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Creating Digital Customer-Centric Strategies - International Istanbul Insurance Confrence - Chris Halliday (2016)
- 1. October 2016 International Istanbul Insurance Conference © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Creating digital customer-centric strategies Chris Halliday
- 2. Digitisation and customer is at the Heart of Companies’ Strategies… © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 2
- 3. But how well has the Insurance Industry done to date? © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 3 Is this Insurance Industry ripe for the taking ?
- 4. But how well has the Insurance Industry done to date? © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 4 Is this Insurance Industry ripe for the taking ?
- 5. © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 5 Drivers of digitalization in insurance Customercentricity Dataintegration predicting and responding to customers changing needs Improving and optimising distribution and customer service Improved efficiency and expense management reacting to and influencing customer behaviour omni-channel customer connectivity and consistency of message costs / expense ratio automation de-duplication of tasks Why be digital ? What is your digital ambition?
- 6. Linking to your strategic business priorities © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 6 Ambition Principles Innovation Projects IT Infrastructure Data and Digital Strategy Strategic Business Priorities
- 7. Innovation is taking place Trov – on-demand insurance for your things © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 7 1. Collect details about your things and protect just what’s important to you 2. Turn protection on or off, file a claim in the app – complete mobile experience As of May 206, 940K items added, over 8.5Bn worth of items Source: Trov
- 8. Innovation is taking place Unico Uni.Kasko, SBM Mobile Accident Report, Vakif VePlus, AXA Drive © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 8
- 9. Health Insurance leading the way © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 9 Goal is to have the happiest members paying the lowest costs for the healthiest outcomes 145K customers in 2016 with plan to reach 1Mn customers Making data-driven decisions based on large data sets aggregated across providers and care data “Make health insurance suck less”
- 10. Health and life insurance that rewards you for being healthy © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 10
- 11. Where are companies now….different stages, but common themes © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 11 Issues with legacy systems Poor data quality Concerns about the implications ‘Pet’ projects that are fragmented across the internal organisation Culture that does not value data Analytics arms race Data ‘storm’ with the potential for multiple new data sources
- 12. Linking to your strategic business priorities © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 12 Ambition Principles Innovation Projects IT Infrastructure Data and Digital Strategy Strategic Business Priorities
- 13. Principles: Changing customer expectations © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 13 Change the view: From product / LoB to customer Ensure permeability between channels: One version of the truth for a client, integrated intermediary portals Proper multi-disciplinary teams / strong analytics function / Break-up of silos Alignment of strategy and ambition across all functions Gain a deep understanding of risks, client and distributor behaviour Increased frequency and breadth of modelling - continuous refinement of customer knowledge Handle large amounts of data efficiently Integrate large amounts of internal and external data, to allow relevant products and customer interactions
- 14. Management of internal data and technology solutions © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. Using Technology and Big Data Analytics to improve customer outcomes Data and Digital Strategy: Enabling innovation
- 15. Innovation Projects: The Art of the Possible © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 15 Automatic claims settlement using Underwriting data Real time millisecond individualised pricing Integrated sensor input: Telematics / IoT / Wearable Real time customer value metrics Single customer view Real time underwriter decision support Customer focused portals across multiple channels
- 16. © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 16 Innovation Projects: Telematics Emergency call Use 3D-Accelerometer and OBD speed to detect significant impacts Use Cellular connection to post an SMS with details Breakdown service Ability to trigger a ‘Where am I’ SMS message from the server, to assist a customer breakdown call To pre-defined numbers for call centre support Limited phone capability If linked to a PND screen in car Satellite navigation Distinguish business travel from personal use Business trip log Theft service Detect motion without ignition start-up Tracking and call for help (in extreme implementations, disable the car) Activates Geo-fence and other driving thresholds via an SMS message Remote safe mode activation Geo-fence service Detect location outside boundary zone Trigger notification (in extreme implementations, disable the car) Notification of driving exceeding other thresholds (speed, braking) Real-time buzzer in car facility Reports and mapping in customer portal website Driver feedback Maintenance and fault diagnosis via customer portal Vehicle wellness $1,000 $1,000 $1,000 $1,000 $800 15-30%Average discounts: 12% – 25% Maximum discounts: 30% – 50% Self-selection 10xDifferential in loss ratio from TW DriveAbility score Pricing Retention 40%Improvement in retention cited by Progressive http://media.corporate- ir.net/media_files/IROL/81/81824/clip- 415391-dl_aud-en.mp3 30+%Reduction in claims costs Behaviour change
