Managing and Leveraging Existing and Emerging Channels

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Managing and Leveraging Existing and Emerging
Channels

• DIRECT Pojistovna Case Study

DIRECT Pojistovna Strategic Concept Addresses the
New Customer Needs
Insurance Strategy and Channel Distribution
Excellence Forum 17th 18th of September 2009,
Vienna
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Viral campaign Car thieves
After Lunch Digest
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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.

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Awards for Car thieves

• The unconventional informational campaign of
  DIRECT Pojistovna gained the acknowledgement 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
• Louskácek 2008 (Czech Republic)
• 1x Grand Prix, 1x gold, 2x silver
• Golden Drum 2008 (Slovenia)
• 3x silver
• Méribel (France)
• 1x Grand Prix, 1x gold

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Agenda

• After lunch digest
• Who we are
• Internet
• Pricing
• Product Innovation
• CRM Segmentation
• Innovative communication

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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 UKs largest commercial lines insurer
• The UKs third largest personal lines insurer
• MoreThgtn the UKs third largest direct insurer

Sun 1710
Royal 1845
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Who we are?
DIRECT Pojistovna operates on the Czech market

• Population 10 467 542
• Car registered 7 091 963
• Personal carsvans 5 102 812
• Households 4 450 000

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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

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Key Milestones in Product Launches

• 2007
• 2008
• 2009
• 2010

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Promise
DIRECT reason for a change.
Dont 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.
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.
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Key KPIs Development - Index
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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
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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

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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
At branch in person
On the Internet
Over the phone
Through mediator \ insurance agent
Contract will be concluded by a lease company or a dealer
Other place
DKNA
At branch in person
On the Internet
Through mediator \ insurance agent
Over the phone
Contract will be concluded by a lease company or a dealer
Other place
DKNA
base n650 all respondents , 2Q 09
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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
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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)

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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
• gt60 of motor insurance policies in UK are
  purchased on-line today
• gt13 of motor insurance policies in the Czech
  Republic are purchased on-line today

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Change of Customer Shopping Behavior - Internet
Channel
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DIRECT Pojistovna Internet Strategy

• DIRECT as a preferred choice for on-line
  arrangement of an insurance prod./serv.
• New style of insurance matching the new style of
  living.

Internet Vision

• 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

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

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DIRECT Pojistovna Pricing Model
Price/Premium structure

• gross premium risk premium loading
• where loading direct costs l. indirect costs
  l. profit

customer price sensitivity Important factor
for profitability
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DIRECT Pojistovna Pricing Model

• 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

• 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

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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

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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

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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!)

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Product Innovation DIRECT

• Copying of bonuses Launched 2009offer
  for good drivers. Possibility to copy bonuses
  from MTPL to CASCO.
• Handbag insurance Launching 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
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Segmentation Background

• Key segmentation objective is increase companys
  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)

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Segmentation Evolution

• Actuarial
• Hard data collected while closing policies
• (Age, Driving experience, Region, Car make,
  Vehicle age,)
• Mass campaigns derived from underwriting rules

• 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

• 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

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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.)

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Overlay banner on www.tvujsoused.cz home page
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Example of profile of your neighbor (fictive)
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Microsite www.tvujsoused.cz results (June1
August 31, 2009)

• 171.000 unique visitors
• 1,5 mio pageviews
• 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.)

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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
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Thank you