Mike Plaxton

FDI Spotlight: Can you tell us a little about FWD Life?

FWD Life Insurance is around two and a half years old and was the brainchild of Huynh Thanh Phong and backed with capital by Richard Li.  Our vision is to create a truly international company that’s focused on pan-Asian business. We began by purchasing ING Thailand, ING Macau and ING Hong Kong.

We inherited a slow business here in Thailand, ING hadn’t invested in technology and I believe had been trying to sell for a while.  We inherited a lot of unsatisfied employees so we did what we always do and focused on them. We truly believe great companies are built by great people, who have passion and spirit in business.

The life insurance business in Thailand is generally 2.5% down, but FWD ourselves are up 84% so we have definitely got some things in place working really well.

FDI Spotlight: What’s the key to success in ASEAN?

To capture the hearts and minds of Asian people.  People here are very smart and passionate, they are innovative and don’t mind doing things differently. This is great for us as when starting as a new company you need to be different.  We want customers to see life insurance differently, to feel differently about it.

We aim to develop products that are transparent.  An example of this is a way in which we managed to change the industry six months ago with a new personal accident plan.  PA is a simple plan but if you look at what was available on the marketplace there were 30-item-long lists of exclusions – so you can have an accident but not one of these or you won’t get covered!  We said to the OIC we’d like to issue a PA that is exactly what it says – you have an accident, we’ll pay.  At first they came back to us and said they couldn’t authorise it because it would be a tough model for the rest of the industry to follow, but we insisted that our concern should be with the customers, and they eventually agreed with us.  They came back to us with just two exclusions – you cannot be covered for accidents you get into whilst drunk or whilst fighting.  This is an example of how we’ve changed the industry for the better and encouraged transparency, to our clients benefit.

We’re looking to implement this model throughout all of our schemes.  It will be particularly useful in the health market, Thai people are underinsured and when they become unwell have nowhere to go to get help. Thailand has lots of hospitals but right now they’re mainly for rich Thais and foreigners.  We need to focus on providing that insurance, that security, for everyone.

FDI Spotlight: Can you tell us about some of the different corporate responsibility partnerships you’re involved in?

One of the key corporate responsibilities we are working on right now is the employment of disabled people.  It was only relatively recently I learned that there are 2 million disabled people in Thailand but we weren’t meeting any of them in interviews.  A colleague took to an organisation in Pattaya called the Redemptorist Centre, which is an organisation that aids disabled people, who are so often neglected by society.  Firstly they are taught self-reliance, and then a trade.  Since that visit we have been recruiting directly from there right into our organisation.

The employees we’ve recruited from the Redemptorist Centre add an interesting and invigorating dimension to our organisation.  They have overcome problems in their lives that most of us couldn’t begin to understand so when they come up against a problem in the workplace they don’t walk away from it – they get right into it and solve it; it’s an infectious attitude and a boon to our business.  We were given an ASEAN award for our interest in the advancement of disabled people but actually all of our disabled employees have been of huge benefit and are assets to our company so it makes perfect sense we would hire them.

We ran an internet competition last year asking to hear people’s dreams.  The winner was a young 27 year old woman. Her dream really stood out because although she is not a wealthy person herself, her dream was not what you would expect; it was to provide a library for poor kids.  We built the library and dedicated it to her and she’s been up there helping out these fantastic kids who make it really worthwhile.

Some other examples are we’ve built a library on the Thai-Myanmar border, for the tribes there who don’t identify themselves as being either of those nationalities; we’ve helped rebuild in Chiang Mai after an earthquake there last year and we’ve helped a British organisation build an orphanage as well.

We take our corporate responsibility seriously and the key to all these projects is the team we have here.  They come up with the ideas for what we can achieve and they devote their time and energy to drive the projects, which is wonderful.

FDI Spotlight: What’s your current outlook on the AEC and its potential pitfalls?

I hope they don’t go for the European model, there they are basically trying to create one country which is never going to work due to the cultural diversity.  Even just within the UK the member countries are irreconcilably different, so this model has proved unsuccessful.

Thailand, Myanmar, Laos and Cambodia are very similar, they’ve all got a Buddhist background. Thailand is definitely trying to position itself as the more senior of the 4, it sees itself as the big brother.  That’s a smart position to take and Thailand can definitely achieve that.  On the other hand you have Vietnam which is part Chinese; Hong Kong and Singapore which are very Chinese and then Indonesia, which is such a massive, diverse country. You have almost as many people living there as in four or five other ASEAN countries.  So the big challenge is how do we bridge those cultures, how do we cooperate with one another?  I hope they don’t go for the full union that Europe has gone for, building a massive bureaucracy in the centre.  That would be a mistake.  Also Thai baht is fairly strong so I’m sure they wouldn’t want to link themselves to some of the weaker currencies.  Thailand’s best chance would be to be a part influencer rather than a total influencer.

You’ve also got the impact of China itself.  A lot of the money that’s being made in China right now they’re feeding into Africa but also a lot of it is coming to Thailand and surrounding nations so of course that’s stimulating the economies and is going to have a big influence.

