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Hugh Terry, The Digital Insurer
LIMRA / LOMA Conference : Distribution Strategies in a Digital World
7th November 2014, Shangri-La Hotel, Singapore
DIGITAL THINKING TO TRANSFORM INSURANCE IN ASIA
Discussion agenda
1Digital trends & the case for change
2 The Digital Advisor – transforming face-to-
face insurance Q&A Session 1
3New digital models – what’s coming?
Q&A Session 2
2
5 Personal conference objectives
1 Make a positive case for change
3
2 Stimulate debate and discussion
3 Share some perspectives & experience
4 Hopefully help to enhance your thinking
5 Learn more from you – Q&A
Digital trends and the case for change
4
LIMRA / LOMA Conference: Distribution Strategies in a Digital World 7th November 2014, Shangri-La, Singapore
1
The Digital Revolution: “It will not be televised”
DIGITAL
CONVENIENCE
DIGITAL
CONNECTIVITY
DIGITAL
EXPECTATIONS
Always on
Always there
Universal
Almost free
Access to information
(Google)
Access to each other
(Facebook)
Access through
devices (Apple)
Location-agnostic
(cloud services)
Data “on demand”
Desire for clarity
& simplicity
Dialogue not
monologue
Easy to promote a
product .. And
complain
5
Change, Change, Change….
Two digital “Mega” trends: forces beyond our control
Changing consumer behaviour –
they are more demanding and
looking for a different experience
2
Technology is cheaper and easier to
implement than ever – it is the fulcrum
to meet consumer needs, reduce
operating costs and to change your
culture
1
6
77
A different world
A real-time and rapid
fundamental change in the
way we live
Our Digital World in 2014: every 60 seconds we…
Source: blog.Qmee.com
888
3. Less Trust in Financial
Services brands
2. Multi-channel service
1 Research on-line and purchase
anywhere
3 changes in customer behaviour: Transforming our industry
Around the world 69% of the online population researches on-line before purchasing a product or service
15%8%
19%27%
23% research online / purchase online 46% research online /purchase offline
Global- % of purchasers who did research online
only before purchasing online
Global- % of purchasers who did research both
online and offline before purchasing online
Base : People who purchased the product / service and are part of the online population
Global- % of purchasers who did research
online only before purchasing online
Global- % of purchasers who did research both
online and offline before purchasing offline
Consumer’s research on-line: …& then purchase anywhere
All Products
Source : www.consumerbarometer2013.com.
10
Is Financial Services different? Not really
Global- % of purchasers who did research online
only before purchasing online
Global- % of purchasers who did research both
online and offline before purchasing online
Global- % of purchasers who did research
online only before purchasing offline
Global- % of purchasers who did research both
online and offline before purchasing offline
14%6%
25%22%
Source : www.consumerbarometer2013.com. 10
Finance and Real Estate
For Finance and Real Estate it is 67% around the world
11
11
Is Asia different? Not really
In India it is 65% and in China it is 74% for Finance and Real Estate. However, a higher % of purchases are currently made offline (>2/3rds reflecting face-to-face channel dominance).
Source : www.consumerbarometer2013.com. 11
17% 12%4%4%
9%
41%
17%
35%
China- % of purchasers who did research online only before
purchasing online
China- % of purchasers who did research both online and offline
before purchasing online
China- % of purchasers who did research online only before
purchasing offline
China- % of purchasers who did research both online and offline
before purchasing online
India- % of purchasers who did research online only before
purchasing online
India- % of purchasers who did research both online and offline
before purchasing online
India- % of purchasers who did research online only before
purchasing offline
India- % of purchasers who did research both online and offline
before purchasing online
Finance & Real Estate
12
12
Multiple sources of information: but digital has won
Source: Swiss Re Sigma 02/14 12
Sources of advice on insurancePercent of survey respondents
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8
Emerging AsiaDeveloped Asia
Legend:1. Internet
2. Family friends and colleagues
3. Insurance agent
4. TV
5. Bank
6. Independent financial adviser
7. Internet enabled mobile
phone
8. Social media
13
Welcome to digital customers:
“they are multi-channel”
13
Myth #1: Digital is a new distribution channelReality : Digital enables customer (& distributor) engagement
Online
Face To Face
Phone
The multi-channel customer is…
Better informed
More demanding
Uses multiple customer touch
points for both sales & services
Will jump channels at any point –
catch them if you can!
