Innovations in Life Insurance Distribution & Customer Engagement. Marc Sofer BSc FFA FIAA Head of Strategic Initiatives North Asia & India

Transcription

1 Innovations in Life Insurance Distribution & Customer Engagement Marc Sofer BSc FFA FIAA Head of Strategic Initiatives North Asia & India

2 Setting The Scene 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. 2

3 Next Generation of Customer Who is it? Any different from your existing customers? 3

4 Next Generation of Customer How will they learn about life insurance? Consumers are accessing the internet more and more via mobiles Do we have smart and engaging content to engage them? 4

5 Consumers are Transacting Differently People are comfortable and willing to transact online and via mobile Issues with security, usability, engagement? 5

6 The Customer Do Customers Know What They Want? If I had asked people what they wanted, they would have said faster horses. Henry Ford How does somebody know what they want if they haven t even seen it? Steve Jobs 6

7 The Customer What Do Customers want? What customers don t want Bothered / Pestered / Annoyed Pressured Product push Feel ripped off Time wasted What customer might want Feel like they are important A good deal Flexibility / Control Efficient process Trust and confidence Satisfaction Education / awareness 7

8 The Customer What are their needs? Are these any different from the needs of your existing customers or target customers? 8

9 Distribution What are our distribution options? Engagement Source In-Store / In-Branch display Leaflet at checkout In-Store / In-Branch manned kiosk SMS Loyalty cards Direct response TV / Radio Direct response print Outbound TM Online / Internet Mail Bank Branch Advisor Inbound TM In store manned kiosk Distribution Channel Online ad Referrals Online search Tweet #lifeinsurance Engagement Source Facebook Like or post Instagram #repost 9

10 BIG DATA Opportunities and Challenges Demographic Data Past Claims History Laboratory Data Property Data Prescription Histories (Potential) Customer Banking Data Insurance Data Socio- Economic Electronic Health Records Spending Data Build Models & Make Predictions Driving Violations Interests & Behaviors and more 10

11 Rise of the Quantified Self External Devices Monitoring Physical Activity 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. 11 Image: Image:

12 Rise of the Quantified Self 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: 12

13 Potential Risks and Opportunities for the Insurance Industry Risks Opportunities Applicant Anti-Selection Point of Sale Underwriting Insurer Overreaching Research and Analytics Improved Consumer Health Regulatory Action Information Overload Market Expansion Customer Engagement 13

14 Engagement is Key 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. Pace of change is increasing and we must be ready to seize opportunities 14

15 Case Studies 15

16 Online Platforms Almost 200,000 policies a year sold. Simple, inexpensive term life and other coverage % growth in recent years. Big brand, lots of advertising, awareness. Aggregator sites. 16

17 Online Platforms Almost 400M of in-force revenue after 15 years of operations. AUD 65M of New business in Big brand, lots of advertising, lots of distribution. Model transformation: o Awareness to brand. o Funeral to term. o Direct response to affinity. Almost 130M of in-force revenue after 5 years of operations. AUD 70M of new business in Big brand, lots of advertising, lots of distribution. Model transformation: o Awareness to brand. o Funeral to both funeral and term. o Aggregator site. 17

18 Online Platforms 18

19 Smart Use of Data Improve the issue process for the customer and distributor 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. 19

20 Predictive Underwriting Case Study Model Results Top Predictive Variables Age at entry Branch Assets Under Management Customer Segment Nationality Score 0-10 Most likely Non- Standard Simplified Issue Guaranteed Issue Score Most likely Standard 20

21 Critical Illness through ATMs Using technology and data analytics to drive sales 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 % take-up rates reported by company. Opportunity to build brand and create awareness and distribute life insurance 21

22 Life Event s Campaign Engage customers 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. 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 22

23 Shopassurance 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. 23

24 MetLife Walmart 24

25 MetLife Walmart A simple approach designed to penetrate the underserved middle market 25

26 Tesco In store sales to affinity marketing & tied bank sales Brand, in store marketing and in store banking drive leads 26

27 Wellness Programs 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. 27

28 The Discovery Vitality Program 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. Source: 28

29 Impact of Wellness on the South African Economy 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 Home) o Other (Movies, Mobile) Sources

30 The Discovery Vitality Program 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 30

31 Fresh Thinking for New Consumers 31

32 Fresh Thinking for New Consumers What is the reality about people. 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? 32

33 Fresh Thinking for New Consumers Who are tomorrow s customers and how will we talk to them? Tomorrow s customers are generation social: o Mobile / tablet users. o Touchscreens not text. o Younger ages 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? 33

34 Summary 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. 34

35 Questions and Discussion 35