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SAP Sigortacılık Zirvesi 2015 Digital Transformation in Insurance Industry 22 Mayıs 2015, Cuma

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 2 Internal

Setting the Scene

25% of

organizations will have a

Chief Digital Officer by

2015. Gartner Prediction

52% of CEOs have

a digital strategy

19% of leaders

expect to see a Chief

Digital Officer by 2014

and 17% expect to

see a Chief Data Officer. Gartner CEO Survey

Only

26% of leaders tell us their

company is striving to be a

pioneer in its industry.

Gartner CEO Survey

Starbucks &

Harvard

University are

notable organizations

who have a digital

officer. Financial Times

20%

of CIOs say they are functioning

as chief digital officers. Wall Street Journal Blog Post


By 2017, a new breed of customer will dominate – We call them:

Digital Natives

2000 2005 2025 2020 2015 2010

Traditional consumer Converts Digital Natives


Consumer segments are becoming more fragmented – with specific needs and preferences for

different formats

Source: Strategy& analysis

Examples of Consumer Segments Implications

Digitally experienced 100% digital

Digital Appetite

Pri

ce

Se

ns

itiv

ity

Lo

w C

ost

Pre

miu

m

Digitally reluctant

ORIENTATION

SIMPLICITY

SECURITY PERFORMANCE

INNOVATION PRICE VALUE

• Segment specific

offerings

• Match assortment,

services, experience and

channels

• “Extremes are beautiful”

– polarizing developments

towards smaller, curated

formats vs. “Supercenter”


Digitalization is already embedded within the market and there is potential to take the digital

engagement and commercial possibilities further

67% would be willing to have a sensor attached to their car or home, if it could

result in a reduction in premiums

68% would be willing to download and use an app from their insurance provider

(New Channels – App)

71% used some form of digital research before buying insurance (Price

comparison or Social media)

bought their policies online (e.g. web or via a mobile device) (New

Channels – Online) 26%

would be prepared to provide their insurer with additional personal and

lifestyle information to enable them to seek the best deal for relevant

services on their behalf 50%

Source: PwC Insurance 2020: The digital prize – Taking customer connection to a new level


Enhancing digital capabilities in sales and marketing operations result in improvements in

sales effectiveness and customer experience, and drive down costs

Up to 65% in cost reduction

90% reduction in turnaround time

Cost Reduction

2

USAA (US) stores documents

through its online facility.

ICICI Lombard (India)

provides a digitally signed

policy immediately through its

online facility.

Improve conversion rates by more than

20%

Progressive (US)

recommends insurance

packages and help compare

the prices with competitors.

Conversion Rate Uplift

1

Customer satisfaction rating increase by

15% over the year before

Customer Experience Enhancement

3

Aviva (UK) provides guidance

on how to report accident and

scene details, and let users

upload photos.

MetroMile (US) offers car insurance

based on how many miles a

customer drives.


Significant increase of digital sales is possible by improving digital engagement

Digital Innovation and

technology

Improve sentiment Integrate analytics

Bundle products Cross-sell

x2,5 x1,1 x2 x2,2 x5

Effects of Mature Digitalization in Digital Customer Purchase Cycle Steps*

First Visit Purchase Intent Initiatation Complete Purchase Cross - Sell

Number of

Unique Visitors

Number of

Purhcase Intent

Number of

Purchase

Initiation

Number of

Orders Recieved

Number of

Cross – Sells

Realized


Analytics Use in Insurance

Use of analytics will boost marketing efficiency and result in increased customer satisfaction

and revenue

Collect Response Execute Target

Which of our customers are eager to

buy our products

Who-When-What to offer in Which

Channel

Are outbound and inbound channels

communicating with each other

Do we have offer consistency

among channels

Which real time action should trigger

my action

Should we optimize number of

customer interactions to maximize

customer experience

Are we collecting our customers’

response for every offer in every

channel

Which insights should we generate

Are we continuously feeding

targeting phase to improve

campaign response rates

1. Sales Propensity Models

Calculate the probability of sales to a

customer

2. Customer Segmentation

Cluster customers in terms of value and

lifestyle

3. Next Best Action

Forecast which product is relevant for

the customer in real time

4. Communication Optimization

Optimize campaign planning to

maximize revenue / response

5. Reporting Structure Design

Design campaign response collection

structure

6. Channel Preference

Segmentation

Cluster customers in terms of channel

preferences

A. B. C.


With the help of analytics, an insurer can target customers more precisely, and increase

conversion rates and customer satisfaction

Sales Propensity Models Customer Segmentation 1 2

Eligible Customer Group for Kasko Product Group

Customer 1 Business know-how and basic reports show

that these customers are relevant for all our

Kasko products

Customer 2

Customer 3

With the use of Sales Propensity Model

Customer

Demographics

Product Usage History

Purchase History

Payment Behavior

History

Eligibility by Product

Kasko Low Kasko Med Kasko Prem.

