innovations in life insurance distribution &...
TRANSCRIPT
Innovations in Life Insurance
Distribution & Customer Engagement
Marc Sofer BSc FFA FIAA
Head of Strategic Initiatives – North Asia & India
� Traditional agency distribution is being challenged in many markets:
o Expensive to maintain.
o Aging distribution force.
o Difficulties recruiting new, younger agents in to the profession.
� Underinsurance (the “protection gap”) is an issue around the globe:
o Engagement with the middle-income and emerging middle-income market is both
a focus and challenge for insurers.
� In the current economic climate, growth is difficult and insurers have
recognized the need to diversify.
� Generational changes (consumer demographics) and technology are
influencing the way we do business.
Setting The Scene
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Next Generation of Customer
3
Any different from your existing customers?
Who is it?
4
Consumers are accessing the internet more and more via mobiles
Do we have smart and engaging content to engage them?
http://www.techinasia.com/thailand-countries-highest-smartphone-tablet-usage-sea/
Next Generation of Customer
How will they learn about life insurance?
Consumers are Transacting Differently
5
People are comfortable and willing to
transact online and via mobile…Issues with security, usability, engagement?
The Customer
Do Customers Know What They Want?
6
“How does somebody know
what they want if they haven’t
even seen it?”Steve Jobs
“If I had asked people what
they wanted, they would
have said faster horses.”Henry Ford
What customers don’t want
�Bothered / Pestered / Annoyed
�Pressured
�Product push
�Feel ripped off
�Time wasted
The Customer
What Do Customers want?
7
What customer might want
�Feel like they are important
�A good deal
�Flexibility / Control
�Efficient process
�Trust and confidence
�Satisfaction
�Education / awareness
The Customer
8
Are these any different from the needs of your existing customers or target customers?
What are their needs?
Distribution
9
What are our distribution options?
In-Store /
In-Branch
display
Leaflet at
checkout
In-Store /
In-Branch
manned kiosk
SMS Loyalty cards Direct response
TV / Radio
Direct
response
Engagement Source
Outbound TM Online /
Internet
Mail Bank Branch Advisor Inbound TM In store
manned kiosk
Distribution Channel
Online ad Referrals Email Online search Tweet
#lifeinsurance
‘Like’ or post
#repost
Engagement Source
10
(Potential)Customer
Demographic Data
Build Models& Make
Predictions
Prescription Histories
InsuranceData
Electronic Health
Records
Property Data
BankingData
Socio-Economic
Driving Violations
Past Claims History
LaboratoryData
Spending Data
Interests & Behaviors
…and more
BIG DATA Opportunities and Challenges
� People of all ages, weight and gender are embracing wearable fitness
devices offering real-time data to track their physical activity.
o Bracelets – Fitbit Flex, Jawbone Up, Nike Fuelband etc.
o Watches – Galaxy Gear Fit, LG G Watch, iWatch etc.
� Although wearable device shipment volumes will reach just 19 million units
in 2014, that figure will grow to over 100 million in 2018, according to IDC
research.
� Portable, inexpensive devices may improve patient outcomes by collecting
health data and influencing behavior.
Rise of the Quantified Self
11
External Devices Monitoring Physical Activity
Image: http://www.macrumors.com/roundup/iwatch/ Image: http://www.samsung.com/global/microsite/gear/gearfit_features.html
Rise of the Quantified Self
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Other Devices
� Smart scales: measure weight, body composition, heart rate, and air quality.
� Blood Pressure: Accurately measure blood pressure.
� Blood Glucose Meters: For Diabetes patients.
� Sleep Pattern Monitors: Optimize sleeping habits.
� Heart Rate and Blood Oxygen.
� More on the horizon:
o Health monitoring tattoos
o Digestible devices
o Implantable devices
Source: http://www.withings.com/
Potential Risks and Opportunities for the Insurance Industry
Applicant Anti-Selection
Insurer Overreaching
Regulatory Action
Information Overload
13
Point of Sale Underwriting
Research and Analytics
Improved Consumer Health
Market Expansion
Customer Engagement
Risks Opportunities
� Important to engage with customers:
o Pique interest.
o Raise awareness.
o Need to start the conversation – this can be online, chat, SMS, social media, in
your local grocery store…it can be anywhere.
o Ensure you can make smart offers to customers at the right time.
� Banks
o Can we count on banks? In certain segments…
o Banks are trying…and insurers are trying…
� Need to think about other forms of engagement sources, lead
generators and ways to improve interactions.
Engagement is Key
14
Pace of change is increasing and we
must be ready to seize opportunities
Case Studies
15
Online Platforms
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� Almost 200,000 policies a year sold.
� Simple, inexpensive term life and other coverage.
� 30-40% growth in recent years.
� Big brand, lots of advertising, awareness.
� Aggregator sites.
� Almost 400M of in-force revenue
after 15 years of operations.
� AUD 65M of New business in
2011.
� Big brand, lots of advertising, lots
of distribution.
� Model transformation:
o Awareness to brand.
o Funeral to term.
o Direct response to affinity.
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� Almost 130M of in-force
revenue after 5 years of
operations.
� AUD 70M of new business in
2011.
� Big brand, lots of advertising,
lots of distribution.
� Model transformation:
o Awareness to brand.
o Funeral to both funeral and
term.
o Aggregator site.
Online Platforms
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Online Platforms
� Predictive analytics use of statistics, modeling and data mining to analyze
current and historical facts to make predictions about future events.
� Propensity to buy – use existing data and information in statistical modeling
to identify customers most likely to purchase.
