FALIA Invitational Seminar in Japan Individual Life Insurance Marketing Course Medium to Long-Term Sales Strategy at a Life Insurance Company May 21 st, 2013 Tatsuo Nakagawa Manager Marketing Strategy Dept. The Dai-ichi Life Insurance Company, Limited
Presentation Contents 1 Session 1. Introduction Overview of Dai-ichi Life Changing Environment of the Life Insurance Business Session 2. Sales Strategy of Dai-ichi Life Total Life Planning Strategy Strategic Alliance Session 3. Sales Channel Strategy of Dai-ichi Life Efforts toward Diversifying Sales Channel Summary
2 Session 1. Introduction Overview of Dai-ichi Life
3 Overview of Dai-ichiLife (As of end of March 2012) Company profile (as of March, 2012) Name The Dai-ichi Life Insurance Company, Limited Total assets JPY 31,461.9 billion Head Office Chairman of the board President Date of establishment Foundation funds Policies in force (Sum insured, Unit: Billions of JPY) 1-13-1, Yurakucho, Chiyoda-ku, Tokyo, 100-8411 Japan Phone: 03-3216-1211 Katsutoshi Saito Koichiro Watanabe September 15, 1902 JPY 210.2 billion Individual insurance: 138,597.90 Individual annuities: 7,537.50 Group insurance: 50,491.50 Group annuities: 6,065. 90 Premium income Claims payments Ratings Subsidiaries and affiliates Management principle JPY 3,056.0 billion (April, 2011 - March, 2012) JPY 2,508.7 billion (April, 2011 - March, 2012) Rating and Investment Information, Inc. A+ Japan Credit Rating Agency, Ltd. A+ Standard and Poor's A Fitch Ratings A- (as of July 1 st, 2012) Domestic: 18, Overseas: 11 Policyholders first Total life partner No. of employees 56,852 (Office employees: 12,904, Salespersons: 43,948) No. of field offices Branch offices: 84,Sales offices: 1,263 (as of April 1, 2012)
4 Position within the Industry Business in force (End of FY2011 Sum insured of Individual Insurance) (Trillion of JPY) 180 160 162 140 139 120 100 103 89 80 60 40 35 28 26 25 20 0 Nippon 日 本 Dai-ichi 第 一 Sumitomo 住 友 Meiji 明 治 Yasuda 安 田 Daido 大 同 Asahi 朝 日 Fukoku 富 国 Mitsui 三 井 (18%) (16%) (11%) (10%) (4%) (3%) (3%) (2%) Share 70%
5 Session 1. Introduction Changing Environment of the Life Insurance Business
Development of Aging 6 (Population) Demographic Structure in the Seventies Current Demographic Structure Demographic Structure in 2020 20 s 30 s 40 s 50 s 60 s onward (Age)
7 Overview of Personal Financial Assets (At the end of FY2011) Total of personal Financial assets JPY 1,516 trillion 現 金 預 金 816 兆 円 (55 55%) Cash and Deposits 833 trillion yen (55%) Total of insurance And pension JPY 422 trillion (29%) Insurance reserves 219 trillion yen (15%) Pension & annuity reserves 202 trillion yen (14%) 1,600 1,500 1,400 1,300 Trends of Personal Financial Assets 1,401 1,429 1,389 1,409 1,371 1,356 1,328 1,286 1,256 1,260 1,519 1,545 1,490 1,410 1,452 1,480 1,516 1,200 1,134 1,177 1,100 1,000 1,026 1,076 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
Deregulation (Insurance Industry) 8 Insurance system reform (1996~) Entry into life and non-life insurance markets each other through the affiliate company method Agency services between insurance companies (2000~) Made it possible for insurance companies to perform sales of the products of other insurance companies as agents Entry into the third sector Japan-US Insurance Talks January 2001~ Entry into each other insurance markets by life and non-life insurance affiliate companies July 2001~ Entry of life and non-life insurance companies themselves Insurance sales through banks and securities companies December 1998~ April 2001~ October 2002~ December 2005~ December 2007~ April 2011 Insurance sales through securities companies Insurance sales through banks themselves (credit insurance related to home loans) Insurance sales through banks themselves (individual annuities, etc.) Insurance sales through banks themselves (single premium whole life insurance + endowment insurance, etc.) Insurance sales through banks themselves (all insurance products) Revise measures for preventing harmful effects
