Digital Thinking to unite sales and operations - LIMRA Bangkok 2015

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

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professionals interested in digital insurance

•  Our aim is to help the insurance industry to take full advantage of digital trends and technologies

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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

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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

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Change, Change, Change….

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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

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Welcome to digital customers: “they are mulW-‐touch”

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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!

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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.

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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

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The Digital Advisor Business Model

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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

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Customer Portal / App

Policy Systems

Advisor Portal Lead/Prospect Management

Sales OpportuniWes

The Digital Advisor Business Model

Tablet

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Digital TransformaWon of face-‐to face

Digital Opportuni7es 1. More Leads 2. Beaer service 3. Beaer selling


Policy Systems

Advisor Portal Lead/Prospect Management

Sales OpportuniWes

Tablet

Improved selling

3. “connecWng the eco system”

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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?

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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

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AIA case study: iPoS regional digital transformaWon

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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

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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

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AIA Case study: benefits

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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

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1

Befer customer service

Customer portal/app: An on-‐line marke7ng capability for customer engagement leading to cross sell / up sell opportuni7es

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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 Experience Centre

Policy Systems

Advisor Portal

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2

Tablet

MulW-‐Touch: a long way to go in Asia

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2

Source: Ep7ca Survey of 10 health insurers

MulW-‐Touch: email response Wmes – slower than post?

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2

Source:Ep7ca Survey of 10 health insurers

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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

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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?

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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

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“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

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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

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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

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3

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How far could bank disrupWon go: and what about insurers?

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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%

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Transforming insurance distribuWon: banking is moving faster

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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

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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

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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)

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the insurer

Maybe the insurer

NOT the insurer

Owned by

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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

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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

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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

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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

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Crystal clear and compelling proposiWon TesWmonials

Online employee filing cabinet

100% paperless benefits enrolment

Automated onboarding

Zenefits: customer focus reaps rewards

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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

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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

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Looking ahead

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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?

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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?

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•  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?

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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

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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

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Future state: the new best pracWce in a digital world?

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PMO

THE CUSTOMER

Are the tradiWonal power centres willing to give up some power for the collecWve good?

Change engines

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AddiWonal info on The Digital Insurer

Contact The Digital Insurer: hugh.terry@the-‐digital-‐insurer.com 55

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Digital Thinking to unite sales and operations - LIMRA Bangkok 2015

Economy & Finance

Transcript of Digital Thinking to unite sales and operations - LIMRA Bangkok 2015