INSURANCE DAY IN BUCHAREST Building effective CRM in Insurance Bucharest, 16 October 2008 Copyright © 2008 Accenture. All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. About Accenture Accenture is a global management consulting, technology services and outsourcing company Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses With deep industry and business process expertise, broad global resources, and a proven track record, we can mobilize the right people, skills and technologies to help clients improve their businesses With more than 180,000 people in 49 countries, the company generated net revenues of $ 19.70 billion for the fiscal year ending 31 August 2007 Accenture serves 87 of the Fortune Global 100, nearly two thirds of the Fortune Global 500 and government agencies in 24 countries We are present in CEE since 1991 Copyright © 2008 Accenture All Rights Reserved. 1 Accenture’s structure Industry Focused Operating Groups Comm. & High Tech Financial Services Government Products Resources Management Consulting • Customer Relationship Management • Finance & Performance Management • Talent & Organization Performance • Strategy • Supply Chain Management Systems Integration and Technology • • • • • Complex Solution Architecture Enterprise Architecture Integration Enterprise Solutions Information Management Services • • • • • Infrastructure Consulting Services IT Strategy & Transformation Microsoft Solutions & Mobile Solutions Service-oriented Architecture Research and Development Growth Platforms Outsourcing • Business Process Outsourcing • Applications Outsourcing • Infrastructure Outsourcing Copyright © 2008 Accenture All Rights Reserved. 2 Accenture presence in the CEER region With 5.000+ people, we are one of the region’s leading business services providers and are present since 1991 advising international and local financial institutions Local Offices RU PL CZ Czech Republic 2000+ 280 Slovakia Poland 1000+ 94 Hungary Slovakia 1000+ 64 Poland Russia 320 400+ Hungary 100+ Romania 200+ UK SK HU SL CR RO SR BG Total 4.700+ 765 (*) MA (*) Combined with non-CEER consultants working in the region, Accenture has at any given time 5.000+ people in the area Countries of CEER where Accenture has offices Copyright © 2008 Accenture All Rights Reserved. Countries of CEER where Accenture has no offices but conducts projects Accenture has unmatched consulting, system integration and outsourcing capabilities in the region, with experience in a wide range of assignments at Financial Institutions, including: – Greenfield start-ups – M&A related work – Strategies for multi-industry financial groups – Complex transformations, SI&T work and outsourcing Next to a strong geographic footprint in 6 CEE countries, Accenture has also a broad experience in conducting projects in e.g. Bulgaria, Ukraine, Slovenia, Croatia, Serbia, Macedonia Other countries in Europe where Accenture has offices 3 What we’re going to talk about today… Topic Section The Insurance market in Romania is experiencing rapid growth and has still significant upside potential… MARKET … a new customer centric approach is required to address the emerging Retail segments… CRM … companies have started re-focusing their organization models and are delivering significant results. CASE STUDIES Copyright © 2008 Accenture All Rights Reserved. 4 Whilst experiencing extraordinary growth, the Romanian insurance market remains significantly under penetrated compared to rest of Europe Non-Life GWP in Romania (EUR B) 1.58 1.27 0.93 2005 2006 2007 Life GWP in Romania (EUR M) 401.3 315.2 287.5 2005 2006 2007 Source: Romanian Insurance Supervision Commission Copyright © 2008 Accenture All Rights Reserved. World Ranking 2 United Kingdom 4 Netherlands 7 Ireland 8 Switzerland 9 France 11 Belgium 12 Denmark 14 Portugal 15 Finland 19 Sweden 22 Germany 23 Italy 25 Austria 26 Slovenia 28 Spain 31 Norway 33 Cyprus 36 Poland 37 Czech Republic 38 Hungary 43 Croatia 44 Luxemburg 45 Slovakia 50 Ukraine Bulgaria 51 56 Russia 67 Romania MARKET Premiums in % of GDP (2007) 15.7% 13.4% 11.6% 10.3% 10.3% 9.6% 8.9% 8.5% 8.4% 7.4% 6.6% 6.4% 5.8% 5.7% 5.2% 4.6% 4.2% 3.7% 3.7% 3.5% 3.3% 3.2% 3.1% 2.7% 2.7% 2.4% 1.8% Worldwide insurance premiums: USD 4,061 B in 2007 Share of Romania in the world insurance market: 0.72% World insurance market penetration (premiums in % of GDP): 7.5% in 2007 while Romania’s is only 1.77% Source: Swiss Re, Romanian Insurance Supervision Commission 5 While mature markets developed alternative channels like bancassurance or direct channels, Romania is mainly relying on traditional sale force, but “wind of change” is getting closer MARKET Non-Life channel distribution 25% 5% 6% 9,1% 35% 5% 5% 26% 25% 16% 28% 1% Brokers 7% 70% Romania Others (e.g. direct distribution) Banks Exclusive agents/ employees 54% 57% 40% Austria Poland Spain Life channel distribution 6% 4% 14% 17% 9,1% 5% 54% 7% 42% 4% 5% Others (e.g. direct distribution) 72% 14% Banks 80% Exclusive agents/ employees 40% 25% Romania Brokers Austria 16% Poland Tied (exclusive) agents remain the main distribution channel for both Life and Non-Life lines of business Banks still do not represent a major distribution channel for most insurers, with the exception of the Life insurance sector. Current bancassurance partnerships are generally non-exclusive distribution partnerships; joint product development being expected only at a later stage Sales through independent brokers and independent networks are also growing in importance Spain Source: Swiss Re Sigma Report No. 5/2007, Romanian Insurance Supervision Commission Copyright © 2008 Accenture All Rights Reserved. 