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Hugh Terry, The Digital Insurer Digital Thinking to unite sales and opera7ons LIMRA conference on opera7ng strategies :23-‐24th November 2015, Bangkok
DIGITAL = CUSTOMER CENTRIC => SALES ∞ OPERATIONS .QED?
About The Digital Insurer
What do we do? • Provide a forum for
professionals interested in digital insurance
• Our aim is to help the insurance industry to take full advantage of digital trends and technologies
• We are the go to “des7na7on” for the latest thinking and the digital insurance ac7on & thought leadership
Our digital insurance content is free for subscribers and supported by our sponsors. Join more than 7,000 others @ the-‐digital-‐insurer.com
2
Discussion agenda
1 Digital and the case for change
2 Transforming face-‐to-‐face – a deeper dive
3 Digital Disrup7on – The future is already being created
3
So how do we innovate? 4
The Digital RevoluWon: “It will not be televised”
DIGITAL CONVENIENCE
DIGITAL CONNECTIVITY
DIGITAL EXPECTATIONS
Always on
Always there
Universal
Almost free
Access to informa7on (Google)
Access to each other (Facebook)
Access through devices (Apple)
Loca7on-‐agnos7c (cloud services)
Data “on demand” Desire for clarity & simplicity
Dialogue not monologue
Easy to promote a product .. And complain
4
Change, Change, Change….
5 5
2015: 2 billion smartphone users 2020 : 80% of adults will own a smartphone
Our digital world: very new, addicWve and diverse
Source: The Economist, Qmee.com
New & Big AddicWve Diverse
6
Welcome to digital customers: “they are mulW-‐touch”
6
Myth #1: Digital is a new distribu7on channel Reality : Digital enables customer (& distributor) engagement
Online
Face To Face
Phone
The mulW-‐channel customer is…
Beaer informed More demanding Uses mul7ple customer touch points for both sales & services Increasingly starts on-‐line Will jump channels at any point – catch them if you can!
7 7
Source: Swiss Re Sigma 02/14 7
The cross channel journey ”mono” communica7on 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 confirma7on
Online customer survey
Fill out on-‐line claim request
Post ra7ng and review
Tweet review
Like
Renewal no7fica7on
Tweet review
Referrals to family/friends
Follow-‐up call
Buy through agent
Approach agent
Product related call
Request further informa7on
Report claim
Gather InformaWon Seek advise Purchase policy Ader sales
service Make claim
Internet
Mobile
Social media
Agent/broker
Call center
Retail branch/bank
Note: The red line shows an example buying journey ini7ated by a mobile advert, and the blue line a purchase experience via online search.
8 8
MulWple sources of informaWon: but digital has won
Source: Swiss Re Sigma 02/14 8
Sources of advice on insurance Percent 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 Asia Developed 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
3 core strategies
Transform exis7ng face-‐to-‐ face models
2
Create or par7cipate in new models
3
Manage exis7ng models for profit
1
9
The Digital Advisor Business Model
10
2
Trust is at the heart of insurance
Rely on agent rela7onships 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 interac7on/touch point
Great insurance advisors -‐ always
in demand
Lack of standardiza7on in training, performance management & coaching
Result : variable quality of advice and low produc7vity resul7ng in high agent turnover, low policy persistency
When customers research online they will research their advisors as well….
Less 7me 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 mafers
Nearly 100% reliant on the advisor
Back office is … back office
Mobile technology provides opportuni7es for cost effec7ve customer service differen7a7on
Push based communica7ons can be used to reconnect with customers
Myth #2: Digital changes the way insurance is sold Reality: Digital strategies must incorporate the fundamentals
Current Agency Paradigm Digital impacts
Back to basics: Digital Advisor strategies need to leverage insurance fundamentals
11
Customer Portal / App
Policy Systems
Advisor Portal Lead/Prospect Management
Sales OpportuniWes
The Digital Advisor Business Model
Tablet
12
Digital TransformaWon of face-‐to face
Digital Opportuni7es 1. More Leads 2. Beaer service 3. Beaer selling
Customer Portal / App
Policy Systems
Advisor Portal Lead/Prospect Management
Sales OpportuniWes
Tablet
Improved selling
3. “connecWng the eco system”
13
3
Present creden7als (materials) Iden7fy needs Produce quotes and help to close Easy proposal submission
Tablet FuncWonality: 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 cri7cal: engage/delight customers & advisors
Usability is the Key Success Factor
POS Tablet sales toolkits: “business as usual” in most markets within 53 years?
