• Thu
  • Jul 31, 2014
  • Updated: 11:51pm
BusinessCompanies
INSURANCE

Back to sales basics as privacy rules take effect

Direct marketing set to be less of a force with curbs on use of customer data, insurer says

PUBLISHED : Monday, 15 April, 2013, 12:00am
UPDATED : Monday, 15 April, 2013, 3:43am

Insurance companies will cut back on direct marketing as they confront new privacy rules on the use and sale of customer information, according to the head of a major firm.

The amendment to the Personal Data (Privacy) Ordinance, which came into effect on April 1, makes it compulsory for companies to determine whether their customers object to the use of their personal data for direct marketing. They are also obliged to inform their customers of the type of data that may be used or transferred, and failure to comply with those two requirements may be a criminal offence.

"The effect of the new privacy law will be insurance companies cutting down on direct marketing to sell products," MassMutual Asia chief executive Tay Keng Puang said. "Insurers will go back to basics and use traditional insurance agents to sell policies."

Tay said that two years ago his company considered following rival insurers down the direct marketing road of using telephone salespeople to cold-call potential clients. "But we abandoned the idea because after a review, we thought this method was too expensive, and it was too difficult to control the quality of the salesperson. Most importantly, it may have competed with our agency force, and so we did not bring in the method," he said.

Tay said that at about HK$10 for each contact detail it was expensive to buy customer data and the success rate of sales was low - as little as 1 per cent by some estimates - because telephone salespeople might not have enough time to explain products to potential customers.

Nevertheless, some insurers use direct marketing to offer cheaper premiums for products such as health or accident protection. But Tay said his company did not want to offer lower prices for products sold through direct marketing because it would be unfair to its network of 500 insurance brokers and 2,300 agents.

"We do not want to add a new channel that can sell our products more cheaply, so we did not opt for direct marketing," he said.

The implementation of the new privacy ordinance this month would also prompt more insurers to cut down on their use of direct marketing.

Tay said his company would like to hire more agents to increase its agency sales force to 2,500 by the end of this year.

Share

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or