6 Motor (72%) and Traditional Life (64%) products continue to dominate the Romanian Non-Life and the Life business, respectively MARKET Product distribution (% of GWP) Non-Life 2006 2007 Δ% 06-07 MTPL 26.8% 26.2% -0.6 p.p. Motor Other 40.6% 45.8 % +5.2 p.p. Fire & natural forces 11.6% 11.3 % -0.3 p.p. Other 21 % 16,8 % -4.2 p.p. Life 2006 2007 Δ% 06-07 Class I 61.5 % 64.1 % +2.6 p.p. Unit Linked 36.6 % 33.7 % -2.9 p.p. 1.9 % 2.3 % +0.4 p.p. Other Motor products (third party liability + other) cumulate 72% of non-life insurance market “Motor Other” insurance, with the largest slice in the market portfolio, followed a steady upward trend, in spite of general market worries about profitability Traditional life insurance (class I) remains the largest segment of life insurance market A significant part of the emerging Romanian life insurance market is represented by unit-linked policies, in slight decline over the past year (34% at the end of 2007, compared to 37% in 2006) Source: Romanian Insurance Supervision Commission Annual Reports 2006-2007 Copyright © 2008 Accenture All Rights Reserved. 7 With the rise of Retail customers, insurers need to change their mindset to address effectively the new segments CRM Mindset shift for insurers From Corporate… Relationship with customer mainly via Account Managers Specific heterogeneous customer data captured depending on customer specific profile, therefore little statistic data is available Customized solutions offered to meet complex customer needs Sale closing process based on direct negotiation Specific KPIs for customer satisfaction measurement … to Retail Customer-insight driven Social demographic data used in addition to data received from customer Standardized offer ruled by “simplicity” approach and price sensitivity Corporate brand awareness using mass market communication techniques Value based management (differentiation based on the value of the customers) Customer is intermediated by exclusive agents or other alternative distribution channels Brokers as significant distribution channel Copyright © 2008 Accenture All Rights Reserved. 8 Insurers face many challenges, from the need of building a single customer view to setting up more complex capabilities such as customer care management and profitability measurement CRM Challenges for Retail Customer Relationship Management in Insurance Single Customer View Customer interaction Up selling The business nature of the insurance industry brings about a relatively low degree of customer contact. Consequently, little behavioral and processing data is available to gain a deep understanding of customer profitability and needs. Therefore, analytical CRM is much more dependent on external data enrichment Customer interaction is limited and often conducted in a negative atmosphere due to claims discussions or redundant contacts caused by decentralized customer databases. Improved customer care and added value services decrease service costs and increase customer service quality with a positive effect on retention In the insurance industry there is typically less up-selling due to the fact that many products deal with life events. An end-customer for example on average buys 1-2 life insurance contracts. While up-selling is limited, crossselling needs to expand the overall product portfolio Distribution channel mix Tied agents and branches are the main distribution channel, however, brokers and banks have growing importance in insurers’ distribution channel mix. Insurers need to employ customer insight capabilities to measure branch and agent potential and profitability in order to efficiently allocate support resources Intermediaries Insurers are distributing via several types of intermediaries. Customer relationship management, therefore, needs to be transformed to manage intermediaries effectively and maximize their profit while measuring customer satisfaction for end-customers Copyright © 2008 Accenture All Rights Reserved. 