Learning Journey. Zurich Brazil

Transcription

1 Learning Journey Zurich Brazil Pick 4 a Dollar (ValeCard) Contents Project Basics... 1 About the project... 1 Project Update... 2 Key Indicators... 2 What is happening?... 2 Project Lessons... 4 On the effectiveness of information and education... 4 On opperational arragements... 5 Next Actions... 7

2 Project Basics About the project Zurich Brazil, part of the Zurich Group, is one of the 20 largest insurance companies in Brazil. For ten years Zurich Brazil has distributed mass-market insurance products through alternative distribution channels. Zurich has developed a product for the lower income middle class that combines different types of insurance and can be purchased individually or combined, once basic cover has been acquired. The basic cover has: R$5,000 for Accidental Death in Public Transport, R$2,500 for Accidental, Death Caused by Other Events, 3x R$250 for Unemployment, R$5,000 per month for Lottery and Home Assistance. Possible additional covers are: home owners (home protection), personal accident and funeral (family protection) and hospital cash (health protection). To get closer to the low-income clients, Zurich is adjusting both its traditional products and insurance processes. The policy has been simplified, written in a straightforward and easy to understand language, and formatted in a colorful style, presenting information in a question and answer format. Moreover, both the insurance purchase and claim settling processes will be simplified. The initial distribution channel for this product will be Valecard. Valecard is a Benefit Card Company based in the state of Minas Gerais in Brazil. Its clients are the Human Resources Departments of companies that provide the Valecard Credit Card benefit to its employees. The employees are primarily from low-income families with an average income around R$ ($313 USD) per month - and without bank accounts. As of today Valecard has 130,000 active cards (clients). The first step is to reach the clients with the basic product. The basic cover would be a voluntary product. The monthly cost for the basic cover is R$5,99 (about $3.75 USD) and each extra cover is R$ 3,00 (about $1.9 USD). The product includes a lottery prize that is higher for clients who have purchased more than one cover. Both Valecard and the participating companies will support the sales of the product. The sales force will be trained along with the promoters. The distribution of the product is planned using two channels: Promoters: sales kiosk at the ten biggest Valecard clients, for four days during the year, with the first month premium as sales incentive Direct Mail: to current basic products clients twice a year Zurich will also try to partner with financial services providers, retailers, supermarkets, and utility companies (e.g. phone, gas, electric). These partners should be able to distribute the product more costeffectively, as they will add insurance on top of their existing client relationships. Learning Journey: June

3 Project Summary Project Name: Pick 4 a Dollar (Valecard) Project Start Date: May 2009 Duration: 3 years Country: Brazil Product: Composite Project Updates Key Indicators Performance indicators will be provided once the product reaches its first six months of sales. What is happening? As of August 2010 Zurich designed the product in its general insurance company based in São Paulo. Different areas were involved: products, commercial and underwriting. The product was designed following the results of other experiences within the company and the team. A local team from Brazil and a global team specializing in microinsurance were involved in the process. The initial product, called Pick 4, pooled four types of insurance covers that could be purchased individually or combined: personal accidents, unemployment, daily hospital cash and household property. The monthly cost of each cover was R$3,00 (about $1.9 USD), and a cumulative discount would apply when more than one cover was purchased together. The product was presented to 16 companies as a fixed Pick 4 product with a set commercial plan and incentive scheme. No company was interested in participating as a distribution partner for the product. As of December 2010 The project reached a standstill due to the lack of a distribution partner. At this point Zurich was working with Valecard who specializes in the low-income market. Valecard s core business is providing a benefit card for low-income employees that provide monthly credit, based on employees salary, to use in supermarkets and drugstores. The project evolved into integrating the pick component to the product that would be implemented with Valecard. Learning Journey: June

4 Valecard would sell the insurance in a voluntary manner to clients that have an existing benefit card. The insurance would be charged to the credit that the clients have with this card. As of June 2011 The Zurich team met Valecard with six options for a product. The process was interactive where Zurich and Valecard worked together. The final product became a three covers product and the commission level was raised to 35% (the initial commission was 25%). Additional activities were included for Zurich to strengthen the channel through training and specialized marketing materials. As a benefits card company, Valecard works with different companies that provide these extra benefits to its employees. It was agreed that Zurich would directly approach these companies to have the promoters of the product work with them in order to reach the employees. The two different strategies for the sales of the product included: (i) existing promoters of Valecard would be sent to companies to perform face-to-face sales of the insurance product and (ii) telemarketing, the central service of Valecard would sell insurance to clients of Valecard that show an interest by reaching them through phone calls. The IT system is being adapted in order to exchange information between Valecard and Zurich. The system will enable Valecard to operate the insurance program. Different marketing materials have been developed by Zurich in cooperation with Valecard. These materials have been sent to clients. Communication with clients has been challenging in terms of being able to clearly communicate a comprehensive product that has different extra covers. Post-sale materials are also being developed. The basic product that will be distributed through Valecard packages together personal accident, unemployment, home assistance and access to a lottery, with a cost of R$5,99 ($3.75 USD) per month charged directly to the Valecard Credit Card. Promoters started offering the basic product in January and will visit all Valecard clients. Basic Product R$5.000 ($3,130 USD) for Accidental Death in Public Transport R$2.500 ($1,560 USD) for Accidental Death Caused by Other Events 3x R$250 ($156 USD) for Unemployment (R$500 ($313 USD) is the minimum wage) R$5.000 per month for Lottery Home Assistance Up-grade Products Homeowners Home Protection Up to R$ ($18,800 USD) for Fire, Lightning, Explosion to Contents of Home Up to R$3.000 ($1,880 USD) for Rental Loss Price: R$3,00 ($1.9 USD) per month AP + Funeral Family Protection DOUBLE COVERAGE - R$5.000 ($3,130 USD)for Accidental Death Up to R$3.000 ($1,880 USD) for Family Funeral Assistance Learning Journey: June