� Predictive underwriting is a simplified insurance underwriting process
where data is analyzed and customers with high likelihood to pass
underwriting are identified and given a “pre-approved” offer with minimal
question asked.
Smart Use of Data
Improve the issue process for the customer and distributor
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Predictive Underwriting Case Study
� Age at entry
� Branch
� Assets Under
Management
� Customer
Segment
� Nationality
Top Predictive Variables
Score
90-100 Most
likely Standard
Score
0-10
Most likely
Non-
Standard
Model Results
Simplified Issue
Guaranteed Issue
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� A pop-up screen appears when you are
withdrawing money.
� Clever market segmentation and customer
profiling:
o Target specific customers at specific points
in time.
o No underwriting.
� Clever use of buttons.
� Cover ≈ €5000
� “5-10%” take-up rates reported by
company.
Critical Illness through ATMs
Using technology and data analytics to drive sales
Opportunity to build brand and create awareness…and distribute life insurance
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� Target individuals who have experienced a recent ‘life event’� Trigger for individuals to think about life insurance.
� Find engaged customers.
� Simplified underwriting to provide insurance coverage for people who have experienced a life event (marriage, child, buy property) in the past x months.
Life Event’s Campaign
Engage customers
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Great engagement opportunity: target products to customers when they need it most and feeling vulnerable and responsible
Opportunity to cross-sell products to interested customers
� Driven largely by the trend for retail chains to diversify into financial services e.g. Tesco, Walmart, Wolloworths, Coles etc.
� Products sold in kiosks or dedicated areas of retail stores:
o Sell very simple short term products.
o Either GI or SI underwriting process depending on the product.
o Possible tele-underwriting for more complicated products and refunds or vouchers for those that do not qualify.
o Clear markings on who should NOT by the product.
� Packaged Selling
o Include very short term coverage at no additional cost with more extended coverage upsold shortly thereafter.
o Attach this coverage to relevant products e.g. dental coverage with electronic toothbrushes?
� In Store Advertising
o Advertising at the check out counter.
o Advertising particular products in relevant parts of the store.
� Encourage sales via points or shopping vouchers.
Shopassurance
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MetLife Walmart
A simple approach designed to penetrate the underserved middle market
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MetLife Walmart
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In store sales to affinity marketing & tied bank sales
Brand, in store marketing and in store banking drive leads
Tesco
What is happening?
�Use of wellness programs to incentivize healthy behavior.
�Insurers aligning themselves with health/fitness providers allowing access to services at
reduced rates.
�Insurers providing incentives for policyholders to improve health via financial rewards
e.g. discounted flights, free calls etc.
�Some insurers offering renewal premium discounts, which also improves persistency.
�Program launched in the US, South Africa, UK and emerging in Asia Pacific.
What is driving this trend?
�Recognition of alignment of interests between the insurer & consumer.
�Increase in general awareness to stay healthy.
�Technology trends e.g. smartphones and wearables.
�A desire to create a framework for integration and big data.
�Need for differentiation and more attractive propositions as protection and Accident and
Health products become more core.
Wellness Programs
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� The world’s largest science-backed wellness program.
� As at 31 Dec 2013, 5.5 million members across South Africa, the US, United Kingdom, China & Singapore.
The Discovery Vitality Program
28Source: www.discovery.co.za
� Wellness (Loyalty) Programs are ubiquitous:
o Discovery Vitality
o Momentum Multiply
o Sanlam Reality
o Universal Healthcare 360˚
o Zurreal
o Liberty Own Your Life (Loyalty)
� Partners include:
o Health & Fitness (Virgin Active, Planet Fitness, Curves, Run Walk for Life)
o Travel (Kulula, Mango, Emirates, British Airways, Protea Hotels, Europcar)
o Wearables (Garmin, Fitbit, Fitbug, Jawbone, Timex, Magellan, miCoach)
o Healthy Food (Pick ‘n Pay, Woolworths)
o Healthy Gear (Adidas, Totalsports)
o Retail (Toys R Us, Nandos, Incredible Connection, Exclusive Books, @ Home)
o Other (Movies, Mobile)
Impact of Wellness on the South African Economy
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Sourceshttp://www.planetfitness.co.za/momentum-multiply/http://www.nandos.co.za/menu
Discovery’s Vitality shows that
wellness programs can...
o Lower claim incidence.
o Improve lapse rates.
o Increase brand awareness.
Source: Discovery Interim Results Presentation
The Discovery Vitality Program
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Fresh Thinking for New Consumers
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� They don’t read too well.
� Ave reading age is 9
& these are the best
buys for 9 year olds…
� Fill in surveys that they are interested in to get something back.
Am I different? Which group am I in?
Fresh Thinking for New Consumers
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What is the reality about people….
� Tomorrow’s customers are generation social:
o Mobile / tablet users.
o Touchscreens not text.
o Younger ages 25-40.
� They want things to be Portable, Visual & Interactive.
� Learning about life insurance does not have to be a chore:
o An application can take 2 minutes, 5 minutes, 15 minutes – if you are engaged
with the customer then does it matter?
Fresh Thinking for New Consumers
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Who are tomorrow’s customers and how will we talk to them?
� Huge opportunity to materially increase protection product sales.
� Proven that if you have the right strategy, focus, tenacity and talent it
can be achieved.
� Must begin to invest and innovate:
o Key is customer engagement.
o Fail Often, Fail Fast, Fail Cheap.
� Huge opportunity for life insurers if we can seize it.
Summary
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Questions and
Discussion
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