14
1. Enable lead management & analy7cs / Predic7ve analysis
2. Improved compliance to sales best prac7ce (& regulatory requirements)
3. Back office produc7vity from digital proposals
7 OTHER BENEFITS AFTER SUCCESS
POS tablet sales toolkit: easy business case
PRIMARY BENEFIT Improved Sales effec7veness through a beaer customer
experience
MEASURED BY: High tablet usage from Advisors
Increased sales produc7vity 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. Plaporm for more automated underwri7ng
• Benchmarking data • Usage data • “Bigger” data
15
AIA case study: iPoS regional digital transformaWon
16
4 Key differen7ators
Off-‐line model 100% availability “Any 7me, Anywhere” Advisor “digital briefcase”
AIA’s Regional Journey August 2012: First launch in Singapore Jan 2014: Rollout Across 10 markets completed
2014 first bank partner moves to 100% tablet sales 2015 and beyond: Elevate iPoS to a total mobile office
16
3. InteracWve, intuiWve
2. NaWve App on a tablet
§ Ease of use § A new customer experience § High adop7on by advisors
§ Independence from internet connec7on § Fast and uninterrupted service § Lightweight device
1. FuncWonally complete
§ Paperless sale, incl. eSignature § Structured, needs-‐based sales process § Straight Through Processing
4. Regionally deployed
§ In-‐house development team in China § Regional standards with localisa7on § Rapid deployment
AIA Case study: usability = funcWon plus form
17
AIA Case study: benefits
18
Fast turnaround
Agents’ producWvity
§ Complete and pre-‐validated documenta7on § Instant underwri7ng decision § Straight Through Processing
§ More effec7ve customer mee7ngs, less mee7ngs with one customer
§ Enhanced mobility, see more customers § Address mul7ple needs, higher case size
Customer experience
§ Interac7ve, progressive buying experience § Explore more op7ons, deeper conversa7ons § Enhanced customer engagement
19 19 19
AIA case study: impressive results High usage in a short Wmeframe
Increased ProducWvity*
*iPoS advisor versus non-‐iPoS advisor
““I would not do much differently. iPoS is very successful in the way we manage it, roll it out and con7nuously improve it. However, we were ini7ally overwhelmed by the success of iPoS and didn’t have enough scale and capacity. Next 7me I would react quicker and be more decisive on adding resources to such a program.”
AIA Director leading the development
If AIA could do it again
Sales Per advisor +19%
No of cases +20%
Lead/Prospect Management
Sales OpportuniWes
More leads
Managing the sales funnel
Co-‐partnership models for lead genera7on Apps to generate leads from the “digital cafes” Analy7cs has an enormous role to play Get the lead to the right person at the right 7me
Lead management systems to manage mul7ple leads , measure ROI and promote beaer prac7ces
Digital Marke7ng offer engines
Business outcome: • More leads • Beaer quality leads
20
1
Befer customer service
Customer portal/app: An on-‐line marke7ng capability for customer engagement leading to cross sell / up sell opportuni7es
1
Build a digital “eco-‐system” around legacy policy systems to treat customers like customers
2 Customer experience centre: Mul7 channel customer support to connect customer interac7ons – a digitally assisted customer service revolu7on (the engine room for conver7ng “data into business”)
3 Advisor portal: Customer data and advisor performance at your finger 7ps
Business outcome: Building deeper, richer and beaer rela7onships with
customers and advisors Facilitate and co-‐partners the advisors to beaer meet
customer needs Allow “farming” as well as “hun7ng”
Customer Portal / App
Customer Experience Centre
Policy Systems
Advisor Portal
21
2
Tablet
MulW-‐Touch: a long way to go in Asia
22
2
Source: Ep7ca Survey of 10 health insurers
MulW-‐Touch: email response Wmes – slower than post?