9 Session 2. Sales Strategy of Dai-ichi Life New Total Life Planning Strategy
10 Diversified lifestyle Married at the ages of 20 s 2 children Wife is a fulltime housewife With children and a full-time housewife Dual income with children Dual income with no kids (DINKS) Not married Strong needs for death coverage Diversified needs for protection along with diversified lifestyles
Changes in Customers 11 Declining population and changing demographic structure (Declining birthrate and aging of society, etc.) Diversifying lifestyle and needs (Mandatory retirement age for the baby boom generation, increase of unmarried people, social advances of women, etc.) Further slimming of the social security system (Necessity of self-help efforts / Increasing unease of customers) Traditionally Life security for the surviving family when a death occurred Currently Life security for the surviving family when a death occurs + Existence security (medical care, nursing, income security) Life security for the elderly (annuities, savings)
12 Strategy Suited to the Changes in the Business Environment Changes in the business environment Social security/customer needs/competitive environment Policyholders-first policy Lifelong partner Total Life Plan
Example Image of the Total Life Plan 13 Savings (education fund, etc.) Old age protection (savings for old age) Nursing care protection Income protection Health protection Death coverage Finding employment Marriage Birth of a child Enrollment of child in school Purchase of a home Child s finding employment Retirement age Old age
Aim of the New Total Life Plan Strategy 14 Current population demographic Death coverage market Death coverage + living protection market 20 s 30 s 40 s 50 s 60 s~ Features of traditional life insurance in Japan Our company s Total Life Plan strategy Market ~ Being good at death coverage Not as good at living protection Once the sale is made it is over and done with and there is poor after service, which leaves the customers unsatisfied Sales of only a single product to each customer Proposal of products that are suited to the customers life stage Provision of after service to the customer via the same sense of values that the new contract was acquired through Overlapping sales to single customers, expanding into the customers households (families)
Orientation of Our Market Strategy 15 Population Population distribution (twin peaks) Wealthy group Protection core groups (Death coverage) Middle/senior group Junior group Single male group Female group (single, fulltime house wife, etc.) 20 s 40 s 60 s
Our Consulting System Supporting the Total Life Plan 16 Customers Salespersons In-house FP/Sales front Outside Agents Banks Securities companies Business owners and business administrators Wealthy group
Visit-Style Shops: Dai-ichi Life Insurance Shops 17 Aiming to further elevate CS by means of providing Total Life Plan recommendations by means of various policy conservation transactions, insurance consultations, and more at locations which are near at hand for customers and in a time frame which is convenient for them, including holidays. In addition, it also includes response to customers for whom it is difficult to maintain contact through visits and sales and customers who would like to perform a comparative review of their own insurance. Thinking things through together with customers Handled by our specialized staff User satisfaction rate of 90.7% Who should I ask about such matters? Dai-Ichi Life Insurance Shops are consultation service centers that were created based on customer comments like the one above. They thoroughly handle a variety of needs to suit the customer s lifestyle related to matters like providing for eventualities, children, and old age. Our procedures give customers peace of mind around the country ( ) Satisfaction rate with responses from contact points on the whole in the FY2012 Nationwide Customer Survey. (Survey period: September 3 November 26, 2012; survey carried out by Research and Development, Inc.)