Customer 1 %5 %25 %60

Customer 2 %45 %5 %1

Customer 3 %12 %40 %8

Prestige

Young

Professional Lady On Wheel Real Estate Lover

Teen

Constructer Digital Savvy Family Member

Visitor Frequent Traveler

Hig

h V

alu

e

Me

diu

m V

alu

e

Lo

w V

alu

e

New

ILLUSTRATIVE

Segment customers by product lines (life or nonlife) or

by product groups (health, vehicle, house, office)

« Create a bundle offer of Kasko + Child Ins +

Earthquake to Medium Value / Lady on Wheel segment »

Increased Sales

Better targeting

Reduced Costs

Operational efficiency

Increased Sales

Reaching untapped

customers

Increased C-Sat

Relevant offers based

on customer needs


Offering the right product at the right time and channel will boost up cross and upsell, and

provide efficient channel utilization

Next Best Action Communication Optimization 3 4

Realizing untapped sales oppurtinities in Inbound Channels in real time

Agency - Call Center - Website

When Ali calls to gather information about his

current kasko 3 months before expiration date, offer

upgraded kasko in advance.

With the use of Next Best Action Model

Customer Demographics

Touchpoint History

Purchase History

Payment Behavior History

When Ali visits his agency, if he already exceeded

80% of his health insurance limit, offer additional

dental insurance product.

With Constraits of

Channel capacity

Operational cost

Business rules

Based on

Purchase history

Channel preferences

Incremental revenue

Maximize

Conversition Rate

Revenue

Interaction Volume

Increased Sales

Cross and Upsell

Reduced Costs

Efficient channel utilization

Increased Revenue

Right offer for right customer


Collection responses of your marketing / sales activities is crucial, as all analytic initiatives are

based on structured data

Reporting Structure Design Channel Preference Segmentation 5 6

All Channels All Transactions Historical

Accessible Integrated Visualized

Centralized Reporting Structure

A robust and comprehensive reporting structure is crucial for a company…

Generated insights are the base for every analytical

initiative

Provides continuous learning for sales and marketing

professionals

KPI’s and performance management system are fed

with created reports

Segmenting Customers for Their Channel Choice

Life Products Non-Life

Products

Customer 1

White Collar

High Value

Broker Digital

Customer 2

University Student

Low Value

Call Center Digital

Customer 3

Housewive

Low Value

Agency SMS

Customer 4

SME Owner

Med Value

Agency Broker

Reduced Costs Operational efficiency

Increased C-Sat Relevant channel and offer

Increased Sales

Better targeting Operational Efficiency


Sample Use – Non-Life Insurance BTL

Collect Response Execute Target

Product Non Life / Auto Insurance / Extra Care

Basic Filters

Age – Location – Gender – Tenure –

Products Owned

Number Of Interactions

1 million customers

Sales Volume

20k customers

2% Conversition Rate

USE OF ANALYTICS

Basic Filters

Sales Propensity Model Filters:

Non Life / Auto Insurance products sales

propensity in top 25% or above 0,6

Customer Segmentation Filters:

High Value and White Collars

Outbound Channel Optimization

Outputs:

SMS: 500k

E-mail: 250k

Outbound Call: 50k

Conversion Rates:

SMS: 2,8%

E-mail: 13,3%

Outbound Call: 25%

Channel Preference Segmentation

Output:

E-mail Lovers

INSIGHT:

Increase E-mail channel weight INSIGHT FEEDBACK


Digitalization of processes will integrate, optimize and excel operations guaranteeing reduction

in cost drivers

Digital Processes

Operating Model

Integration

Operational Excellence

Sales and Service

Optimization

Consolidated and

centralized

Standardized,

simplified, integrated

and automated

Elimination of activities

with no value

Greater reliance on

lower cost channels

Optimal alignment of

marketing spend

Reduced call volumes

and other transactions

Greater customer

retention

The precise

measurement of

benefits

Ongoing identification

of opportunities that

reduce costs

Trained internal

resources who have the

tools and experience


When the digital strategy is set, insurers can realize benefits in sales, marketing and

operational processes

Customer Facing

Processes

Operational Processes

Social Media

Customer Experience

Mobile Channel

Analytics

Process Digitalization

Data Integration

Internal Collaboration

Monitor reputation

Promote products and services

Sell products and services

Provide customer service

Build customer communities

Ensure cross-channels

consistency

Personalize the customer

experience

Offer self-service

Promote products and services

Sell products and services

Provide customer service

Target marketing more

effectively

Personalize marketing com.

Optimize pricing

Better qualify sales prospects

Automating processes

Monitoring operations in real-

time

Adaptability to external

changes

Integration of customer data

wtih finance, supply-chain and

other data sources

Active knowledge sharing

Use of internal social networks

and video conferencing

Working anywhere, anytime,

any device


Digital is now a very wide and encompassing term for the “omni-channel of customer

experiences”

www

In Person

Kiosk

Social Media

Web

Call Center

Mobile

Live Chat

Email

Eric finds his

dream home!