23
2
Source:Ep7ca Survey of 10 health insurers
24
What changes : How do sales and operaWons work together?
• Reinvent how func7onal areas work together • Common theme around the customer
New Philosophies
• More collabora7on and more structured Project management New Rules (Governance)
• Use produc7vity tools to transform the day-‐to-‐day work
• Insurers will need to hire externally and collaborate with other companies to access new skills
• Internal skills need to be upgraded
New Tools
New Skills
25
Digital change: All areas are/ will change
Training • Training & knowledge on demand • Video – everyone a trainer
Sales • Process standardisa7on • Management by metrics
Customer Service • No more back office • Engage and cross sell
Technology • Agile and in the cloud • Front-‐end components
MarkeWng • Now an opera7onal unit • Management by metrics
UnderwriWng • Much more straight through • Faster to change
Process & Knowledge • Need to invest • Make it engaging
Actuarial • Dynamic pricing • Lead data analy7cs – or get let behind?
26 26
Comms tools : FWD use Whatsapp
Real Wme Training & SupporWve Community On-‐line Knowledge base with FAQ’s Support via community forum
“chic, cool and colourful”
Do you have an open plaporm tool to connect
your sales people?
The Social Enterprise : YAIA use Yammer
27
“Facebook” for the enterprise
For AIA started as a Prophet user group Now covers 13,500 people Social Enterprise = Knowledge + Comms + Fun
Has your company gone
social?
Video Tools : Become a video company for US$300
28
Does you company use video regularly?
Webinars + conferencing @ < US$100 per month
World class video hosWng @ < US$100 per month
Training videos @ < US$100 per month
Process mapping : Visio – not new
29
Why bother?
Drive a consistent customer experience Communicate with all stakeholders Create a training base The business advantage : process connects people to technology
Do you have a dedicated process
team?
Digital DisrupWon & InnovaWon
30
3
31 31
How far could bank disrupWon go: and what about insurers?
31
FT HEADLINE: “MCKINSEY WARNS BANKS FACE WIPEOUT IN SOME FINANCIAL SERVICES”
Source: Financial Times, 30th September 2015 -‐ quo=ng from McKinsey annual global banking review
OriginaWon & sales acWviWes US$1.7 trillion revenue
22% ROE
Balance sheet provision US$2.1 trillion revenue
6% ROE
“A high stakes struggle… Either banks fight for the customer rela7onship, or they learn to
live without it and become a lean provider of white-‐labelled balance sheet capacity.”
V’s
No surprises: under aaack from digital disruptors e.g. predic7ng profits from car loans and credit card loans to fall by 60%
32 32
Transforming insurance distribuWon: banking is moving faster
32
6
7
8
9
10
1
2
3
4
5
Top 10 US retail mortgage originators in Q1 2015:
Wells Fargo $28.4bn
Quicken Loans $19.3bn
Bank of America $13.7bn
Chase $10.0bn
PHH $8.8bn
Citi $6.4bn
loanDepot.com $5.8bn
Guaranteed Rate $4.2bn
Freedom Mortgage $3.6bn
US Bank $3.2bn
NON-BANKS ORIGINATED OVER HALF OF NEW MORTGAGES IN Q1 2015 IN 2010 THEY ORIGINATED LESS THAN 10%
Source: Inside Mortgage Finance, Financial Times, 2015
Would a new entrant establish a distribuWon centric model?
Agency Channel
Incumbents have scale Opera7ons are complex and inefficient Models don’t deliver value to the consumer on the investment component Part-‐7me sellers – very hard to manage Low produc7vity Product range is too narrow
Bancassurance Has 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
ExisWng models are ripe for disrupWon:
A personal view for life insurance industry In Asia
33
There are untapped opportuniWes around the world
Seriously shopped but didn’t buy life insurance (10%)
Didn't shop for life insurance (78%)
Seriously shopped and bought life insurance (12%)
Buyers and non-‐buyers of life insurance, US households(%), 2011
Can digital strategies change the paradigm that “life insurance is sold not bought”?
