protection review conference innovation – what innovation?
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Protection Review Conference Innovation – what innovation?. Roger Edwards , Product Director, Bright Grey. So how innovative are we at the moment?. So how innovative are we at the moment?. Spiral of price competition. Industry infra-structure geared to price only. - PowerPoint PPT PresentationTRANSCRIPT
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Protection Review Conference
Innovation – what innovation?
Roger Edwards , Product Director, Bright Grey
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So how innovative
are we at the moment?
So how innovative are
we at the moment?
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Spiral of price competition
Short term need to meet targets beats long term desire to innovate and be different
Prices fall further
Ambitious plans to grow market share
Industry infra-structure geared to price only
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Protection markets
Income Protection
Critical Illness
Term
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Life cover for less than 26p per day
When it comes to protection are retailers behaving like retailers?
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Will price continue to fall?
12%
20%3%
65%
Commission Expenses Risk Profit
Better mortality
Psuedo - preferred lives
Tele-underwriting
Reassurance deals
Online transactions
Offshore admin
Persistency initiatives
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Difficult to break out
Prudential Flexible Protection Plan
• Same market
• Alternative to CI
Virgin Cancer Plan
• New market?
• Alternative to CI
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What advisers recommend?
Given regulation, advice justification, reasons why, threat of legal action
Existing CI• Cheap rates• Comfortable with cover• Proven concept• Millions paid in claims
Impact based CI• Higher rates• New definitions• Unproven concept• No claims history
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Is innovation taking too big a risk?
Short term•Sales
•Profit/share price
•Tactics
•Safety in similarity
Long term•Strategy
•R&D
•Innovation
•New product lines
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Difficult to break out
•Can you launch something new into the adviser channel and expect instant success?
•How many companies will take a long term view?
•More than one company launching something new might work – but what about the Competition Act?
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To summarise the current environment
• Doing the same things
• To the same people
• With the same products
• Using the same processes
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So how innovative
are we at the moment?
So is it really possible to innovate?
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How to change the current environment
• Doing the same things• To the same people• With the same products• Using the same
processes
•Do different things•To people who are NOT currently customers•With different products•Using different
processes
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Evolution or revolution?
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Innovation
We couldn’t do that
because……
The Reassurers won’t let us do that….
That’s a daft idea…..
My only concern is
that…..
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Innovation
• Are we designing products for consumers or our distribution channels?
• Bells and whistles that let our consultants get one up on the competition or benefits of real value to the consumer?
• Recent examples– silent heart attacks
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What is a protection product?
a piece of paper to
file away and forget
about?
compensation for life
changing events?
a promise to pay money when
something horrible happens?
peace of mind?
debt repayment?
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The traditional protection product
product•Piece of paper
•Promise to pay after a horrible event
•Just money
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The problem
product•Exciting•Status - you can polish it
•Material goods
•It’s an experience!
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Reality
productcomms apply claim
the customer product experience
•perception •experience •piece of paper•promise to
pay after a horrible event
•just money
•experience
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Where to innovate
productcomms apply claim
Innovation needn’t be confined to the product – think about all the proposition touch points
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comms
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Communication
• Create a better perception• Engage with the Government
– Education: on school syllabus, free consumer guides– Cultural influences
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Affordability
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Information overload
•Innovation on advice
•Navigate through the massive maze
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Don’t understand it
SACIC
TPD
ACIC
PMI
PTD
PHI
IPGPR
MER
LTA
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Perception
“In the event that you procure one item, as defined by the appropriate boxed quantity and confirmed by the electronic point of sale supervisor, we will assist you in the procurement of a second item, as defined by the appropriate boxed quantity, for no charge, that is, no monetary transaction, as defined by an exchange of currency, would be needed”
“Buy one get one free”
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Communication innovation
•What about 24 hour protection channel?
•What about advertising on DVDs?
•What about the flavour of the month boy/girl band promoting protection?
•Include a protection podcast on each new iPod?
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apply
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Apply
1992 App • 1992 application form– 2 pages
• 2004 industry average– 32 pages
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Are we doing preferred lives?
• Even more intrusive questions
• Less people accepted at ordinary rates
• Preferred lives products through the back door
• Length of process leading to reduced mortgage protection sales?
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GP report
•Expensive•VAT•The Holy Grail is a replacement for the GP report•…or to do away with it all
together
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Do we have the bottle to replace the GP report?Is the industry
obsessed by removing every possible
risk from writing risk products?
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Application innovation
• What about blood spots and saliva profiles?
• What about drop ins to Boots for medicals?
• What about microchips embedded into the back of the neck?
• What about full medical details on the new Government Identity Card?
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product
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Consumer needs
Debt repayment
Income replacement
Decreasing life
Level life
Family income benefit on death
Income protection for occupational disability
CI??
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Innovative products
• What about IP - when are we going to fix it?
• Is evolution of CI restricted to illness definition nitpicking?
• What about hybrid products?
• What about ‘Impact Based Cover’?
• What about a replacement for TPD?
• What about protection in a box or on a smartcard?
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Lessons for the IP market?
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•Benefits payable for full term or age 60•Own occupation cover•Tick box application – no
underwriting•Everyone pays the same rate
Wow!
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But…..
•3 year pre-existing conditions
•Stress, backache or nervous disorder.
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Longer term
MPPI IP
Is the answer MPPI+ or IP-
Mortgage Brokers
Financial Advisers
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claim
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Claims
•Long-winded process – often a repeat of initial underwriting
•Private detectives
•Treating people like people, not policy numbers
•Clarity – “We are declining your claim because of caveat emptor and uberrima fides.”
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More than money
•More than just a hand out– Helping Hand– Best Doctors– HCML
•Real valuable service to all customers and their families
•Money when needed and pro-active help
•“Best advice” benefit to the adviser
•Repositioning protection to be help first, money second
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Claims innovation
• What about paying them (ha ha!)?• What about no financial underwriting at claim for IP?• What about immediately paying 5% of every critical
illness claim? Or cover their monthly outgoings until the decision is made?
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Summary
productcomms apply
the customer product experience
•perception •experience •piece of paper•promise to
pay after a horrible event
•just money
•experience
claim
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Summary
• Do different things– Not just price– Not just stealing existing market share
• To people who are NOT currently customers– Other markets– Other distributors
• With different products– New product models tailored to market niches– New propositions
• Using different processes– Simplified underwriting– Easy application
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