9 From our experience a holistic approach is required to design a customer centric operating model – customer insight is not enough CRM Accenture approach to customer centricity What are customer needs, preferences and expectations? What is driving satisfaction? Voice of the customer “What opportunities exist to better differentiate ourselves in the marketplace through the customer experience we deliver?” Segmentation Model Service Model How are others operating? What operational trends will change the competitive landscape? Copyright © 2008 Accenture All Rights Reserved. Customer Experience Blueprint “How should the customer experience be defined to deliver better customer satisfaction while being operationally effective?” Execution Model Internal operational effectiveness Competitive landscape “What operational improvements can be made to gain an operational competitive advantage in the marketplace?” How effective and efficient are our operations? Have we found the right balance? Legend • Understanding current position • “Driving future strategy” 10 A customer centric operating model must maximize customer satisfaction and loyalty delivering a flawless customer experience CRM Customer centric operating model objectives Every interaction with the customer follows a standard set of steps, each of which should be designed to: Enhance the customer’s satisfaction with the insurance company by meeting their basic needs and expectations Develop customer loyalty and advocacy by creating an emotional bond with the customer The Advocacy / Satisfaction Curve Customer Interaction Model (agency interaction example) Interactions should look to deliver the hygiene factors of the customer experience to grow customer satisfaction Dissatisfied Unconcerned Customer Satisfaction Copyright © 2008 Accenture All Rights Reserved. Zone of Delight Interactions should look to deliver a customer experience that creates an emotional bond with the customer in order to grow advocacy Neutral Advocacy Zone of Indifference Defection Customer Advocacy Zone of Defection Extremely Satisfied 11 In order to delight customers, organizations need to excel in capabilities around client centricity by generating and applying customer knowledge CRM Client Centricity Success Factors Customer Insight … knowledgeable about customer needs, value and moments of truths Customer Lifecycle Management … ability to identify key customer events and to fulfill related needs Experience Management Delivery … translation into superior customer experience, surprise and delight across delivery channels Copyright © 2008 Accenture All Rights Reserved. 12 To take the appropriate actions based on your specific retention problem Accenture has defined an effective and profitable acquisition and retention engine CRM Best Practice Retention Model Our experience shows that setting up a Customer Retention Center within the organization can significantly help to improve retention 3. Tailored sales and service blueprints for different customer segments Copyright © 2008 Accenture All Rights Reserved. Technical pricing Market Marketprice priceoptimisation optimisation Timing Timing Presentation Campaign Campaignmanagement management Retention Retention offer offer Customer Customer Proposition Proposition • • • • Differentiated Differentiatedservice servicedelivery delivery CrossCross- sell sell prompts prompts At risk prompts Outbound calling • Onboarding • Claims follow -up • Save calls • Staff incentivisation incentivisation Target Target Customers Customers Sales & & Sales Service Service Customer Strategy • • • • • Technical Technical pricing pricing Market Marketprice priceoptimisation optimisation Channel Presentation Campaign Campaignmanagement management Organisational focus on retention 2. Tailored customer propositions and targeted acquisition and retention offers for different customer segments • • • • • • Brand Features • Marketing Benefits Exclusions • Channel Service Marketing Marketingmix mixoptimisation optimisation • • • • • Acquisition Acquisition Offer Offer 1. Insight driven customer segmentation driving market and customer strategy, including customer analytics to develop churn prediction and propensity models Market analysis Strategic market segmentation Needs/Attitudes segmentation Customer Value Analysis Market Strategy Organisational focus on retention Additional actions include: • • •• •• • Risk based segmentation • Behavioural segmentation – Propensity propensity modelling modelling • • Behavioural Acquisition segmentation target strategy Churn modelling • • Acquisition Retention target target strategy strategy • Retention target strategy 13 Which levers to address customer needs and the efficiency / profitability objectives of the Company? CASE STUDIES Characteristics and needs of the Customer Base Retail Characteristics / Issues Needs Few contacts and primarily for administrative purposes Insurance needs that are simple and evolving according to Customer Life Cycle Low levels of satisfaction Low customer loyalty and increased price sensitivity Customers FOCUS OF CASE STUDIES Corporate Complexity of needs increasing along with size of business Heterogeneous characteristics dependant on industry sector Copyright © 2008 Accenture All Rights Reserved. Complex needs to be addressed with tailor made offers, differentiated coverages by sector (i.e. Product Liability, Transportation, …) and one-toone advisory relationships 14 The approach: review