ASISA Assembly 2014 Robert A. Kerzner President and CEO LIMRA,
LOMA, LL Global
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LL Global, Inc. SM The Trusted Source for Industry Knowledge
Research Learning & Development Research Learning &
Development Research Learning & Development Professional
Networking 2
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LL Global, Inc. SM 3 Nearly 100 Years of Providing Industry
Research and Knowledge to: More than 800 member companies in 65
countries worldwide Leading Media Outlets Wall Street Journal
Bloomberg CNN Policy-makers/regulators/legislators Treasury
Department Insurance Commissioners GAO
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LL Global, Inc. SM LIMRA ResearchA Catalyst for New Ideas
Benchmarking and Sales Trends ResearchDistribution Research
Consumer/Customer Engagement Research Technology ResearchCustom
ResearchInternational ResearchThe LIMRA Secure Retirement Institute
LIMRA employs 80 researchers to provide this research to our
members.
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Life insurers infused R176 billion into the South African
economy through death benefits paid to beneficiaries in 2013. 5
Source: ASISA Annual Report, 2013
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The financial services industry makes up 20 percent of South
Africas GDP. 6 Source: ASISA Annual Report, 2013
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LL Global, Inc. SM LIMRAs Market Maturity Model 7 China I
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LL Global, Inc. SM 8 The Dichotomy of the South African
Population
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LL Global, Inc. SM 9 Demographics Regulation & Legislation
Technology External Forces Major Driver of Growth/Change Unknown
The Change Agent Possible Disruptors Focus on Retirement Risk
Legislative Changes Create New Markets Rules/Regs Make It Hard to
Do Business How We Engage How We Become More Effective Interest
Rates & Investment Climate Globalization OR Forces of the
Future
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LL Global, Inc. SM South Africa Has a Young Population South
Africa - 2050 Source: U.S. Census Bureaus International Data
Base
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LL Global, Inc. SM Adv ice Model UnderScrutiny
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LL Global, Inc. SM Norway Finland Commission Advice Under
Pressure Commissions Banned in 2007 and 2008: United Kingdom
Netherlands Australia Countries Where Commissions Were Banned in
2013:
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LL Global, Inc. SM Regulators Believe: Commission sales are
inherently conflicting lead to lack of objectivity. Fee-based sales
remove all bias. Consumers are willing to negotiate & pay for
advice. Low-cost, free advice will be more available.
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LL Global, Inc. SM Consumers Say They Prefer Flat Fees
CommissionsFlat FeeAnnual Fee Develop and implement a plan for
retirement income 9% 55% 13% Develop and maintain a financial plan
105513 Advice on insurance type, amount, and options 9588 Advice on
which types of investments to buy or sell 115411 Source: Bye-Bye
Commissions, LIMRA 2012
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LL Global, Inc. SM 1 in 5 Consumers are willing to pay more
than $100 for advice Consumers are willing to pay far less than the
cost of providing advice. Source: Bye-Bye Commissions, LIMRA
2012
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LL Global, Inc. SM In UK, Consumers Wont Pay for Advice Half of
consumers are not willing to pay more than 50 ($80) for an hour of
professional advice Source: Bye-Bye Commissions, LIMRA 2012
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LL Global, Inc. SM Consumers in UK 84% not aware of RDR or that
they will have to pay for financial advice 54% said they would
refuse advice rather than pay a fee Source: Deloitte, 2012
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LL Global, Inc. SM Impact of Retail Distribution Review (RDR)
in United Kingdom 18
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LL Global, Inc. SM New IRDA Rules Resulted in 20% Drop in
Agents 19 Source: IDRA Annual Reports, 2011, 2012, 2013
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LL Global, Inc. SM Regulation in China 2010 reg. # 90 banned
insurance advisors from selling in bank branches Limits banks to
selling no more than three of a given insurers products Unit linked
products can only be sold through wealth management centers Sales
staff must hold specific designations and experience to sell
investment and UL products 20 Source: interviews with Chinese
members
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LL Global, Inc. SM New Regulations Dampen Bancassurance Sales
21 Bancassurance Market Share 20102011 China Life50%46% Ping An
Life11%13% New China Life67%60% China Pacific Life55%48% Taiking
Life74%68% In 2011, CIRC and CBRC released new rules to impose
stricter control. Source: 2012 Special Report: Asia-Pacific Life
Review & Preview. Growth Pauses in Asia-Pacific Life Markets as
Insurers Seek New Routes to Expansion (2012), AM Best, Shanghai
Securities News A 2014 regulation resulted in a 60% decline in
bancassurance policy sales by eight major life insurance companies
in China
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LL Global, Inc. SM 22 7 in 10 Canadians Prefer to Purchase Life
Insurance Face-to-Face Source: 2013 Canadian and 2010 U.S. Life
Ownership Studies Future Preference For Buying Life Insurance
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LL Global, Inc. SM In general, consumers dont trust life
insurance agents or advisors 23 Source: Advisor For Life, LIMRA
2009
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LL Global, Inc. SM But when it comes to their advisor 24 83%
Source: Finding the Right Mix: Retirement Income Attitudes and
Preferences, LIMRA Secure Retirement Institute, 2014 (in progress).
