wealthier, they now have more disposable income, they’re planning for college, if you’re familiar with that Islamic agreements to Saudi Arabia, and we want to plan for that period of time, maybe three to five years ahead of that. So the savings for that and they want to see the production is there when they in case you know, something happens to the families, someone else can go and perform that religious obligation. So we brought that up, bring that out in the market, which got some you know, good, good responsibility. Other few solutions that we’re working on is critical in that so the critical illness coverage for a longer period of time up to age 80 or so, which is in the process of regulatory approval, and hopefully we’ll get it pretty soon. And then bring it out to the market bundling with other health solutions that I indicated earlier.
Michael Waitze
Got it. So you bring up an interesting point, which we haven’t spoken about yet. And that is the regulatory environment. In Thailand, and I believe in Indonesia and some other countries in Southeast Asia, the insurance regulator, so here’s the OIC. And maybe in India as well, I believe. So there’s a regulatory sandbox. So if you want to test out a new product, you can test it inside that sandbox in a way that wasn’t possible beforehand. Is there something similar in Bangladesh as well, a place where you can test a product that’s not widely distributed, but that’s very tightly distributed to see what the responses and also what the impact is.
Ala Ahmad
We don’t have anything like that yet for the product. But what regulators are discussing is about a sandbox for bancassurance distribution model. So the scale and piloting it and see how the outcome is that impact for the banking sector and insurance sector, and most importantly, on the overall customer experience to in a scary town later. But for the product, ee have not seen that yet.
Michael Waitze
It’s been really, really powerful actually, in the rest of this region. So it’s just interesting to see like how that goes. What types of best practices do you think you were able to garner and bring home when you came home from abroad?
Ala Ahmad
One important piece will be the production solutions. So in Bangladesh, if you look at the products that we or other insurance companies are bringing to the market are mostly savings and to some extent, production products. But I think there are big opportunity for critical illness and different production products that the country has never seen before. And most importantly, how do we position the product or the insurance plan with a solution? Right? If you think about education protection plan for parents, right? How do we build the ecosystem for the person to have access to education consultancy, right? brings make it part of the you know, solution instead of just a product? So we are working on that concept to see how we can I attach a solution with all the other products that you have and make it something beyond insurance, something that is actually meeting some need of the customers?
Michael Waitze
Got it. And the last thing I’ll leave you with is we talked a lot about how the agents are using technology to be smarter and to make their lives like the superpower of the agents. How are the customers responding to the digital transformation of the insurance world?
Ala Ahmad
Customers are welcoming. They’re loving it because they have seen this happening in other places, right? When you go for online marketplace to buy anything. When you do banking. So there are a lot of lot of changes. A lot of apps and online services are coming up in those areas. And most recently, the MFS the mortgage, more financial services, the way it is working, people expect more, when they see that we are bringing in new things digitally, we are connecting customers or potential customers digitally pending them out in the social media and reaching out to them. They’re loving, they will come in you tend to think about the conversion for those areas. It’s it’s very good, very encouraging, better than what we expect.
Michael Waitze
Well, that’s a great way to end I really want to thank you for coming on the show Ala Ahmad, the CEO of MetLife in Bangladesh. I really appreciate your time today.
Ala Ahmad
Thank you so much, Michael, for having me on your show.
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