the offering and service model defining a lean and “customer need-based” catalog CASE STUDY #1 Leading Italian Insurance Company Innovation 1 Dynamic response to integrated Customer needs 2 3 New way to reach Customers (many more effective contacts) Simplicity and standardization for modularity Copyright © 2008 Accenture All Rights Reserved. New and few “easily scalable” products New sales and services approach New operational processes Goals Complete offering adapting to dynamic Customer Life Cycle needs Coverage integration: P&C - P&C P&C - Life Modular product structure: flexibility during the entire Customer Life Cycle (CLC) Customer base development (cross and up selling) even through transformation of administrative processes into sale opportunities Effective communication to seize every opportunity Operational simplicity and versatility in order to facilitate sales and after sales activities 15 New and few “easily scalable” products… CASE STUDY #1 “Need-Centric” segmentation ILLUSTRATIVE Product concept definition … Profile 2 Basic Offer Customer needs Profile 1 Life Quality FIRE Development and consolidation ANNUAL LIABILITY PREMIUM Coverages responding to the most “intensive needs” Safety Basic needs Beginner Builders Careers Optional Coverages Enjoyers Life Cycle Stages Most intensive needs Customer segmentation and needs analysis Coverage identification to meet Customer heterogeneous needs HEALTH Optional coverages to define a custom “Insurance project” THEFT FUND Products structure (modular contents) able to guarantee flexibility during the Customer Life Cycle Copyright © 2008 Accenture All Rights Reserved. 16 … offered with a new sales and services approach CASE STUDY #1 First “need-focused” product results “Insurance coverage need” New commercial approach Leading Italian Insurance Company ILLUSTRATIVE 2nd Proposal: increasing assured capital 1st Proposal: adding Family Liability THEFT House protection product Average premium (index numbers; %) Multi-coverage policies (%) +66% +45% 166 48% 100 LIABILITY 33% 3 THEFT FIRE Year 1 Year 2 Year 1 Year 2 2 Operational expenses (index numbers; %) 1 “Customer Life Stages” 30 years old: first house 32 years old: marriage -20% 100 80 35 years old: career advancement Year 1 Year 2 Annual payments Copyright © 2008 Accenture All Rights Reserved. 17 Creation of a Customer Services Center was the answer from the Company to the growing need for better Customer Services and excessive dispersion of Customer Service activities Re-modeling Customer Services CASE STUDY #2 Leading Polish Insurance Company Deteriorating Customer satisfaction Increasing Customer Base Disintegration of Customer Services activities Customer Services Center project Project scope – 4 perspectives Business Need Creation of a single Customer Service entity for the whole Group Teams and roles description Extending Customer Service capacities Legal and tax model Discharging Sales force from providing secondary Customer Service activities Customer satisfaction improvement HR policies regarding CSC employees Enabling standardization, monitoring and evaluation of relevant processes Organization size estimation People Organization Description of processes Assigning responsibilities Proces- Best practice and ses methodology description Technology Solution selection Expected Results Harmonization with other departments Increase in Customer Services effectiveness Creation of unified Customer records Ability to serve growing customer base Sales force more focused on sales activities Implementation plan preparation Verification of functional requirements Copyright © 2008 Accenture All Rights Reserved. 18 The new Customer Service model consists of 3 levels of Help Desks, each dealing with issues with a particular degree of complexity Customer Service Center – proposed solution Channels CASE STUDY #2 Leading Polish Insurance Company Customer Services Center Product factories Telephone Mail Fax E-mail Customers Branch Agents IVR Internet Help Desk Level 1 Employees: with general knowledge Enquiries: common, not requiring particular product or process expertise Help Desk Level 2 Employees: qualified, process and product specialists Help Desk Level 3 Employees: product specialists Enquiries: nonstandard, complex Enquiries: complex and/or rare SMS Assumptions – Majority of inquiries resolved in the Help Desk Level 1 – Introducing specialization in terms of processes and products – Customer service teams divided into 3 areas: P&L products, life products and claims – Using the telephone channel do collect inquiries/orders – Readiness to outsource secondary activities (e.g. scanning, archivization) Copyright © 2008 Accenture All Rights Reserved. 19 Thank you! From today’s presenters… Andreea Niculae Accenture Romania – Bucharest Office andreea.niculae@accenture.com Giuseppe D’Elia Accenture Italy – Turin Office giuseppe.delia@accenture.com Copyright © 2008 Accenture All Rights Reserved. 20 Question & Answers Copyright © 2008 Accenture All Rights Reserved. 21