18 Introduction of Mobile Computers (DL Pads) We are introducing DL Pads, which are cutting edge mobile computers with specifications that are unique to our company to serve as vital infrastructure for promoting our New Total Life Plan. DL Pads are equipped with functions that allow salespersons to explain a wide array of information in an easy to understand manner using illustrations, video, audio, and other media. The information includes that on health and medical care, the social security system, services customers will receive after joining based on their insurance arrangements, programs and arrangements that customers can soundly receive, and more. The DL Pad s Presentation Function
19 Session 2. Sales Strategy of Dai-ichi Life Strategic Alliance
20 Strategic Alliance (Essential Features of the Alliances) Introduction of the most powerful and very best products in order to make the Total Life Plan complete Expanding customer services by means of forming a comprehensive insurance group Creation of customer bases utilizing non-life insurance products and cancer insurance products Vitalization of Activities and the Creation of New Customer Bases Sompo Japan Insurance Inc. Mutually providing products Sales consisting mainly of Sompo Japan s car insurance in the non-life insurance sector Sales of our products by Sompo Japan s agents in the life insurance sector Strengthening our affiliate relationship In order to have our affiliation produce additional results, in September 2008 we invested in Sompo Japan DIY Life Insurance Co., Ltd., while Sompo Japan invested in Dai-Ichi Frontier Life Aflac Sales of cancer insurance We combined Aflac s Cancer Insurance Days for Living with the New Total Life Plan that we provide and are selling it as our customized Cancer Insurance Days for Living Dai-Ichi Life Full Support Plan
21 Session 3. Sales Channel Strategy of Dai-ichi Life Efforts toward Diversifying Sales Channel
Development of Sales Channels by Market and Product 22 Positioning salespersons channel as the central channel and developing agent channels in response to product and market General level Individual market Affluent level Corporate market Small/medium, companies Large companies Pro agents (alliance) Death coverage, (Tax accountant) medical insurance markets Salespersons Financial institutions independent agents Tokyo Market Sales Department RM FP Consulting Department Savings market Banks, securities companies
(Reference) Establishment of Dai-ichi Frontier Life as a Subsidiary Company for the Over the Counter Sales Business 23 Dai-ichi life established a subsidiary life insurance company in December 2006 that was the first in Japan to be fully financed by a life insurance company. Accompanying the expansion of the savings-based market, the company was designed to strengthen the over the counter sales business through banks and securities firms. [Background to its Establishment] Alterations in the population composition due to factors like the declining birthrate and aging of society Expanding need for annuity products due to insecurity over aging Growth of bank and securities firm channels (Channel) (Products) (Over the Counter Sales Business) Business Characteristics which Differ from Our Main Business Main business (Sales of insurance products by salespersons) Channels exclusive to one company Primarily coverage insurance Limits on the death coverage market Expansion of the savings-based market Responding to the over the counter sales business Over the counter sales business Independent channels (severe competition) Mainly savings-based (shortening of the development cycle) [Company Overview of Dai-ichi Frontier Life] Established: December 1, 2006 Capital: 185.0 billion yen (incl. reserve capital of 67.5 billion yen) Shareholder: Dai-Ichi Life Insurance Company, Limited (90%), Sompo Japan Insurance Inc. (10%) Start of operations: October 1, 2007 Products handled: Individual annuity insurance (from the outset of the start of operations) (Relation between Dai-ichi Frontier and Dai-ichi Life) (Sales support) Banks and securities firms (Clerical processing) (No. of contracts) (System) (Service) Extremely vast number of contracts Vast information processing Uniform service structure throughout all of Japan Small number of contracts per product Rapid development suited to the product cycle Service varies for each agent The decision was made to establish a subsidiary company specializing in the over the counter sales business that was separate from our main company Dai-ichi Life (Agent and representative agreement) Sales support via a support unit Dai-ichi Frontier Product development Insurance underwriting Operations Through the establishment of a subsidiary company we have achieved the provision of competitive products suited to our customers needs and the unique characteristics of sales channels, as well as low cost, flexible operations
Summary 24
