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Managing and Leveraging Existing and Emerging Channels

Managing and Leveraging Existing and Emerging Channels. DIRECT Pojistovna Strategic Concept Addresses the New Customer Needs. DIRECT Pojistovna Case Study. Insurance Strategy and Channel Distribution Excellence Forum 17 th & 18 th of September 2009, Vienna. Viral campaign „Car thieves“.

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Managing and Leveraging Existing and Emerging Channels

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  1. Managing and Leveraging Existing and Emerging Channels DIRECT Pojistovna Strategic Concept Addresses the New Customer Needs DIRECT Pojistovna Case Study Insurance Strategy and Channel Distribution Excellence Forum 17th & 18th of September 2009, Vienna

  2. Viral campaign „Car thieves“ After Lunch Digest

  3. Viral campaign „Car thieves“ • Objective: • buzz around DIRECT brand (positive connotations in public; people to send its friends/relatives the link; reach min. 40.000 viewers on YouTube.com; minimum costs) • learn how sales performance of viral campaign works (reach 2times higher daily visits on our website at the peak of the campaign, track conversion rates) • Form: 5 videos placed on YouTube.com (not branded, after 1 month branded). • Message: „It is easy to theft your car. Much easier is to arrange an insurance for your car with DIRECT.“ • Results: • Costs only 2.000 EUR • Cca 2,5 million viewers !!! saw videos on YouTube.com • Daily visits on our website 9times higher than usual daily average (9.000) • Main TV channel (TV Prima), main dailies, main radios and key internet domains broadcasted at least some information about theft prevention commented by Czech Police representatives and providers of antitheft tools.

  4. Awards for „Car thieves“ • The unconventional informational campaign of DIRECT Pojistovnagained theacknowledgement of not only Czech internet users, but also of the jury members of a series of prestigious competitions both domestically and abroad. • Red Apple 2008 (Russia) • 3x Grand Prix, 4x gold • Louskáček 2008 (Czech Republic) • 1x Grand Prix, 1x gold, 2x silver • GoldenDrum 2008 (Slovenia) • 3x silver • Méribel (France) • 1x Grand Prix, 1x gold

  5. Agenda • After lunch digest • Who we are • Internet • Pricing • Product Innovation • CRM & Segmentation • Innovative communication

  6. Who we are? • DIRECT Pojistovna is owned by one of the oldest and biggest British insurance group - RSA Insurance Group Plc. • Global Operations in 29 countries and a network in over 130 • 20 million customers worldwide • The UK’s largest commercial lines insurer • The UK’s third largest personal lines insurer • MoreTh>n – the UK’s third largest direct insurer Sun 1710 Royal 1845

  7. Who we are? • Population: 10 467 542 • Car registered: 7 091 963 • Personal cars&vans: 5 102 812 • Households: 4 450 000 DIRECT Pojistovna operates on the Czech market

  8. Who we are? • DIRECT Pojistovna was founded in May 2007 i.e. 2.5 year of activity on the market • Currently we offer motor vehicle home and civil liability • The only purely online insurance company on the Czech market. Direct non-physical distribution channels only: Call center Internet

  9. Key Milestones in Product Launches • 2007 • 2008 • 2009 • 2010

  10. Promise DIRECT reason for a change. Don’t thing of nonessentials, you have better think of more advantageous insurance contract. Vision Leader on the direct insurance market: To gain 250.000 satisfied clients by 2013, achieve great financial results and excellent reputation in insurance sector. Brilliant Service Bright Ideas Getting The Job Done Doing The Right Thing Positive People Values Mision Dynamic and innovative insurance company, which simply, fast and reliably offers a budget wise products and services of non-life insurance for responsible clients.

