DIGITAL THINKING TO TRANSFORM INSURANCE IN … Model Tablet LIMRA / LOMA Conference: Distribution...

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


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


online and offline before purchasing online

Global- % of purchasers who did research

online only before purchasing offline


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


India- % of purchasers who did research online only before

purchasing online

India- % of purchasers who did research both online and offline


India- % of purchasers who did research online only before

purchasing offline

India- % of purchasers who did research both online and offline


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

E-mail

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


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


Policy Systems

Advisor Portal


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


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 Experience Centre

Policy Systems

Advisor Portal

24

2

Tablet


Policy Systems

Advisor Portal


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?


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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DIGITAL THINKING TO TRANSFORM INSURANCE IN … Model Tablet LIMRA / LOMA Conference: Distribution...

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