Copyright © 2008 Accenture. All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. I NSURANCE D AY IN B

Copyright © 2008 Accenture. All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

INSURANCE DAY IN BUCHARESTBuilding effective CRM in Insurance

Bucharest, 16 October 2008

2Copyright © 2008 Accenture All Rights Reserved.

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

About Accenture


Comm. & High Tech

FinancialServices

Government Products Resources

Industry Focused Operating Groups

Outsourcing

Management Consulting

• Customer Relationship Management• Finance & Performance Management• Talent & Organization Performance

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

• Business Process Outsourcing• Applications Outsourcing• Infrastructure Outsourcing

• Strategy• Supply Chain Management

GrowthPlatforms

Accenture’s structure


765Total

Romania

320Poland

64Hungary

94Slovakia

280Czech Republic

Total

200+

400+Russia

1000+Slovakia

1000+Poland

2000+Czech Republic

100+Hungary

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

(*) Combined with non-CEER consultants working in the region, Accenture has at any given time 5.000+ people in the area

Local Offices

PL

CZSK

HU RO

RU

UK

BG

SLCR

MA

SR

Other countries in Europe where Accenture has offices

Countries of CEER where Accenture has offices

Countries of CEER where Accenture has no offices but conducts projects

4.700+ (*)

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

Accenture presence in the CEER region


What we’re going to talk about today…

The Insurance market in Romania is experiencing rapid growth and has still

significant upside potential…

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…

… 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.

… companies have started re-focusing their organization models and are

delivering significant results.CASE STUDIES

Topic Section


Life GWP in Romania (EUR M)

CAGR05-07 = 18.2%

287.5

315.2

401.3

2005 2006 2007

Non-Life GWP in Romania (EUR B)

CAGR05-07 = 30.2%

0.93

1.27

1.58

2005 2006 2007

Source: Romanian Insurance Supervision Commission

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%

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

2

WorldRanking

4

7

89

1112

14

1519

22

23

252628

31

33

3637

3843

44

4550

51

56

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%

United KingdomNetherlands

IrelandSwitzerland

FranceBelgium

DenmarkPortugalFinland

SwedenGermany

ItalyAustria

SloveniaSpain

NorwayCyprusPoland

Czech RepublicHungary

CroatiaLuxemburg

SlovakiaUkraineBulgaria

RussiaRomania67 1.8%

Whilst experiencing extraordinary growth, the Romanian insurance market remains significantly under penetrated compared to rest of Europe

MARKET


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

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

Source: Swiss Re Sigma Report No. 5/2007, Romanian Insurance Supervision Commission

Non-Life channel distribution

Life channel distribution

Romania

70%

5%

9,1%

Austria Poland Spain

5%

25%

54%

5%

35%

6%

57%

1%

16%

26%

40%

7%

28%

25%

Romania

80%

5%

9,1%

Austria Poland Spain

14%

6%

25%

54%

17%

4%

40%

14%

4%

42%

16%

72%

5%

7%

Others (e.g. direct distribution)

Brokers

Banks

Exclusive agents/ employees

Others (e.g. direct distribution)

Brokers

Banks

Exclusive agents/ employees


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)

Life

Class I

Other

Unit Linked

20072006

64.1 %

2.3 %

33.7 %

+2.6 p.p.

+0.4 p.p.

-2.9 p.p.

61.5 %

1.9 %

36.6 %

Δ% 06-07

Non-Life

Source: Romanian Insurance Supervision Commission Annual Reports 2006-2007

MTPL

Fire & natural forces

Motor Other

26.2%

11.3 %

45.8 %

16,8 %

-0.6 p.p.

-0.3 p.p.

+5.2 p.p.

-4.2 p.p.Other

20072006

26.8%

11.6%

40.6%

21 %

Δ% 06-07

Product distribution (% of GWP)

Motor (72%) and Traditional Life (64%) products continue to dominate the Romanian Non-Life and the Life business, respectively

MARKET


With the rise of Retail customers, insurers need to change their mindset to address effectively the new segments

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

Brokers as significant distribution channel

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

Brokers as significant distribution channel

From Corporate… From Corporate…

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

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

… to Retail… to Retail

Mindset shift for insurers

CRM


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, cross-selling needs to expand the overall product portfolio

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

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

Single Customer View

Customer interaction

Intermediaries

Up selling

Distribution channel mix

Challenges for Retail Customer Relationship Management in Insurance

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


“What opportunities exist to better differentiate ourselves in the

marketplace through the customer experience we deliver?”