  11. Key KPIs Development - Index

  12. DIRECT Pojistovna Strategic Concept Addresses the New Customer Needs Customers are changing as fast as the technology – insurers must align their market strategies: channel, pricing and product to meet the unique needs of targeted customer segments

  13. Relative strength of each network in 3 year • Relative ability of each network to deliver against the top selection criteria (price, product, brand) • Internet scores so high in terms of price and product that it can overcome concerns customer may have about brand/issue

  14. Preferred Manner of Contracting Insurance 2Q09 – Czech Republic Contracting of MTPL is still dominated by personal contact at a branch. More than one in four respondents named the Internet as the first preferred way of contracting MTPL. Overall, MTPL was contracted by 38% of people on the Internet and 16% of drivers did so over the phone. How would you like to contract MTPL? FIRST NAMED OPTION ALL NAMED OPTIONS FOR MTPL CONTRACTING in % base: n=650 [all respondents , 2Q 09]

  15. Contracting Manner of Insurance – Year of Purchase 2Q09 How did you contract MTPL for your latest car? Could you please remember when it was? in %

  16. Change of Customer Shopping Behavior - Internet Channel • Important non-life personal products becomes commodity • Customer value the Internet, because it offers wider access to information than physical networks, allows for a better comparison of policies and services and offer higher convenience and simplicity. • 34% of customers said they intend to buy their non-life policies online in 3 years; 28%-life insurance policies (WIR 2008)

  17. Change of Customer Shopping Behavior - Internet Channel • 11% of policies (life & non-life) are purchased online today (WIR 2008) • Nearly 40% of non-life customers have switched providers in the last 5 years • >60% of motor insurance policies in UK are purchased on-line today • >13% of motor insurance policies in the Czech Republic are purchased on-line today

  18. Change of Customer Shopping Behavior - Internet Channel

  19. DIRECT Pojistovna Internet Strategy Drive more TRAFFIC recruited from our target groupthrough marketing communication vehicles Enhance ENGAGEMENT via content & tools appropriate to the target groups Continuously TRACK & ANALYZE bottom-line results within a set process Internet Vision • DIRECT as a preferred choice for on-line arrangement of an insurance prod./serv. • „New style of insurance matching the new style of living.“ Demand INTERNAL & EXTERNAL SUPPORT with defined service level agreement (SLA) Make them respond to call to action and increase CONVERSION through testingandoptimization • Communication shift toward internet - SEO, PPC, emailings, promotions • Websale redesign to consumer faster & simpler flow/shopping • Enhance the client zone (customer selfservice zone) to up-sell, cross-sell • Increase CASCO and riders share on new websale policies • Maximize potential through Callbacks, Websale follow ups, Website soft sell content Internet Strategy Internet strategy building bricks 3 key areas of focus how to fulfill Internet strategy • Online media • Website • Websale

  20. Most of the customers see price as key criteria when buying insurance

  21. Declared Significance of Factors for Arranging an Insurance with DIRECT Pojistovna The most important factors when deciding whether to conclude a contract with DIRECT insurance company are the price and the speed with which the insurance is arranged.

  22. Most of the customers see price as key criteria when buying insurance • Non-live insurance products like car & household insurance become commodity for which price is prime customer concern. • Internet and call center channels has created environment in which customer have time and information to shop for the right price

  23. DIRECT Pojistovna Pricing Model gross premium = risk premium + loading where loading = direct costs l. + indirect costs l. + profit Price/Premium structure customer price sensitivity = Important factor for profitability

  24. DIRECT Pojistovna Pricing Model • Sophisticated pricing models based on GLM (Generalized Linear Models) enable adjust prices according to the actual risk involved. • Our model has more than 10 variables. • Targeting pricing strategies also serves as profit vehicles • Individual tailor made pricing reflecting individual risk • Tariff structure and parameterization reviewed every quarter in order to reflect the last known claims experience • Official, publicly available claims database used in individual policy price setting

  25. DIRECT Pojistovna Pricing Model • Sophisticated pricing models enable us: • Attract lower-risk customers • Drive higher-risk customer to competitors • Challenge at early stage of portfolio development: • Drive away high-risk customer before low-risk customers have been acquired

  26. Innovation as driver of DIRECT Pojistovna Products and Services Differentiation Value of potential product synergy for customers Product bundling/one stop shopping • 2/3 of customer would buy multiple products from one provider if it were cheaper than individually priced products. 1/2 say convenience would encourage them to buy multiple products. • Current promo campaigns

