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What if a consumer company with a loyal pool of budget-conscious customers incorporating the age 35-and-under ‘millennials’, and asked a provider if they could provide protection products to sell to that group?

Some insurers might say: “We would have to control the distribution. Would you rent us the list?” This might not be the right move. Insurers that maintain a tight grip on distribution could miss out on an interesting (and potentially valuable) alternative distribution paradigm.

For multinational life and health insurers, attracting new Association of Southeast Asian Nations (ASEAN) region customers has become something of a Holy Grail.

The economies of the ten nations that comprise the 600 million in population – Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Brunei, Cambodia, Laos and Myanmar – have together been growing far faster than the G6 nations. They have been growing even faster than several of the larger emerging markets nations.

However, reaching and capturing these buyers is proving to be a challenge. Traditional advertising and direct marketing tools are less efficient than in the past, as the budget-conscious, no matter what the generation, tend to prefer the DIY route for their financial and insurance needs, from research and shopping to making the purchase. So no salesperson need call.

Perhaps the story of Tune Group’s success in selling life and health insurance to its loyal and budget-conscious customer pool in the ASEAN countries could be instructive, or even inspiring.

Founded in 2001 in Malaysia, the holding company has taken a unique approach to selling protection products to this market. It focuses on providing a range of affordable products and services to its ASEAN region base.

Its divisions include: Tune Air, which owns AirAsia, the region’s largest and most popular budget airline, and AirAsiaX, a long-haul carrier; Tune Hotels; Tune Talk Mobile Prepaid; Tune Sport, which owns the Caterham Formula 1 team; The AirAsia ASEAN Basketball League; Tune Money, which offers prepaid/loyalty cards that allow users to earn free flights on AirAsia; and Tune Insurance, which focuses on marketing life, health and travel insurance.

If Tune’s model seems reminiscent of Virgin’s, there is a good reason for that: Tune’s founder, Malaysian entrepreneur Tony Fernandes, worked for Virgin’s investment arm early in his career, a job that inspired him to launch Tune Group in 2001.

Local Partnerships

In 2010, Tune began to look at leveraging Air Asia’s sizable cohort of budget-conscious, DIY-minded customers, many of whom were already buying financial products and travel insurance from Tune Money, by selling them life and health insurance.

To do this, Tune Insurance did not rent its list. Rather, it partnered with local life and general insurers in the countries served by its Air Asia airline. The partners then sell their products through Tune Insurance to Air Asia’s loyal customers. A portion of the business is co-insured with Tune Money Life.

Tune also partnered with a global reinsurer, which provided the technical expertise and capital that enabled Tune Insurance to distribute insurance without having to set up an insurance company, due diligence on potential partners and products, and optimisation, as needed, for pricing and underwriting.

Tune Insurance began insurance distribution in Indonesia in late 2010, in Malaysia in mid-2011, and in Thailand in April 2012. Its local life insurance company partners sell the personal accident, life, critical illness and hospital cash insurance to Air Asia customers in these markets.

So far, this strategy has been an enormous success. In 2010 Tune Insurance started out with a team of three. In 2012 the team, which has grown to 350, sold more than six million policies to AirAsia travellers and to people who registered on the website to be informed of offers.

Tune Insurance recently listed on the Malaysian stock exchange with a market cap of RM1bn (£205m). Tune intends to continue its expansion by acquiring domestic insurers in key markets in the next 24 months. It already has a Malaysian insurer and is selecting potential purchase targets in Thailand and Indonesia.

Tune intends to continue this strategy of partnering with life insurers to other countries served by AirAsia and AirAsiaX, including Singapore, China, India, the Philippines, and possibly Japan, Hong Kong and Australia.

The life insurance companies partnering with Tune Money are achieving several goals: expanded distribution in an attractive market, access to valuable but difficult-to-reach customer cohorts, and experienced assistance in optimising their products for this market. Perhaps aspects of this strategy could work in the UK?