- 17. Fraud Fraud Bureau Insurers Exchange Investigators Fraud Register External Mining Supplier alerts Innovation Projects: Harvesting the widely dispersed claims data © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 17 Suppliers Intervention Replacement car Windscreen Legal Panel Other suppliers Roadside recovery Repairers Engineers Repair Database Email Post Phone Social media Email Post Phone Portal Personal Injury Injury valuation tool Portal Core systems Commercial Motor Personal Lines Motor UW and claims Document management system Phone Email Motor Claims Example
- 18. Innovation Projects: Unlocking customer lifetime value © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 18 Protection products — first customer recruitment Acquisition of savings products Manage profitably — retain and optimise share of wallet Win and manage annuities Profit 20s 30s 35s 40s 45s 50s 55s 60s 65s 70s and 75+ PROFIT emergence Cost optimisation Retention management Pricing optimisation Customer segmentation Customer segmentation CLV modelling Embedded value reporting KPIs and data analytics PROFIT emergence Profit increase through cross-sell/up-sell Share of wallet optimisation PROFIT emergence Customer lifecycle Cross-sell /up-sell optimisation and propensity modelling Protection products Savings products (pensions, ULIPs…) Annuities Analyse portfolio by customer or intermediary to gain insights into customer behaviour and optimise interactions with customers and distributors, to ensure value Data Exploration and Initial Audit Predictive Analysis (e.g., GLM, GBM for lapse Segmentation and Value Proposition Target Segment and Test Framework Test Program Deployment Evaluation and Potential Rollout
- 19. Innovation Projects: Technology and Data Advancements © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 19 The focus and the opportunities Deliver a “hassle-free” service Optimise the cost of claims Eliminate process waste Increase employee engagement Enrich pricing Streamline the reserving process Support continuous improvement Reduce the frequency of claims (risk management) Keeping pace Omni-channel Digital images Dashboard Cameras Telematics 3 D Printing Drones Automation Self-service Cognitive analytics Advanced vehicle technologies Will Require: Continuous Investment & Operational Change
- 20. Innovation Projects: Digitisation in a Face-to-Face Environment © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 20 Supporting your sales force to generate profitable growth History drives behaviour and corresponding IT-systems Negotiation on prices is standard / as well as discounts Client is “owned” by the sales people Depending on the power of the sales force, tariff structures with lot of cross-subsidies Customer journey knowledge not seen as key Different media used for underwriting vs. Most companies do lack a proper digitisation strategy for their face-to-face sales force Even if online is growing, traditional still owns a substantial market share in many markets.
- 21. Innovation Projects: Becoming Truly Customer Centric Organisations © 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 21 Analysis Point of Sale Forecast available for each individual customer / prospect: Expected profitability / Lifetime value Expected retention Expected conversion Maximum discount for individual customer still delivering minimum of profit … Digitisation tears down the wall and enables free flow of information – in both directions
- 22. Willis Towers Watson Pricing Software Supporting Effective Pricing Emblem Predictive modelling software Classifier Geographical spatial analysis Innovation Projects: Best Practice Pricing and Underwriting Radar Base Builds and views analyses and reports Radar Dashboard Views reports and interactive dashboards constructed with Radar Base Radar Live Executes calculations and rules at point of sale Provides the interface, forms and workflow integration Main Policy Admin System Radar Live Radar Base or Radar Optimiser
Editor's Notes
- Nowadays it is quite common to see digital and customer feature strongly within insurer’s strategies. .. [update slide to include customer]
- However, progress towards becoming a truly digital insurer has been slow. There are various contributing factors –legacy systems and processes, lack of an innovation culture, complexity of insurance to name but a few. We are starting to see pockets of innovation, but is this enough? Second build How do we compare to the likes of air bnb, uber, amazon? And more importantly, what are the drivers around their success. Is it purely being digital, or is it rethinking the business model focusing on what customers really need and want…creating a great customer experience..which means a great product with great customer service…delivered efficiently. Making it easy for them to connect with you in the way that they want to. This brings me to the question: And is the insurance industry ready to rise to the challenge?
- However, progress towards becoming a truly digital insurer has been slow. There are various contributing factors –legacy systems and processes, lack of an innovation culture, complexity of insurance to name but a few. We are starting to see pockets of innovation, but is this enough? Second build How do we compare to the likes of air bnb, uber, amazon? And more importantly, what are the drivers around their success. Is it purely being digital, or is it rethinking the business model focusing on what customers really need and want…creating a great customer experience..which means a great product with great customer service…delivered efficiently. Making it easy for them to connect with you in the way that they want to. This brings me to the question: And is the insurance industry ready to rise to the challenge?