Chart Source : To Buy not to buy life insurance, LIMRA 2011. Extracted from Swiss Re Sigma 06/13 . *Swiss Re Asia Pacific Mortality Protec7on gap 2015 34
78%
12%
10%
US$55 trillion
Protec7on gap in Asia*
35 35
Transforming insurance: Acknowledging innovaWon
Source: Transforming Insurance, KPMG Interna7onal, 2014 & The Insurance Innova7on Impera7ve, KPMG Interna7onal 2015 35
Acknowledge the challenges Seize the opportunity
65% Regulations high costs &
margin erosion
45% 48% 83% future success = ability to innovate
business models disrupted
8 Digital distribuWon models: breaking down the value chain
36
Acquire New Customers Selling to Customers Servicing Customers Taking Product Risk
2. Bancassurance Insurer Bank
1. TradiWonal Agency Insurer
3. Digital / Direct Insurer
5. Digital Managing Agents Single Insurer
4. Price Comparison Sites Mul7ple Insurers
6. Digital Broker Mul7ple Insurers
7. Digital Affinity Mul7ple Providers Affinity Partner
8. Product eco-‐systems Insurer(s)
36
the insurer
Maybe the insurer
NOT the insurer
Owned by
37
Digital DistribuWon around the world
Acquire New Customers
Selling to Customers
Servicing Customers
Taking Product Risk
3. Digital / Direct Insure
4. Price Comparison Sites MulWple Insurers
5. Digital Managing Agents Single Insurer
Affinity Partner 7. Digital Affinity MulWple Providers
1. TradiWonal Agency Insures
2. Bancassurance Insure Bank
8. Product eco-‐systems Insure(s)
6. Digital Broker MulWple Insurers
Started in November 2013…
First online insurance seller in China USD 128 million premium income
630 million insurance policies 150 million customers …and raised US$1bn of funding in 2015
Advanced cloud compu7ng system
Selling its #1 product through
C2C Taobao
B2B B2C
Cross-‐industry cooperaDon
Major shareholders are Alibaba, Tencent and Ping An
Source: Zhong An, 2015
… by the end of 2014
Direct Insurance / Digital Affinity: Zhong An Region -‐ China
Region: North America Agency Model: Sureify
39 39
Background Lifestyle op7on Discounts for healthily lifestyle
Term Life + telema7cs
Region: United Kingdom Agency Model: Beagle Street
40 40
Background 8% of new business in UK from this company
Online recommenda7ons Bereavement counselling
Term Life with great experience
Price Aggregators: CoverHound
Commentary & insights
CoverHound provides a one-‐stop & consistent fulfillment experience across mul7ple insurers
Strong CoverHound User experience includes quick quote and an element of simple “gamifica7on” to encourage users to get discounts by providing more informa7on
Moving into small business commercial insurance with ACE 7e up
Background
Founded in 2010 as a one-‐stop-‐shop for auto insurance covering price comparison and purchase
Aggregator “plus” model that includes the customer fulfillment process up to policy issue. Now covers home, car and motorbike insurance
Website redesign in 2013 increased website conversions by 33% and won it the coveted Stevie award that year
US$14 million raised from venture capital in March 2015 ater Google partnership. Addi7onal US$33 million from Ace in September 2015 for expansion into commercial insurance
Region: United States
41
CoverHound – Engaging design
Email delivers a comparison guide with opWons to buy
Discounts have element of “gamificaWon”
Customer centric: dial “pricing”, mobile friendly and call in
42
Email delivers a comparison guide with
opWons to buy
Quick Quote via Twifer
Commentary & insights Excellent example of “service for Free” model disrup7ng two industries (HR sotware and employee benefits)
Window of opportunity was Affordable Care Act that simplified ra7ng for health insurance for small companies
Not so “Zen” – very public argument regarding use of ADP payroll accounts
Suite of HR services
Background Fastest growing SaaS business ever Offering free HR sotware plaporm and integra7on to third party services in return for insurance on employee benefits
Focused on SME’s Just raised US$500 million on US$4.5 billion valua7on Revenue target of US$100 million by Jan 2016