14
14Source: Swiss Re Sigma 02/14 14
The cross channel journey ”mono” communication channels are going the way of the dinosaur
Online
search
Compare
quotes Browse
reviews
Targeted
advert
Receive quote Check with
friends
Buy online
Text/email
confirmation
Online customer
surveyFill out on-line
claim requestPost rating and
review
Tweet
reviewLike
Renewal
notification
Tweet
review
Referrals to
family/friends
Follow-up call
Buy through
agent
Approach
agent
Product
related call
Request further
information
Report claim
Gather
InformationSeek advise Purchase policy
After sales
serviceMake claim
Internet
Mobile
Social media
Agent/broker
Call center
Retail
branch/bank
Note: The red line shows an example buying journey initiated by a mobile advert, and the blue line a purchase experience via
online search.
1515
15%
By Letter
7%
By Text/SMS
1%
Other
32%
By Phone
24%
In Person
21%
Online/Web
Source ; Ernst & Young Voice of the Insurance Customer – Asia Pacific 2012
Customers are already using multiple touch pointsWhat would be your preferred means of contact from your provider?
Multi-channel service is here today…
1616Source : McKinsey Study
Customers prefer digital customer service: Telco example
The more digital the journey, the higher the satisfaction (and the lower expenses are)
Channels Customer service journey1 Share of
transactions
Customer
satisfaction,2 %
Traditional
Phone
Vendor
Mail/fax
Click to call
Starts Ends
57
Digital
E-chat
Forum
FAQ
Personal account
Virtual assistant
Social media
Traditional
Only11%
Digital to
Traditional
Traditional
to digital
41%
41%
Digital Only 15%
61
76
62
Dig
ital o
nly
= +
33
% o
ve
r trad
ition
al o
nly
1Telecom example, Western Europe; 4 service journeys were identified based on an analysis of 11 touch points spanning traditional and digital channels. For
traditional-to-digital journeys (and voice versa), the first channel switch was used to allocate the journey. 2Respondents who ranked their satisfaction in the top 3 on a 7-point scale, where 7 = most satisfied.
Also > 25% cheaper
Source : MetLife employee benefits trends study (1,400 employee interviews)
Digital demand: across all age groups
Employee interest in employer providing Gen Y Gen X
Younger Boomers
Older Boomers
Online tools 70% 69% 58% 53%
A financial advisor sponsored
by my employer65% 62% 48% 47%
Financial planning/retirement
webinars via the internet59% 55% 47% 42%
Advice and guidance from an
expert via telephone52% 41% 28% 38%
Age definitions: Gen Y :<31,Gen X :32-47,Younger Boomers: 48-56,Older Boomers 57-66
17
1
2
3
4
Source : Edelman 2014 Trust barometer
71% would rather go to the dentist than listen to what their banks are saying to them
Source: survey by Viacom
We have a Trust
Challenge
18
Trust is at the heart of financial services: and…
78%69% 67% 64% 64% 61% 59%
55% 55% 52% 49% 48% 48%
32%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Tech Co.1 Pharma
Co.1
Tech Co.2 Food &
Bev Co.1
Food &
Bev Co.2
Energy
Co.1
Energy
Co.2
Food &
Bev Co.3
Pharma
Co.2
Tech Co.3 Food &
Bev Co.4
Pharma
Co.3
Financial
services
industry
Pharma
Co.4
48%
52% 52%
47%46%
42%
44%
46%
48%
50%
52%
54%
Financial services industry Banks Credit/Payments Insurance Financial advisory/asset
management
3 core strategies
Transform existing face-to-face models
2
Create or participate in new models
3
Manage existing models for profit
1
19
The Digital Advisor: transforming face-to-face
Policy Systems
Advisor Portal
Lead/Prospect Management
The Digital Advisor Business Model
Tablet
LIMRA / LOMA Conference: Distribution Strategies in a Digital World 7th November 2014, Shangri-La, Singapore
Sales
Opportunities
20
2
Customer Portal / App
Trust is at the
heart of
insurance
Rely on agent relationships
Insurance brand is a hygiene
factor in the sales process
As customer research on-line trust
will need to be developed and
leveraged on-line
Trust must be earned & reinforced at
every interaction/touch point
Great insurance
advisors - always
in demand
Lack of standardization in training, performance management & coachingResult : variable quality of advice and low productivity resulting in high agent turnover, low policy persistency
When customers research online they will research their advisors as well….Less time face-to-face – but no less important (probably more so)Insurance advisors need to be more mobile (digitally & physically)Digital will transform & standardize key management processes
Customer
service matters
Nearly 100% reliant on the
advisor
Back office is … back office
Mobile technology provides
opportunities for cost effective
customer service differentiation
Push based communications can be
used to reconnect with customers
Myth #2: Digital changes the way insurance is soldReality: Digital strategies must incorporate the fundamentals
Current Agency Paradigm Digital impacts
Back to basics: Digital Advisor strategies need to leverageinsurance fundamentals
21
Customer Portal / App
Policy Systems
Advisor Portal