If you look at the countries involved in ASEAN you have collectively a massive population and thus a massive market.  It’s not totally matured in some countries. Laos, Cambodia and Myanmar are at the bottom level of sophistication but that’s all going to change very quickly.  Myanmar for one is clearly opening itself up.  They have this opportunity to reposition themselves to the rest of the world and I welcome that, that’s a great thing to do.

FDI Spotlight: How can Thai business leaders benefit from the AEC?  Which sectors and industries should they focus on?

Integration is already happening.  We’re not seeing a lot of governments collaborating on how they want to work together in the region but what we are seeing is key wealthy people in Thailand taking the opportunity to start businesses elsewhere now that the borders are coming down.  It’s changing and where it’s coming from is business people making their move.

The challenge in my sector, the life insurance sector, is that every company in life insurance has to be regulated in the country they do business in.  We could open up in Laos but we’d have to be licensed by the government there and start from scratch.  The more attractive option for me is if the borders really go down and the Insurance Commissioners get together and say, “Here are the rules we’ll use for cross-border activity”, then I could go in there from Thailand.  The model I would want to use to expand internationally would be to use the strength I have in Thailand to start a smaller operation elsewhere, rather than start a whole separate business.  I am hopeful that this will be possible within the next year or two.

Life insurance killed itself in the UK.  Regulation comes at a price and it’s the consumer who pays that price.  Nobody has ever asked the consumer whether they would be willing to pay the price they have to pay to get the protection that they perceive they get. I’m pretty sure if they knew the full cost they wouldn’t.

Singapore is probably the most regulated of the ASEAN countries but there you have an environment where the country is sophisticated and they know what they’re doing.  In a country like that you don’t need all the protections these organisations claim to offer and it’s expensive.  I pay a yearly fee here to the OIC and if the OIC had to be bigger than those fees would rise and I would have to charge more from my customers.  The price of protection in Europe has got to a point now that if customers really understood it they wouldn’t buy it.  That would be a sad result as we are offering a unique thing in the life insurance industry.  There is no other investment you can buy where if the worst happens in the short term we can still pay out a huge sum and protect people.  I’ve been in this business now for 45 years and I love it because we help people realise the dreams they have and if they should no longer be around their family will still get to enjoy the dream they had for them.

FDI Spotlight: How do you educate people on the value and benefits of life insurance?

I’ll tell you about my first sale around 45 years ago.  It was to a university colleague who’d recently had a daughter.  He wanted to ensure she was given a great education and asked me to sell him a plan.  Sadly he died shortly after but because of his insurance he was still able to provide that dream for her without being there himself.  I’m proud we can help people achieve that.

A lot of companies have specialists who underwrite conditions we couldn’t 20 or 30 years ago which is great, but the complexities that are written into it are confusing. There were no risk managers back when I started in the industry and now there are risk managers all over the place and they want zero risk but risk is exactly what we are trading on.  Taking risks is where I make my money!  If I insured you, there is an implicit risk that you might die or get ill, but the risk managers are tightening things so hard that people on the street don’t understand all the conditions that are put in place.  So it takes us back to the idea of transparency we discussed earlier.  Being able to understand the plans on offer is a key factor.

FDI Spotlight: What would you say to those who worry about the political instability in Thailand?

It was a unique revolution in Thailand, everyday life was normal throughout the political trouble.  You wouldn’t have known there were protests happening on the next street over; life carried on as normal, which is characteristic of the Thai attitude – when hardships come, they get on with life.

When we suffered bad flooding one of my employees arrived at work and told me his house was completely flooded.  He had been inside his house with the waters rising when a crocodile floated right past his window! The floods had allowed crocodiles to escape from a local breeding facility.  I asked him how he was going to get through it with all that damage.  He replied very calmly that the water comes and the water will go; the house will dry out and we’ll be fine.  I thought this was a wonderful attitude of resilience.  In Thailand it’s all a part of nature, trouble comes, trouble goes, and we accept life and get on with it. I also asked him what happened to the crocodile, he said, “It’s dead; we’re eating it!”

FDI Spotlight: What would be your message of confidence to the international community looking to invest in Thailand?

Somebody needs to start looking at how the media sensationalise things.  During the worst of the trouble here, life went on perfectly smoothly.  I think the challenge for the international community is how you get a real feel for the place.  Either they need to access articles that really do represent what life is like here or come visit for themselves and see the stability.  The difference between what the media representation is and what is actually happening has made me question news reports I now see from elsewhere, how sensationalised it all is.

I’ve watched Asia for decades.  It’s still the key area to invest in and now it has a stronger base on which to do that; it has a record; it has a history.  The tiger cub has grown up from being the star child and the momentum is unstoppable.  My confidence in Asia is still extremely strong.

My belief in people has been the key to my success.  The future of the ASEAN people is secured in the attitude of its people and within that Thailand particularly has something special.

If they can avoid the bureaucracy that Europe has built I believe ASEAN will go far.