Presentation to the Insurance Institute of London

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(No Transcript)
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Presentation to the Insurance Institute of
London

• 20 January 2000

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Agenda

• What is a virtual company?
• What application does it have for insurance?
• Creating the company
• Issues arising

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Business structures

• Vertically integrated
• Complete value chain delivered in-house
• Horizontally integrated
• Area of expertise used to deliver value across
  product area using common techniques
• Conglomerate
• Portfolio holding company
• Network integrated
• Providing services based on network of value
  providers

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Some examples of network companies

• CISCO
• Design and supply of network hardware
• Intellectual R D company
• Quicken
• Link financial solutions
• Network value company
• Careers Experience
• Provides careers counselling on the web
• Sainsbury Bank
• Backed by Bank of Scotland
• Tesco Personal Financial
• Backed by Royal Bank of Scotland

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Publishing - an example
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A thought .

• There is one thought that keeps me awake at
  night. Somewhere, there are a couple of smart
  young people who understand the power of the
  internet to deliver products and services
  directly to consumers and how to negotiate
  contracts with product providers. Under current
  regulations these people have the ability to
  package services from providers and deliver them
  nationally. At that point banks, insurance
  companies and brokers all become commodity
  service providers
• John McCoy, CEO, Bank One

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another thought

• We could reach a situation where a billion
  people are interacting with a million
  e.businesses and interconnected with a trillion
  devices
• Source IBM report to CBI, Oct 1999

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Distribution

• For all the supposed vastness of cyberspace,
  there wont be room for No. 3 brands
• Source Arthur Anderson

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Outsoucing v Virtual
Virtual Drivers
Outsourcing Drivers
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Virtual insurance structures
Strategic Direction Planning
20 of Work force
Outsource Providers
80 of Work force
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Some insurance examples

• Lloyds
• Cybercom - Reliance National
• Florida Select - Zurich
• Virgin
• United Friendly
• Guardian NPD

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Private label brands - the virtual leaders

• Sainsbury
• Marks Spencer
• Tesco
• Kwik Fit
• Utilities
• Credit card companies

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Horizontal distribution
Client Affinity Group
Invisible service provider
Common Database
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Creating the virtual insurer

• Strategy
• Business Plan
• Identify core and non-core functions
• Which functions become virtual
• Outsource and partnership management must be a
  core competence
• Location
• Stick to the plan

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Loss of control in a virtual company?

• Internally, more focus on key objectives
• Increased service standards
• Greater policing of standards
• More rigorous specification and planning
  disciplines
• Formation of working partnership - common
  interests and incentives
• Outsourcing director is key

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Impact

• Virtual companies create more focus enable more
  strategic management
• Virtual companies are leaner and more responsive
• Traditional companies are under threat -
  compounded by e.commerce
• Virtual companies are capable of rapid market
  entry/exit
• prohibits the peaks of the cycle

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Impact (continued)

• Virtual insurer/distribution companies will
  remove a significant element of personal lines
  and small commercial from traditional market
• Opportunities for reinsurers
• Opportunity for reinvention

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a quote for the risk taker

• ..old performance barriers are gone our
  infrastructure is flexible and fluid. Our
  culture and technology are open, collaborative
  and innovative and, we're learning to listen (and
  react) to the market, to look around corners and
  question what we see then leverage what were
  learning

Source Free, Perfect and Now by Robert Rodin
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and for the broker

• We are becoming our customers connection with
  tomorrow, connecting people to people, people to
  technology and products (and services) to market.
  We provide answers to questions, solutions to
  problems, and order to chaos. By any method.
  From any place. At any time. Because that is
  what the world demands

Source Free, Perfect and Now by Robert Rodin
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