INSURANCE CONSUMERS: The Missing Link

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INSURANCE CONSUMERSThe Missing Link

• Insurance in Russia CIS
• 26 June 2003
• Zurich, Switzerland
• Peter B. Necarsulmer
• Chairman CEO
• The PBN Company

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A Crossroads

The Russian Insurance Industry Can Follow One of
Two Paths
Or One Taken by H. Ross Perot
One Recommended by Nikita Khrushchev
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One Path Is

When you are skinning your customers, you should
leave some skin to grow again so that you can
skin them again. Nikita Khrushchev Advice to
British Businessmen, London Observer, 1961
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The Other Is

Business is not just doing deals business is
having great products, doing great engineering
and providing tremendous services to customers.
Business is a complex cobweb of human
relationships. H. Ross Perot
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Todays Insurance Policy Pyramid
Industry Driving Policy Dictating Insurance Market
Government Responding to Industry Ill-Equipped,
Inexperienced
Consumers Inadequately Served Limited Income
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A Healthy Insurance Paradigm
Government Independent Regulator Ensures Fair
Play
Industry Consumer Driven Long-Term
View Self-Capitalization
Consumers Define Insurance Needs Willing Able
to Pay Premiums
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Insurance Premiums GDP
Sources Goskomstat of the Russian Federation,
2002 Swiss Reinsurance Company, 2001 United
Financial Group, 2003
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Internet Users vs. General Population of Russia
Internet usage in Russia 22-55 years of age

Sources PBN/IRG Survey of Internet Users, June
2003 IRG Inside Russia (5,000 N), December 2002
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Russian Consumers Understand Risk

Source PBN/IRG Survey of Internet Users June
2003
Base 1338 consumers with a high propensity to
purchase insurance coverage
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Occurrence of Accidents

Source PBN/IRG Survey of Internet Users June
2003
Base 1338 consumers with a high propensity to
purchase insurance coverage
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But They Dont Insure Against Risk! Use of
Voluntary Insurance Services
Source PBN/IRG Survey of Internet Users June
2003
Base 1338 consumers with a high propensity to
purchase insurance coverage
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Whats Wrong with This Picture?
Russian Insurance Companies are Forgetting About
Consumers!
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Who are Consumers?

• Your Customers Potential Customers
• Fellow Citizens, Friends and Family
• Voters  They Elect the People Who Regulate You!
• Your raison detre

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Awareness, Usage Intent Insurance Services

Source PBN/IRG Survey of Internet Users June
2003
Base 1338 consumers with a high propensity to
purchase insurance coverage
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Consumer Perceptions of Insurance

Source PBN/IRG Survey of Internet Users June
2003
Base 1338 consumers with a high propensity to
purchase insurance coverage
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Consumer Insurance Barriers
Factors Preventing Purchase of Insurance

Source PBN/IRG Survey of Internet Users June
2003
Base 1338 consumers with a high propensity to
purchase insurance coverage
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Lessons Learned from Western Counterparts
They Too Forgot About
Consumers!
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Today, Western Insurers Are

• Highly Regulated
• Often Demonized by Media
• Targets for Ambitious Politicians
• Spending Tens of Millions to Rehabilitate Image
  and Reputation

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Whats Absent in the Russian Insurance Market?

• Understanding of Consumer Needs?  No No Consumer
  Research
• Presence of Consumer Advocacy?  No
• No Consumer Organizations
• Protection for Consumer Interest?  No
• No Government Watchdog
• Choices for Consumers?  No
• No Range of Consumer Products
• Consumer Trust of the Industry?  No
• Self-Regulation? No

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Solutions

• Market-Based Research
• Market-Based Products
• Transparency
• Industry Information
• Education
• Self-Regulation
• Independent Insurance Department

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Choosing Insurance Companies

Source PBN/IRG Survey of Internet Users June
2003
Base 1338 consumers with a high propensity to
purchase insurance coverage
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Sources of Information About Insurance

Source PBN/IRG Survey of Internet Users June
2003
Base 1338 consumers with a high propensity to
purchase insurance coverage
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Awareness of Compulsory Auto Insurance
Source PBN/IRG Survey of Internet Users June
2003
Base 615 car owners
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Cost of Compulsory Auto Insurance

Source PBN/IRG Survey of Internet Users June
2003
Base 615 car owners
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Attitude Toward Cost of Compulsory Auto Insurance
Source PBN/IRG Survey of Internet Users June
2003
Base 615 car owners
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Plans for Buying Compulsory Auto Insurance

Source PBN/IRG Survey of Internet Users June
2003
Base 615 car owners
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An Old Saying

The state waxed fat, while the people grew
thin. Vassily Osipovich Kliuchevsky
(1841-1911) Kurs Russkoi Istorii'
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A Burning Question

Will the Russian insurance industry grow fat,
while the consumer wears thin? The PBN
Company June 2003
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Counsel to Remember

Your most unhappy customers are the greatest
source of learning. Bill Gates CEO Microsoft
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For More Information, Please Contact
REGIONAL INSIGHT.
GLOBAL IMPACT.
www.pbnco.com tel [phone] fax (7-095)
775-0075
www.intrg.com tel [phone] fax (7-095)
933-0942