Future Expansion (Life Insurance Industry) 25 Increasing our role of supplementing the social security system Diversification of products and sales channels owing to the diversification of lifestyles and needs Shrinking of the death coverage market Expansion of the health, annuities, nursing care, and occupational disabilities markets Diversification of sales channels such as financial institutions like banks and securities, stores, and mail-order Intensifying competition, including that in peripheral industries
Future Expansion (Dai-ichi Life) 26 Becoming a life insurance company that has the utmost support of its customers Sustainable efforts to keep our competitive advantage in the death coverage market Further development into expanding markets such as savings and the third sector Investigation for advancement into the life insurance markets of other countries
Priority Areas 1. : Response to the Saving Market 27 Dai-ichi life established a subsidiary life insurance company in December 2006 that was the first in Japan to be fully financed by a life insurance company. Accompanying the expansion of the savings-based market, the company was designed to strengthen the over the counter sales business through banks and securities firms. The operation started in October, 2007. [Background to its Establishment] Changes in the population composition Expanding need for annuity products Growth of bank and securities firm channels (Channel) (Products) (Over the Counter Sales Business) Business Characteristics which Differ from Our Main Business Main business (Sales of insurance products by salespersons) Channels exclusive to one company Primarily coverage insurance Limits on the death coverage market Expansion of the savings-based market Responding to the over the counter sales business Over the counter sales business Independent channels (severe competition) Mainly savings-based (shortening of the development cycle) [Company Overview of Dai-ichi Frontier Life] Established: December 1, 2006 Capital: 185.0 billion yen (incl. reserve capital of 67.5 billion yen) Shareholder: Dai-Ichi Life Insurance Company, Limited (90%) Sompo Japan Insurance Inc. (10%) Start of operations: October 1, 2007 Products handled: Individual annuity insurance (from the outset of the start of operations) (Relation between Dai-ichi Frontier and Dai-ichi Life) (Sales support) Banks and securities firms (Clerical processing) (No. of contracts) (System) (Service) Extremely vast number of contracts Vast information processing Uniform service structure throughout all of Japan Small number of contracts per product Rapid development suited to the product cycle Service varies for each agent The decision was made to establish a subsidiary company specializing in the over the counter sales business that was separate from our main company Dai-ichi Life (Agent and representative agreement) Sales support via a support unit Dai-ichi Frontier Product development Insurance underwriting Operations We have achieved the provision of competitive products suited to the unique characteristics of sales channels, as well as low cost, flexible operations
Priority Areas 2. : Response to Overseas Markets 28 Signed a merger contract that established a joint life insurance company with two major banks in India, Bank of India (BOI) and Union Bank of India (Union Bank) in Dec 2007. Named Star-Union Dai-ichi Life, it started operations in Feb 2009. India Vietnam Acquired Vietnam s life insurance company Bao Minh CMG and started business as Dai-ichi Life Insurance Company of Vietnam in Jan 2007. Started the life insurance business as the first Japanese life insurance company in Vietnam. Australia Thailand In May 2011 the local life insurance company TOWER Australia became a wholly owned subsidiary. The Australian life insurance market has expanded steadily as the country has gone on to achieve favourable economic growth. Entered into a group reinsurance agreement with Ocean Life Insurance Co. in Aug 2006. Subsequently, after strengthening relationships such as human interactions and provision of know-how, established a strategic business alliance in July 2008.
29
<Reference> Business Results (Individual Insurance) 30
Trends of Results (Policies in force, Sum insured in force, premium in force converted to a yearly basis) (1) Sum insured in force / Policies in force (Trillion Yen) 500 250 Sum insured 保 有 S in force 1,267 1,258 保 有 N Policies in force 1,243 1,233 1,243 (Note) Shown for Individual Life Insurance + Individual Annuity (Note) Include results of Dai-ichi Frontier Life Insurance 1,266 1,298 (10,000 policies) 1,300 1,200 31 190 182 175 167 159 153 148 0 17 2005 年 度 182006 年 度 19 2007 年 度 20 2008 年 度 21 2009 年 度 22 2010 年 度 23 2011 年 度 (FY) 1,100 (2) Premium in force converted to a yearly basis (100 million Yen) 25,000 Individual Insurance 個 保 第 一 分 野 Individual Insurance 個 保 第 三 分 野 Individual 個 人 年 金 (First sector) (Third sector) Annuity 21,335 21,311 21,097 20,965 21,487 21,617 21,979 2,323 2,616 2,858 3,297 4,259 4,569 5,149 15,000 4,710 4,826 4,888 4,927 4,948 5,066 5,150 14,302 13,869 13,351 12,741 12,280 11,982 11,680 5,000 17 2005 年 度 182006 年 度 192007 年 度 20 2008 年 度 212009 年 度 222010 年 度 23 2011 年 度 (FY)