Region: North America Broker Model: Zenefits
43 43
Crystal clear and compelling proposiWon TesWmonials
Online employee filing cabinet
100% paperless benefits enrolment
Automated onboarding
Zenefits: customer focus reaps rewards
44 44
Affinity model: Tune Insurance
Digital affinity – capturing value in Travel insurance
Background Tune Insurance (now Air Asia Insure) provides insurance solu7ons to AirAsia – the regions largest low cost carrier
More than 5 million travel insurance policies are sold each year Incremental capturing of value as moved from Agent to reinsurer to insurance carrier resul7ng in successful IPO with Market capitalisa7on of Approx US$400 million
Commentary & Insights On line flight purchase experience Opt out approach drives take up rate in excess of 20% Nearly 100% digital model ensures profitability and scalability to meet demands of enterprise level
Investment in middleware allowed Tune to deliver a cost effec7ve and customer friendly solu7on
Region: Asia
45 45
Sale bundled with flight Wcket Opt out selling
Digital Customer services
Value of insurance reinforced upon opt out
Selling the benefits
Smooth Sales fulfilment with a model nearly 100% digital Tune Insurance
46 46
Looking ahead
47
Where could the seeds for future disrupWon occur?
New Entrants
Digital only companies – Google, Facebook , Amazon , Baidu
Industries with digital customers – airlines, telcos, supermarkets
Customer engagement
Avatars and machine intelligence for insurance advice
Insurance bundled into more interes7ng products
Digital rela7onship building
Data and Devices
Telema7cs and IOT for cars, homes and people
Devices to reduce risk Value of data – a new currency How to analyse data. how to augment data
Digital will redefine our industry . It is early days..
How do we Innovate in insurance?
48
4
49 49
Our industry is on the move
Source: Survey of 280 global C Suite execu7ves for « A New World of Opportunity: The Insurance Innova7on Impera7ve, KPMG 2015 49
How fast can we move? At our fastest is it s7ll too slow?
Digital innovaWon in distribuWon: what ingredients are needed?
50
• Customer at the heart of the process
• “Outside-‐in” approach to ini7a7ves
• Respect customer choice
• Distribu7on partners
• Tech partners • Marke7ng
partners • Eco-‐system models
1. Customer Centric 2. CollaboraWve ü ü
5. Data centric & scalable opera7ng models leveraging technology plaporms
4. New challenger brands – disrupt own business if necessary
3. Agile frameworks and mindsets
6. Strong internal support for a clear plan with risk mi7ga7on via pilo7ng
Enablers
Trust is at the heart of insurance
Great insurance advice
-‐ always in demand*
Customer service really
mafers
Digital TransformaWon: our opportunity to return to the basic “DNA” of insurance
51 * and digital avatars will be part of this advisory mix
Current org state: will it work in our digital world?
52
CEO
DistribuWon (CDO)
MarkeWng (CMO)
Project Management Office (PMO)
OperaWons (COO)
Technology (CTO)
Is the current organizaWon structure broken?
Designed for “ business as usual” not constant change i.e. s7fles innova7on Distribu7on centric Silos of power Command and control doesn’t resonate with digital na7ves or Gen Y
OrganisaWonal structures for insurance innovaWon
53
Labs
• For bets on ideas not yet fully formed
New Business Unit
• Centralise digital to create impact
• Digital Centre of excellence
• Co-‐opt exis7ng + bring in new staff
Partnerships
• Look for partners with connec7vity and selling products needing insurance
• Venture capital and private equity
• Third party innova7on centres
Innovator Brand
• New Digital insurance co
• Start afresh
54
Future state: the new best pracWce in a digital world?
54
PMO
THE CUSTOMER
Are the tradiWonal power centres willing to give up some power for the collecWve good?
Change engines
55
AddiWonal info on The Digital Insurer
Contact The Digital Insurer: hugh.terry@the-‐digital-‐insurer.com 55
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