Lead/Prospect Management
Sales
Opportunities
The Digital Advisor Business Model
Tablet
22
Digital Transformation of face-to face
Digital Opportunities
1. More Leads
2. Better service
3. Better selling
Lead/Prospect Management
Sales
Opportunities
More leads
Managing the sales funnel
Co-partnership models for lead generation
Apps to generate leads from the “digital cafes”
Analytics has an enormous role to play
Get the lead to the right person at the right
time
Lead management systems to manage multiple
leads , measure ROI and promote better
practices
Business outcome:• More leads
• Better quality leads
23
1
Better customer service
Customer portal/app: An on-line marketing capability for
customer engagement leading to cross sell / up
sell opportunities
1
Build a digital “eco-system” around legacy policy systems to treat customers like customers
2 Customer experience centre: Multi channel customer
support to connect customer interactions – a digitally
assisted customer service revolution (the engine room for
converting “data into business”)
3 Advisor portal: Customer data and advisor performance
at your finger tips
Business outcome:Building deeper, richer and better relationships with
customers and advisors
Facilitate and co-partners the advisors to better
meet customer needs
Allow “farming” as well as “hunting”
Customer Portal / App
Customer Experience Centre
Policy Systems
Advisor Portal
24
2
Tablet
Customer Portal / App
Policy Systems
Advisor Portal
Lead/Prospect Management
Sales
Opportunities
Tablet
Improved selling
3. “connecting the eco system”
25
3
Present credentials (materials)
Identify needs
Produce quotes and help to close
Easy proposal submission
Tablet Functionality: Should be focused on the customer
Must be designed for advisors to connect with
customers
Easy to use with a “wow” factor that encourages
use with clients
Great usability is critical: engage/delight customers
& advisors
Usability is the Key Success Factor
POS Tablet sales toolkits:“business as usual” in most markets within 53 years?
26
1. Enable lead management & analytics / Predictive
analysis
2. Improved compliance to sales best practice (&
regulatory requirements)
3. Back office productivity from digital proposals
7 OTHER BENEFITS AFTER SUCCESS
POS tablet sales toolkit: easy business case
PRIMARY BENEFIT
Improved Sales effectiveness
through a better customer
experience
MEASURED BY:
High tablet usage from Advisors
Increased sales productivity
per month
• More efficient
• Faster & more accurate (clean policies in a day)
4. Reduced overheads: premises & technology costs
5. Business intelligence
6. Recruitment training (and hiring) tool
7. Platform for more automated underwriting
• Benchmarking data
• Usage data
• “Bigger” data
27
Digital Advisor model: designed for the multi-channel customer
Online
Multi-Device
Access
“Digitally enhanced”
Insurance
Advisors
Customer Experience
Centre
Face
To
Face
Phone
DIG
ITA
L C
US
TO
ME
R
EN
GA
GE
ME
NT
Customer Portal/App
Self - Service
Referrals
Corporate Website
Direct purchase
Support Requests
Digital eco-system
Engaging content
Research tools
DIG
ITA
L
AD
VIS
OR
S
Customer Facing : Tablet POS Toolkit
Sales Intro & Fact Find
Quote & application
Internal : Advisor Portal
Performance & compensation
Customer data & e-comms
DIG
ITA
L
CU
ST
OM
ER
SE
RV
ICE
Multi-access customer experience centre
Voice/chat/text queries & escalation
Direct Sales : content & calls
Analytics engine room
Lead engine roomSales / Service
Opportunities
28
Leads
50% of leads from digital
engagement activities
Twice as many leads per advisor
Agency KPIs for 2018
The Digital Advisor:Where should you be 5 years from now?
Insurance
advisors
At least 2-3 times more
productive
50% fewer advisors
100% tablet usage for all new
advisors – core tool for sales
Customer
service
matters
50% reduction in back office staff
But at least a corresponding
increase in customer facing staff
supporting digital service, sales
and lead processes
Digital will transform
agency operating models
29
Digital face-to-face transformation: how to succeed?
Strategic Alignment New Implementation approach
Digital as a transformation opportunity Customer centric (outside in)
The importance of tablet POS toolkits Fast pilot (AGILE)
Comprehensive business case approved Explicit change management
Resources dedicated Distribution owned (?)
Advice: Think about tablet POS toolkits as the “pivot” for your change strategy
Reality: Digital should challenge, and transform, your organisational structure
30
Q&A Session 1
Questions on:
• Digital Transformation of face-to-face insurance
• The trends in this new digital world we live in
• Anything else that is vaguely digital
Q&A Session 1
What characterizes
the difference
between success
and failure for a
Point of Sales Tablet
toolkit
POS tablet Toolkits
How can we
transform
customer service?
Customer service
What is it ? How
will it help
insurers?
Big data
Backup Questions!
32
“New” digital models –what’s coming?