“How should the customer experience be defined to deliver better customer satisfaction while being operationally effective?”

“What operational improvements can be made to gain an operational competitive advantage in the

marketplace?”

From our experience a holistic approach is required to design a customer centric operating model – customer insight is not enough

Accenture approach to customer centricity

CRM

What are customer needs, preferences and expectations?

What is driving satisfaction?

How effective and efficient are our operations?

Have we found the right balance?

How are others operating?

What operational trends will change the

competitive landscape?

Voice of the customer

Competitive landscape

Internal operational

effectiveness

• Understanding current position• “Driving future strategy”

SegmentationModel

ServiceModel

ExecutionModel

Legend

Customer ExperienceBlueprint

Customer ExperienceBlueprint


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

Cu

sto

mer

Ad

voca

cy

Customer Satisfaction

Def

ectio

nN

eutr

alA

dvoc

acy

Dissatisfied Unconcerned Extremely Satisfied

The Advocacy / Satisfaction Curve

Zone of Defection

Zone of Indifference

Zone of Delight

Interactions should look to deliver a customer experience that

creates an emotional bond with the customer in order to grow

advocacy

Interactions should look to deliver the hygiene factors of the customer experience to grow customer satisfaction

Customer Interaction Model (agency interaction example)

Customer centric operating model objectives

A customer centric operating model must maximize customer satisfaction and loyalty delivering a flawless customer experience

CRM


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

In order to delight customers, organizations need to excel in capabilities around client centricity by generating and applying customer knowledge

Client Centricity Success Factors

CRM


1. Insight driven customer segmentation driving market and customer strategy, including customer analytics to develop churn prediction and propensity models

2. Tailored customer propositions and targeted acquisition and retention offers for different customer segments

3. Tailored sales and service blueprints for different customer segments

Our experience shows that setting up a Customer Retention Center within the organization can significantly help to improve retention

Additional actions include:

Market Strategy

Customer StrategyOrg

anis

ati

on

al f

oc

us

on

re

ten

tio

n Org

anis

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Target Customers

Customer Proposition

Sales & Service

Ret

enti

on

o

ffer

Acq

uisitio

n

Offer

• Features• Benefits• Exclusions• Service• Marketing mix optimisation

• Brand• Marketing• Channel• Technical pricing

• Market price optimisation• Timing• Presentation• Campaign management

• Technical pricing• Market price optimisation• Channel• Presentation• Campaign management

• Differentiated service delivery• Cross- sell prompts• At risk prompts • Outbound calling

• Onboarding• Claims follow -up• Save calls

• Staff incentivisation

••

Market analysisStrategic market segmentationNeeds/Attitudes segmentationCustomer Value Analysis

• Behavioural segmentation – propensity modelling• Acquisition target strategy• Retention target strategy

Target Customers


Sales & Service

Ret

enti

on

o

ffer

Acq

uisitio

n

Offer








••••

–• Risk based segmentation• Behavioural segmentation

Propensity modelling

Churn modelling• Acquisition target strategy

• Retention target strategy

Market Strategy

Customer Strategy

Market Strategy

Customer StrategyOrg

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Target Customers


Sales & Service

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Acq

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••

Market analysisStrategic market segmentationNeeds/Attitudes segmentationCustomer Value Analysis

• Behavioural segmentation – propensity modelling• Acquisition target strategy• Retention target strategy

Target Customers


Sales & Service

Ret

enti

on

o

ffer

Acq

uisitio

n

Offer








••••

–• Risk based segmentation• Behavioural segmentation

Propensity modelling

Churn modelling• Acquisition target strategy

• Retention target strategy

To take the appropriate actions based on your specific retention problem Accenture has defined an effective and profitable acquisition and retention engine

Best Practice Retention Model

CRM


Which levers to address customer needs and the efficiency / profitability objectives of the Company?