- To answer the question, we need to realise that digital is not an end in itself. Companies need to be clear on why they want to be digital? Do they want to better understand their customers, not just looking at demographic data, but also at behavioural data? Do they want more powerful customer interactions and a provide a truly consistent omni-channel service. Or is it about improved efficiency and expense management. Or a combination of these. The answer will depend on the strategy of the company, and how, in turn, the digital and data strategy supports this. Key to this is defining your ambition. [could include iceberg in that data integration and systems connectivity is key to delivering all three]
- Once you have set your ambition – how to you define and prioritise your innovation projects? We should mention that we support clients with all aspects from ambition right through to Innovation Projects.
- Oscar Health Insurance is a health insurance company, headquartered in New York City. Oscar sells individual health insurance plans, both directly and through health insurance marketplaces Aim: to provide smart, simple health insurance through technology, data, and design This is a technology enabled company aimed at simplifying customers health insurance experience. Using their app customers can talk to a doctor, get prescriptions without ever leaving home, keep track of their health history and earn rewards for staying active with a free Misfit step tracker They currently have 145K customers with plan to reach 1Mn customers
- In short: Vitality is a programme providing rewards to customers for living a healthy lifestyle. It is an add-on to health and life insurance products. How is it different… it acknowledgement that the nature of risk is changing. That risk is no longer purely pre-determined but predominantly behavioural. Three lifestyle choices (smoking, poor nutrition and poor physical activity) contribute to four conditions (diabetes, cancer, heart disease and lung disease) which in turns drive over 50% of mortality every year. So lifestyle choices are fundamental, but behavioural science shows that to make changes people need incentives. But how to pay for the incentives…well Vitality is a shared value model, whereby they use incentives to change behaviour, which in turn drives up profitability, which allows them to fund the incentives. So really a shared value cycle that is mutually beneficial to all. Winning features… (in my opinion): Sharing profits – not just about increasing profit for shareholder (similar to RL who is now planning to widen profit share and Old Mutual South Africa that decided to share the profitability of a large margin release). Discovery Life CEO Hylton Kallner says this model is "based on a combination of engaging clients and incentivising them to manage their wellness and dynamically pricing their behaviour into the products. We share the upside of the superior actuarial outcomes with the client, through lower premiums." Mortality and morbidity risk drops by as much as 40% for those customers who "engage" in managing their health, he says. Positive focus: Focus on a healthy lifestyle (which then reduces medical expenses and insurance costs) rather than the often negative connotations with life insurance. Thus a positive sale (healthy lifestyle) rather than death cover. More frequent touch points with customers: not just at claim stage, but regular ongoing engagement through use of wearables, etc. Culture of innovation: “One key, says Gore, is that rewards and risk taking go hand in hand at Discovery, which puts its money where its mouth is by making an innovation score part of each manager’s performance evaluation and by conducting an annual competition to identify creative new ideas.” Not purely based on earnings: “We have growth metrics for a lot of what we do. Our earnings per share have grown by 25 percent a year, compounded, for the last two decades, with little capital. But my personal view is that the rationales behind innovation and earnings targets are not really great bedfellows. You have to invest in innovation, even if you don’t know where it will end up. But with a growth-target mind-set, you’re always thinking, “Oh, we can’t do this, because it’s going to undermine our margins” or whatever. You ought to do both well, but it’s challenging to balance those two parts of your brain.” Over the past three years, as the South African economy crawled, Discovery’s share price rocketed 44%. They are also seeing success in the UK with VitalityHealth (which covers 550,000 lives) and VitalityLife (318,000 lives). Last year, VitalityHealth made a R131m profit while VitalityLife recorded a profit of R366m. Generali Vitality also recently launched in Germany with the programme being available in Germany from 1 July this year. Perhaps add video digital is a way to create more customer engagement if used correctly.
- This slide is about bringing out that digital and customer development is often tactical projects without thinking about the long-term ambition
- Once you have set your ambition – how to you define and prioritise your innovation projects? We should mention that we support clients with all aspects from ambition right through to Innovation Projects.
- FCA thematice review with 00’s £m price tag
- We can perhaps skip this if there are too many slides, but this is a good one to say it is possible. Then we lead into two examples. The first has a video (which you can view if you are in presentation view and click on the blue box). I also have a discovery video that is about them having a doctor on skype in the UK which you may want to rather use.
- You can use some of the points on your slides to talk to this.
- Chris - We could just use one to cover all the software