LIMRA / LOMA Conference: Distribution Strategies in a Digital World 7th November 2014, Shangri-La, Singapore
33
3
Would a new insurer establish a distribution centric model?
Agency Channel
Incumbents have scale
Operations are complex and inefficient
Models don’t deliver value to the consumer on the investment component
Part-time sellers – very hard to manage
Low productivity
Product range is too narrow
BancassuranceHas a lot of advantages but….
Banks have consistently chosen $$ over customer centricity
Lacks the personal touch on servicing
Technology hard to deploy in banking environment
Agency is a cash cow that needs renewal
Bancassurance is an increasingly expensive game – and banking is going digital
Existing models are ripe for disruption:
A personal view for life insurance industry In Asia
34
There are untapped opportunities
Seriously shopped but didn’t buy life
insurance (10%)
Didn't shop for life insurance (78%)
Seriously shopped and bought life insurance
(12%)
Figure 6
Buyers and non-buyers of life insurance, US households(%), 2011
Can digital Strategies change the paradigm that “life
insurance is sold not bought”?
Source : To Buy not to buy life insurance, LIMRA 2011
Extracted from Swiss Re Sigma 06/13
35
78%
12%
10%
POS Tablet Toolkit drives
agency renewal
10 million connections
on Line
Content anchored on
health & wellness
MULAN mobile
customer service
Direct model exploiting
Airline affinity
Asia’s first dedicated
direct channel
iGenius
content strategy
Digital worksite /
flexible benefits
On-line Life insurance Aggregator model
36
Digital business models: moving beyond theory
7 operating models for Asia: breaking down the value chain
37
Acquire New Customers Selling to Customers Servicing Customers Taking Product Risk
2. Bancassurance InsurerBank
1. Traditional Agency Insurer
3. Digital / Direct Insurer
4. Digital Managing Agents Single Insurer
5. Price Comparison Sites Multiple Insurers
6. Digital IFA Multiple Insurers
7. Digital Affinity Marketing Co. OR
Brand Financial Service Co e.g. TESCO BankMultiple ProvidersAffinity Partner
NO
WE
ME
RG
ING
IN
AS
IA
Digital / Direct Insurers
Direct Asia
Direct Line
38
3
Life Net
Esurance (All State)
Digital Managing Agents
Beagle Street
Pet Sure
39
4
Mobile Cover
Australian Seniors
Price Comparison Sites
iMoney
Money Supermarket
40
5
Brokerfish
Ins Web
Digital IFA
Life Broker
Unbiased.co.uk
41
6
Cycle Sure
Wealth Wizards
Digital Affinity
Airlines: AirAsia / Tune Insurance
Telco: BIMA
42
7
Worksite: CX Asia
Supermarkets: Coles
Health insuranceEngagement
Higher Relevance
A thought: is life insurance enough in a digital world?
Non - life
Smaller ticket
First to go on-line
Customer acquisition
Customer cross sell
Other
Banking products – credit cards, savings, loans
(reverse bancassurance !)
Loyalty programmes
Customers don’t think about industry structures when they buy on-line
43
The trend to
choice
Digital = customer centricity
The educated consumer
The world of “more perfect” information
How can insurers
react?
Be the best choice
Buy choice based models
Manage choice
Defend existing models
Do we think we can deny customer choice ?
Do we think we can deliver poor value products?
44
Another thought: embrace customer choice or baton down the hatches?
Recap: which one can you afford to ignore?
Transform existing face-to-face models
2
45
Create or participate in new models
3
Manage existing models for profit
1
46
Concluding: “business as usual” is the most dangerous path
Be radical
Now is the time to embrace change and start building digital models.
Be cautious
You don’t need to “bet the bank”. Learn from fast and strategically well thought our pilot
projects. Find people with the skills to transform.
Beware
If you don’t utilise digital thinking, plenty of others will continue to do so.
47
Q&A Session 2
How do insurers
need to reorganise
to meet the
challenges of the
digital world?
Org design
Who are the new
entrants to be
most afraid of?
New
entrants
Agility and
insurance don’t
fit well together.
How can that be
changed?
Agility
Backup Questions!
484848
1. Internal demand for a face-to-face makeover: Do you agency and banc sales team recognise the
need to create a new digital face-to-face model
2. Playing as a team: Are all business heads prepared to move from a hierarchical approach to a team
approach?
3. Customers first: Can you align your business around your customers instead of your distributors?
4. Skills deficit acknowledged: Do you recognise you don’t have the skills available internally?
5. Investment in people: are you prepared to invest in new roles?
– Chief content officer
– Chief customer officer
– Distribution technology head
– Head of digital centre of excellence
6. Modern tech: Are you prepared to challenge the Technology status quo?
7. License to innovate: Are your incentives aligned to allow your to build new business models – or are
you tied to short-term targets?
A ready reckoner for change: 7 questions
49
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