EASY MONEY>5 QUESTIONS
5 QUESTIONS WITH NANJO BERBA AND ROLLY ROBLES
Senior Vice Presidents, Pioneer Life
1. The SPARX product you launched last year was innovative in both its business model and marketing campaign. How successful has it been in terms of number of accounts, contribution to premiums, and most importantly impact on Pioneer Life’s profitability?
NANJO: We are tracking our business plans for both SPARX and SPARXx quite well. We launched SPARX (for children) bundled with the Private Iris comic book series in school tours and various events and the reception was warm and very encouraging.
Conversely, we decided to test SPARXx (for adults) as a stand-alone card targeting the employee market together with our financial wellness programs. It has had strong acceptance in the companies that see the relevance of having financially healthy employees in relation to overall productivity.
Compared to selling insurance the traditional way and acquiring clients slowly, in such a short time several thousands have already joined the SPARXx family. As is the case for new products that are different and innovative, there have been challenges along the road but we are very optimistic that we will see the fruits of our efforts as projected in our business plans.
2. Sachet marketing is a proven model for buyer-driven consumer goods, but savings and particularly insurance, as they say, is not bought but sold, i.e. seller-driven. SPARX solves many of the hindrances like affordability, convenience, and lapsation, but how has it changed consumer behavior in terms of driving motivation to really want to save up and be insured?
NANJO: Spending and saving may be likened to oil and water. While saving seems to be in most people’s minds, the habit of doing so has remained a challenge that’s difficult to hurdle. Spending for something, especially for things we want, is often gratifying and is therefore the easier thing to do.
When we were conceptualizing our business strategies for SPARXx, we thought that people would easily go for the concept but have a harder time topping-up or saving habitually. To our pleasant surprise, the current rate of top-ups is twice as much as we projected. It seems that the act of starting a savings program is hard for people to do, but once they get into the program, they save regularly because their end goal is clear and becomes a motivating factor.
3. With the global financial crisis and economic slowdown and now that the big gorilla of the Philippine insurance industry Philam is on sale, how has the market dynamics changed and how will these affect your business?
ROLLY: People are now more vigilant in scrutinizing the credentials of the financial services company they are dealing with. They can no longer rely on the notion that a big global player is more financially sound and operationally stable than a local player. Many local players were not exposed to the investment instruments that caused the financial crisis, hence their investment portfolios remain intact.
Filipinos now realize that it is easier for them to track how a local company is doing business, unlike foreign companies who usually operate in other jurisdictions that they know nothing about. The stability of foreign companies has thus become questionable, as proven by the recent fall of some big global players. In this sense, the financial crisis has leveled the playing field between global players in our country and their local counterparts.
As the financial crisis lingers, the Philippine market will continue to be more cautious with a high tendency to wait and see. This will lengthen the decision process for many clients before they purchase a life insurance policy. Nonetheless, we are still confident that people will soon realize that while the financial crisis is a force to contend with in the short term, they cannot put their long term plans on hold because of it. The fact is that the financial packages that life insurance offers are designed to fulfill long term goals. As the market gets used the prevailing economic climate, we are confident that sales will pick up again.
4. VULs have swept the investors’ market by storm, but it seems Pioneer Life seems a bit low-key in this area. What are your plans in this category?
ROLLY: Due to the apparent difficulties in the industry, where returns for variable products depend on market performance, we have adjusted our targets for VUL products to pattern it after the expected response of the market.
5. How do you feel about the economy’s and your industry’s prospect this year?
ROLLY: The country’s economy will still grow but not as fast as it did before the financial crisis. The life insurance industry will still experience decent growth primarily because it remains relevant to the needs of the market. Sales should pick up in the second half of 2009 as people become accustomed to the situation and begin to realize the benefits of saving and investing to attain their long term goals.