  27. Innovation as driver of DIRECT Pojistovna Products and Services Differentiation • Bad road conditions Launched 2007Insuring the damage cased by the bad road conditions such as road holes for free • Accident MINI for motorbikes Launched 2008 Limit for each claim equals 50 % of sum insured, i. e. providing cheaper casco insurance covering fully small damages • Summer assistance for cars Launched 2008 so called cars travel insurance meaning services such as emergency driver, emergency cash or travel advice • Child seat theft Launched 2008 Adding child seat/shell as standard equipment paid for if vehicle theft insured • Multicar discount – “My fleet product” Launched 2008If the same client insure the another car with DIRECT, automatically gains 15 – 20 % discount • Insurance for electro bikes Launched 2009 Insuring pure electro bikes for MTPL and CASCO while CASCO no other insurer provides • Garden and balcony insurance Launched 2009Insuring plants, garden furniture and other garden equipment (e.g. grill) against natural hazard and vandalism for free • MGM Launched 2009Recommending/loyalty program – if someone recommends DIRECT and the insurance for a new client is withdrawn, than the new client as well as recommender gains 1 months of the policy for free. (1 person can earn up to 12 months (whole year policy for free!)

  28. Product Innovation DIRECT • “Copying” of bonuses Launched 2009offer for good drivers. Possibility to copy bonuses from MTPL to CASCO. • Handbag insuranceLaunching autumn 2009insuring women handbag for all risk if women present in the car DIRECT Pojistovna Awarded The Most Dynamic Insurance Company of the Year 2008

  29. Segmentation Background • Key segmentation objective is increase company’s profitability by: • Efficient customer acquisition (↑ response rate, ↓ cost per acquisition) • Efficient sales process (↑ average premium, ↑ product per customer) • Increased loyalty/retention (keeping most valuable customers, ↓ cancellation, ↑ renewal rate)

  30. Segmentation Evolution • Behavioral • Adding the knowledge gained in the market research • Campaigns targeted to Women (Handbag insurance); Men over 50 • First pilots of micro campaigns (My Fleet in satellites) in test & learn approach Actuarial • Hard data collected while closing policies • (Age, Driving experience, Region, Car make, Vehicle age,…) • Mass campaigns derived from underwriting rules • 360º degree view – Segmentation full launch • Integration of global consumer profiles & RSA proprietary know-how • Adaptation to Czech market consumer and insurance usage habits and attitudes using advanced business intelligence tools • Impact on Communication, Distribution, Product portfolio, Pricing, Service levels • Tightly related with Customer Management/CRM • Test & learn approach

  31. „Your neighbor“ online campaign to support property insurance lunch • Objective: • Communicate connection of DIRECT with home insurance product in original and creative way with limited budget • Create buzz amongst target audience (male&female 30-50 YO) • Drive higher sales performance than in 2008 viral campaign • Concept background (CZ specific): • Everyone is interested in what neighbors are doing … • Form: • DIRECT branded microsite with fictive database of neighbors with connection to Google Maps („fake“ localization of neighbors) • 6 videos for online published on micorsite, YouTube.com • Functionality of Facebook sharing • Campaign supported by online banners (display camp.)

  32. Overlay banneron www.tvujsoused.cz home page

  33. Example of profile of your neighbor (fictive)

  34. Microsite www.tvujsoused.cz results (June1 – August 31, 2009) • 171.000 unique visitors • 1,5 miopageviews • Average time spent on microsite more than 5 minutes (seeing min. 2 videos) • Only 9% bounce rate (those who clicked but not stayed with the site) • Microsite delivered: • far less visitors on our website compared to the viral campaign, BUT • reached much higher performance indicators (not only home insurance websale visitors and quotations, but also car websale – 12 times higher than for viral camp.; 10times higher sales performance than with viral camp.)

  35. Customer loyalty & Satisfaction Customer satisfaction index (CSI) The customer satisfaction index is higher for customers who took out an insurance in comparison with customers involved in an insurance settlement. With loyalty this ratio is reversed. The total satisfaction (CSI index) of DIRECT customers is on average higher if compared with other banks and insurance companies Customer loyalty index (CLI) Positive solution unites Watch the inclination to churn

  36. Thank you

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