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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.

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Protection review conference innovation what innovation

Protection Review ConferenceInnovation – what innovation?

Roger Edwards , Product Director, Bright Grey


Protection review conference innovation what innovation

So how

innovative are

we at the

moment?

So how

innovative

are we at the

moment?


Spiral of price competition

Spiral of price competition

Industry infra-structure geared to price only

Ambitious plans to grow market share

Short term need to meet targets beats long term desire to

innovate and be different

Prices fall further


Protection markets

Protection markets

Critical Illness

Term

Income Protection


Life cover for less than 26p per day

Life cover for less than 26p per day

When it comes to protection are retailers behaving like retailers?


Will price continue to fall

Better mortality

Psuedo - preferred lives

Tele-underwriting

Reassurance deals

3%

20%

Online transactions

Offshore admin

Persistency initiatives

12%

65%

Commission

Expenses

Risk

Profit

Will price continue to fall?


Difficult to break out

Difficult to break out

  • Prudential Flexible Protection Plan

  • Same market

  • Alternative to CI

  • Virgin Cancer Plan

  • New market?

  • Alternative to CI


Protection review conference innovation what innovation

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


Is innovation taking too big a risk

Is innovation taking too big a risk?

  • Long term

  • Strategy

  • R&D

  • Innovation

  • New product lines

  • Short term

  • Sales

  • Profit/share price

  • Tactics

  • Safety in similarity


Difficult to break out1

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?


To summarise the current environment

To summarise the current environment

  • Doing the same things

  • To the same people

  • With the same products

  • Using the same processes


Protection review conference innovation what innovation

So is it really

possible to

innovate?

So how

innovative

are we at the

moment?


How to change the current environment

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


Evolution or revolution

Evolution or revolution?


Innovation

Innovation

We couldn’t do that because……

That’s a daft idea…..

The Reassurers won’t let us do that….

My only concern is that…..


Innovation1

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


What is a protection product

What is a protection product?

a piece of paper to file away and forget about?

a promise to pay money when something horrible happens?

peace of mind?

compensation for life changing events?

debt repayment?


The traditional protection product

The traditional protection product

  • Piece of paper

  • Promise to pay after a horrible event

  • Just money

product


The problem

The problem

  • Exciting

  • Status - you can polish it

  • Material goods

  • It’s an experience!

product


Reality

the customer product experience

Reality

comms

apply

product

claim

  • piece of paper

  • promise to pay after a horrible event

  • just money

  • experience

  • perception

  • experience


Where to innovate

comms

apply

product

claim

Where to innovate

Innovation needn’t be confined to the product – think about all the proposition touch points


Protection review conference innovation what innovation

comms


Communication

Communication

  • Create a better perception

  • Engage with the Government

    • Education: on school syllabus, free consumer guides

    • Cultural influences


Affordability

Affordability


Information overload

Information overload

  • Innovation on advice

  • Navigate through the massive maze


Don t understand it

Don’t understand it

TPD

PHI

LTA

SACIC

MER

GPR

PMI

PTD

IP

ACIC


Perception

Perception

“Buy one get one free”

“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”


Communication innovation

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?


Protection review conference innovation what innovation

apply


Apply

Apply

  • 1992 application form

    • 2 pages

  • 2004 industry average

    • 32 pages

1992 App


Are we doing preferred lives

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?


Gp report

GP report

  • Expensive

  • VAT

  • The Holy Grail is a replacement for the GP report

  • …or to do away with it all together


Protection review conference innovation what innovation

Do we have the

bottle to replace

the GP report?

Is the industry

obsessed by removing

every possible

risk from writing

risk products?


Application innovation

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?


Protection review conference innovation what innovation

product


Consumer needs

CI??

Debt repayment

Income replacement

Consumer needs

Decreasing life

Level life

Family income benefit on death

Income protection for occupational disability


Innovative products

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?


Lessons for the ip market

Lessons for the IP market?


Protection review conference innovation what innovation

Wow!

  • Benefits payable for full term or age 60

  • Own occupation cover

  • Tick box application – no underwriting

  • Everyone pays the same rate


Protection review conference innovation what innovation

But…..

  • 3 year pre-existing conditions

  • Stress, backache or nervous disorder.


Longer term

Longer term

Is the answer MPPI+ or IP-

Mortgage Brokers

Financial Advisers

MPPI

IP


Protection review conference innovation what innovation

claim


Claims

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.”


More than money

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


Claims innovation

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?


Summary

the customer product experience

Summary

comms

apply

product

claim

  • piece of paper

  • promise to pay after a horrible event

  • just money

  • experience

  • perception

  • experience


Summary1

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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