5 Price: R$3,00 ($1.9 USD) per month Hospital Cash Health Protection Hospitalization for Accident R$50 ($31 USD)/day Cash Benefit (Max. 15 days) Prescription Discount Price: R$3,00 ($1.9 USD) per month 2 Packages Combined Price: Basic Product +R$6,00 + double lottery to R$ Packages Combined Price: Basic Product R$9,00 + R$ for lottery Learning Journey: June

6 Project Lessons On the most effective processes, materials and communication strategies to transmit the information about the product It is easier for sales force to start with one product that is easy to understand and sell before integrating more complex products. Zurich was involved in the Estou Seguro project where different companies sold different microinsurance products in the community of Morro Santa Marta in Rio de Janeiro. The Zurich team was able to test the early design of the product and the interaction between the sales force and the target population. The product that was mostly sold was Funeral insurance. The sales force staff felt that it was easier to explain the benefits of this product first as it was easy to understand. The experience indicates that it might be better for sales staff to learn how to sell an easy product first and then to add additional benefits to the mix. Additional benefits in products should be easy to understand and should provide tangible value to clients. In Brazil, low-income families are more open to buying products that include Funeral and Lottery (or Sweepstakes). Market studies carried out in Brazil, have shown that people plan only for the shortterm. The concept of insurance: paying without knowing if the benefit will be used in the short-term, limits the product's appeal. As a result, funeral assistance and lottery benefits help improve the appeal of insurance products by making the benefits more tangible. It has been challenging to include covers like hospital cash that require waiting periods and deductibles, because they make the selling process more difficult as the explanation is more complex. A product that allows people to choose from different covers needs a clear communication and marketing strategy for clients to really understand the product. Zurich has found it challenging to train the sales force and design communication materials. A product that has three options for the client needs to be clearly explained so that clients understand the protection and the mechanics of operation and can make informed buying decisions. The product is not complicated but it has very peculiar features that are meant to bring value to clients. This value still needs to be understood. The communication in the sales and post-sales process needs to be as clear so that there is no doubt about the coverage and services offered. Zurich reviewed the material and tried to adapt the language to a question and answer model without neglecting the obligations imposed by the regulatory body, SUSEP. Zurich recognizes the need for a focused communication effort. Communicating to clients that covers like hospital cash or unemployment are important for the family's financial protection has become a priority, as low-income families still see funeral as the main benefit. Learning Journey: June

7 On the criteria of distribution channels and how the distribution channels can help to define new microinsurance products Integration of the distribution channel in the design of the product, the commercial plan and the incentive scheme is needed when approaching partners. Zurich Brazil approached 16 different channels and none of them showed any interest in Pick 4. The reasons that were given for rejection were: the incentive scheme was too low; too many products to be launched at the same time; the products had no additional benefits and were only insurance covers. The initial product proposed by Pick 4 consisted only of basic insurance covers. In the Brazilian market lotto (sweepstakes) and funeral assistance are common additional benefits for the low-income market. Normally, for affinity projects in Brazil, the distribution channels want to be part of the design of products together with the insurance company. The channels also want to be involved in designing the commercial plan and incentive system. This presented the greatest challenge for the project in terms of the channels rejecting a predefined product with a predefined commercial plan. It was also challenging to price products with different covers to develop an attractive combo. On how to scale up microinsurance through distribution channels The existence of a division that is in charge of traditional insurance products allows for a better implementation for a microinsurance project where interaction between different divisions is needed. The internal mindset of traditional mass market insurance helps to have the right tools aligned for the implementation of microinsurance. Zurich Brazil has learnt how the team can better use the internal Affinity Department resources of the company to develop a program. There are capacities to create the right marketing materials, integrate systems to channels, and be flexible to design products that are targeted to groups with similar features, giving a good platform for the team to bring new microinsurance products. The mindset to reach scale helps. Next Actions In the next period (June 2011 to December 2011), Zurich Brazil plans the following activities under the project: - Finalize the marketing materials: pamphlets and direct mailing documents - Finalize post-sales materials - Complete the IT systems adaptations - Implement the sales strategy Learning Journey: June