@MyBank, where do

I fill in homeloan

application?

@Eric tx for choosing MyBank.

App is here ow.ly/mybank

Completes online

application

Hello Eric, this is Tom from

MyBank. Can you please

verify….

Msg: Congratulations Eric, your

loan is approved. Please

LiveChat us to agree to T&C’s

Hello Eric, I’m Tanya, your Live Chat agent

for today. Can I please discuss your loan

agreement with you?

Dear Eric, enclosed please find your contract.

Please click here from your mobile phone to

direct you to our nearest doc-kiosk.

OMNICHANNEL EXPERIENCE

Please scan your thumbprint and

place your documents in the slot

provided for FICA purposes.

Customer

Satisfaction Rating

NPS

Customer Effort

Score

Illustrative


By ensuring the operating model will support the omni-channel customer experience

Customer

database/ file

Algorithms

and business

rules

Life Events and Triggers

Customer Centricity

Event driven

customer value

propositions

Digitisation of all

events, triggers

and consumption

Predictive customer

experience offerings and

connected experiences


The global standards for the mobile applications in the insurance industry are very much the

same and having some additional attributes

Domestic Market

What Turkish insurers are

doing

US Market

What best practices are doing

Better user interface with user-friendly outlook

Addition to common services, bill payment by credit card regarding policies and part

ordering regarding damage claims

Orders integratedly tracked by the part supplier, insurance company and the insure holder

Inventory management to prevent a loss in case of mobilization, fire or any other natural

disaster

High number of downloads and active users

Customer Services (Turkey) Progressive Insurance (US)

Manage Claims and Policies

Generate Accident Reports/Claims with photos

Emergency Calls

Step-by-Step Accident Assistance

Learn where closest service provides are on the GPS map

Additional services provided:

Paying bills via credit card with the mobile app

See billing history and future payment schedule

Integrated Part Ordering/Payment Communications System

Much better user interface


The Route to Digital

Four technologies underpin digital disruption

In the past, digital business meant e-commerce. However, the landscape has changed; the

rapid rise of social media, smart devices, big data and new tech have opened up new

avenues of potential.

Social media Smarter Commerce

Big data & analytics

New tech, devices, sensor

technology, wearable tech


Strategy and operational model need to reflect the new digital norm

Social Mobile Analytics Technology

Strategy How does it change my business, my industry, and the logic of competition?

Operations How can I successfully transform my company?


PwC’s integrated approach aims to answer both operational and strategic issues of omni-

channel transformation

Social Mobile Analytics Technology

Business

Model What opportunities does the digital landscape create for your business?

Customer

Engagement How do you engage with customers across channels?

Employee &

Network Engagement

How do you facilitate knowledge sharing and collaboration

across your extended organization?

Technology,

Infrastructure &

Security

What technology model will underpin enhanced business agility,

performance, security and efficiency?

Str

ate

gy

-Based

Serv

ice P

ackag

es

Topic-Based Service Packages

Supply Chain &

Process

Enhancement

What opportunities does Digital Transformation create to optimize

processes and how are supply chains affected?

Legal,

Compliance &

Tax

How do you ensure that Digital Transformation projects comply

with regulations? How does Digital Transformation impact your taxes?


Top 5 Insurance Consumer Issues

Solution Overview

Cross-Channel

Consistency

• Only 40% of insurance players provice cross-channel consistancey in

communication and marketing.

Synchronized Customer

Care Experience

• According to PwC Study 81% of insurers plan to implement customer

experience initiatives over the next three years as part of their business

model innovations

More Customers Using

Mobile Devices

In-Store

• Capgemini research indicates that apps for claims servicing—the most

widely available insurance app today—will increase sharply in the next two

years with 73% of insurers offering this self-service capability.

Integration of Online and

Offline Analytics

• In a recent study by the CMO Council, only 3% of major players stated that

their online and offline analytics were fully integrated.

Social Media Initiatives

Align Across Channels

• More posts doesn’t mean a more active audience and companies need to

use inspiring, human stories and video content to increase content virality.


Our Approach in Digital Transformation in Insurance

2-4 weeks 8-14 weeks 8-12 weeks 6-18 months

1. Establish the

case for change

2. Perform a

digital diagnostic

3. Develop the

digital vision &

strategy

5. Solution design

7. Deliver the

programme

8. Assure the

programme

4. Programme

design

E.g. RBS Working

Capital

E.g. HSBC Global Digital

Tipping Point

E.g. Finance Wales,

Orange, others

Potential next step at RBS

Working Capital

E.g. Jacuzzi at Visa

Experience pre-PwC

Strategy and assessment Design Construct & Implement

TRANSFORM

© 2015 SAP SE or an SAP affiliate company. All rights reserved.

Thank you

Contact information:

Mustafa Vardar

Director

Süleyman Seba Cad. BJK Plaza No:48

B Blok, Kat 9 Akaretler

34357 Beşiktaş İstanbul

+90 212 355 2303