of consumers who work with a financial advisors, trust them
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LL Global, Inc. SM
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Advisors Make a Difference Contribute to a Retirement Plan With
Advisor Without Advisor Source: Use of and Impact of Advisors,
LIMRA, 2012
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LL Global, Inc. SM 27 Consumers Who Use Advisors Also Save More
Percent of consumers who defer more than 7% of their income into
employers defined contribution retirement savings plan. Source: Use
of and Impact of Advisors, LIMRA, 2012
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LL Global, Inc. SM Pre-retirees who worked with advisors feel
more prepared for retirement Source: Retirement Income Reference
Book, LIMRA Secure Retirement Institute (2012)
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LL Global, Inc. SM Retirees working with advisors are more
confident Source: Retirement Income Reference Book, LIMRA Secure
Retirement Institute (2012)
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LL Global, Inc. SM Pre-retirees who have advisors have done
more planning than those without an advisor Source: Retirement
Income Reference Book, LIMRA Secure Retirement Institute
(2012)
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LL Global, Inc. SM Three in 10 U.S. Households Have No Life
Insurance 32 Source: LIMRA Household Trends in U.S. Life Insurance
Ownership, 2010
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LL Global, Inc. SM Americans Households Owning Individual Life
Insurance 33 Source: LIMRA Household Trends in U.S. Life Insurance
Ownership, 2010
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LL Global, Inc. SM 34 Canadian Household Life Insurance
Ownership at Record Lows Source: Canadian Life Ownership
Studies
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LL Global, Inc. SM American Households That Say They Need More
Life Insurance Source: LIMRA Household Trends in U.S. Life
Insurance Ownership, 2010
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LL Global, Inc. SM Canadian Households Needing More Life
Insurance at All-time High 36 Sources: Canadian Life Ownership
Studies (LIMRA) and Statistics Canada 2013
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LL Global, Inc. SM 37 Americans Top Financial Concerns Source:
2013 Insurance Barometer Study, LIMRA & LIFE
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LL Global, Inc. SM 38 Living Expenses Have Increased Source:
Consumer Price Index, Bureau of Labor Statistics Peanut Butter
Average Price 2002 - $1.96 2012 - $2.75 40% Electricity kw/hr
Average Price 2002 - $0.091 2012 - $0.130 42% Orange Juice Average
Price 2002 - $1.84 2012 - $2.69 46% Gasoline Average Price 2002 -
$1.44 2012 - $3.73 158% Coffee Average Price 2002 - $2.92 2012 -
$5.98 90%
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LL Global, Inc. SM 39 Every day expenses limit achieving
financial goals 61% energy costs (oil, gas, electric) 58% every day
living expenses (food, clothing, transportation) 50% debt payment
(credit card balances, loans, equity lines of credit) 46% housing
costs 43% taxes (income, sales, property) Source: 2008 Middle
Market Study What limits your ability to save for goals or for
discretionary items.
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LL Global, Inc. SM Americans Disposable Income Has Been
Dropping for 30 Years
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LL Global, Inc. SM South Africans Have Other Priorities
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LL Global, Inc. SM Behavioral Economics Helping us understand
the seemingly irrational decisions of consumers about investments,
savings and insurance.
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LL Global, Inc. SM Which Would You Choose?70% Consumers who
chose chocolate Source: Presentation by Dr. Barbara Fasolo, Senior
Lecturer in Behavioral Sciences, London School of Economics
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LL Global, Inc. SM 44 Self-control is not a problem in the
future I start my diet on Monday. Solution: Commit to save later
Offer programs that allow employees to commit future income to
retirement plan Source: Presentation by Dr. Barbara Fasolo, Senior
Lecturer in Behavioral Sciences, London School of Economics
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LL Global, Inc. SM We liveNOW 45 Thinking about future self
elicits neural activation patterns that are similar to neural
activation patterns elicited by thinking about a stranger. Source:
Presentation by Dr. Barbara Fasolo, Senior Lecturer in Behavioral
Sciences, London School of Economics
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LL Global, Inc. SM 46 Age Progression Age 10 Age 70
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LL Global, Inc. SM Using Virtual Games to Show People their
Future Selves 47 Source: Increasing Saving Behavior Through
Age-Progressed Renderings of the Future Self Jeremy Bailenson,
Stanford University In a 2011 paper, Professor Jeremy Bailenson
reported that those who had seen their future selves in the virtual
mirror subsequently put twice as much money into a savings account
as those who hadn't.
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LL Global, Inc. SM Visceral Reaction: A visceral perception of
some risk is a necessary condition for any action taken to manage
the risk. Putting it negatively, a purely analytic judgment of risk
will have little or no affect on the behavior. Elke Weber Columbia
University
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LL Global, Inc. SM 49 Why dont they buy? Think they cant afford
it 74% Cant decide on amount 52% Havent gotten around to it 50%
Worry about wrong decisions 43% Put money in other financial
products 40% Have never been approached to buy 29% Dont want to
think about dying 20%
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LL Global, Inc. SM 50 Benefits Traditional Version Go over
financial needs and ways life insurance can help a family You could
come down with cancer. Behavioral Version RealLife story about
financial needs and how life insurance helped a specific person
Mark died of pancreatic cancer. Behavioral Economics Tactics
Concrete instances overcome optimism that the client will not die
prematurely.. Vivid and personal information is more effective than
statistical information. Source: Improving Sales Presentations:
Using Choice Architecture to Influence Buying Decisions, LIMRA
(2009)
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LL Global, Inc. SM Likelihood of Buying 51 Definitely Would Buy
Uncertain Definitely Would Not Buy 29% increase Source: Increase
Sales Through Behavioral Economics, LIMRA (2005)
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LL Global, Inc. SM Sales Reps Connecting with Consumers
Directly Immediately When Consumers Want
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LL Global, Inc. SM MetLife Partners With Walmart to Sell Life
Insurance in Stores
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LL Global, Inc. SM Diversifying into sales of financial service
products 55
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LL Global, Inc. SM Bradesco using POS machines to sell life
insurance
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LL Global, Inc. SM Mobile technology is changing how people
want to buy 57 South Africa ranks 5 th in mobile data usage (U.S.
ranks 7 th ) 80% of South Africans who use the Internet use only
their mobile devices Source: Neilson 2014 Survey