Characteristics and needs of the Customer Base

CASE STUDIES

Characteristics / Issues Needs

Few contacts and primarily for administrative purposes

Low levels of satisfaction

Low customer loyalty and increased price sensitivity

Insurance needs that are simple and evolving according to Customer Life Cycle

CustomersCustomers

RetailRetail

CorporateCorporate

Complexity of needs increasing along with size of business

Heterogeneous characteristics dependant on industry sector

Complex needs to be addressed with tailor made offers, differentiated coverages by sector (i.e. Product Liability, Transportation, …) and one-to-one advisory relationships

FOCUS OF CASE STUDIES


Dynamic response to integrated Customer needs

Dynamic response to integrated Customer needs

Innovation

New and few “easily scalable”

products

New and few “easily scalable”

products

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)

1

New way to reach Customers (many more

effective contacts)

New way to reach Customers (many more

effective contacts)

New sales and services approach

New sales and services approach

Customer base development (cross and up selling) even through transformation of administrative processes into sale opportunities

Effective communication to seize every opportunity

2

Simplicity and standardization for

modularity

Simplicity and standardization for

modularity

New operational processes

New operational processes

Operational simplicity and versatility in order to facilitate sales and after sales activities

3

The approach: review the offering and service model defining a lean and “customer need-based” catalog

CASE STUDY #1

Leading Italian Insurance Company


Products structure (modular contents) able to guarantee flexibility during the Customer Life Cycle

“Need-Centric” segmentation

Customer segmentation and

needs analysis

Coverage identification to meet Customer

heterogeneous needs

Life Cycle Stages

Cu

sto

me

r n

ee

ds

Beginner Builders Careers Enjoyers

Basic needs

Safety

Development and consolidation

Life Quality

Profile 1

Most intensive needs

Profile 2

…

Wea

lth p

rofile

s

Coverages responding to the most “intensive

needs”

Optional coverages to define a custom

“Insurance project”

Product concept definition

Optional Coverages

Basic Offer

LIABILITYANNUAL PREMIUM

FIRE

THEFT

HEALTH

FUND

ILLUSTRATIVE

New and few “easily scalable” products…

CASE STUDY #1


… offered with a new sales and services approach“I

nsur

ance

cov

erag

e ne

ed”

“Customer Life Stages”

1

2

3

30 years old: first house

32 years old: marriage

35 years old: career advancement

House protection product

LIABILITY

1st Proposal: adding Family Liability

2nd Proposal: increasing assured capital

Annual payments

THEFT

THEFT

FIRE

ILLUSTRATIVE

New commercial approach

Average premium (index numbers; %)

Multi-coverage policies(%)

Operational expenses (index numbers; %)

80

100

Year 1 Year 2

-20%

166

100

Year 1 Year 2

48%

33%

Year 1 Year 2

+45%+66%

First “need-focused” product results

Leading Italian Insurance Company

CASE STUDY #1


Creation of a single Customer Service entity for the whole Group

Enabling standardization, monitoring and evaluation of relevant processes

Extending Customer Service capacities

Discharging Sales force from providing secondary Customer Service activities

Business Need

Customer satisfaction improvement

Increase in Customer Services effectiveness

Creation of unified Customer records

Ability to serve growing customer base

Sales force more focused on sales activities

Expected Results

Organi-zation

People

Proces-ses

Technology

HR policies regarding CSC employees

Teams and roles description

Organization size estimation

Legal and tax model

Description of processes

Assigning responsibilities

Best practice and methodology description

Harmonization with other departments

Solution selection Implementation plan

preparation Verification of functional

requirements

Project scope – 4 perspectives

Increasing Customer BaseDeteriorating Customer

satisfactionDisintegration of Customer

Services activities

Customer Services Center project

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


– 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)

Employees: with

general knowledge Enquiries:

common, not

requiring particular

product or process

expertise

Customer Services Center

Help Desk Level 1

Help Desk Level 2

Employees:

qualified, process

and product

specialists

Enquiries:

complex and/or

rare

Help Desk Level 3

Product factories

Employees:

product specialists

Enquiries: non-

standard, complex

Customers

Telephone

Mail

Fax

E-mail

Branch

Agents

IVR

Internet

SMS

Channels

Assumptions

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

CASE STUDY #2

Leading Polish Insurance Company


Thank you!From today’s presenters…

Andreea NiculaeAccenture Romania – Bucharest Office

[email protected]

Giuseppe D’EliaAccenture Italy – Turin [email protected]


Question & Answers

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Copyright © 2008 Accenture. All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. I NSURANCE D AY IN B