Edwards Warwick Actuarial Conference It’s about time we got

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Edwards Warwick Actuarial Conference It’s about time we got Powered By Docstoc
					Warwick Actuarial Conference
     It’s about time we got it right!




Roger Edwards
Products Director
Bright Grey
Do you know
    what
 consumer
 focus is?
Is it really
possible to
innovate?
Innovation

              That’s a daft
                  idea…..
               We couldn’t do
              that because……
My only concern is
     that…..
                   The Reassurers
                    won’t let us do
                       that….
Innovation
Taking a risk?


Short term             Long term
  Sales                  Strategy
  Profit/Share price     R&D
  Tactics                Innovation
  Safety in              New product
  similarity             lines
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?
 • Features that research well with
   consumers don’t always research well with
   distributors
Do you really
 talk to your
customers?
Talking to customers


                       •   Talk to consumers –
                           how many of us do
                           this enough?
                       •   Product testing
                       •   Trial areas
                       •   FMCG tactics
Research
 Session one   Refine     Session two
 – research    session    – research
 concept                  concept




 Marketable    Session    Refine
 proposition   three –    session
               research
               concept
What do consumers think about
protection?
                    •   Building lifestyle
                        pictures
                    •   They do recognise
                        the need
                    •   Income is the
                        foundation stone
What do consumers think about
protection?
                    •   Confusing
                    •   Don’t trust it
                    •   Don’t understand it
                    •   Too much small print
                    •   Jargon
                    •   Not convinced it will
                        pay out
What do consumers need from
protection?
 •   Consumers want
     money and help if
     something goes
     wrong in their lives
     but they don’t know
     what will go wrong
 •   To know that it will
     pay out
Happy customers


                  •   Financial
                       • Debt repayment
                       • Family security = income
                         replacement
Happy customers

                  Financial
                  • Death
                       • Debt repayment
                       • Family security = income
                         replacement
                  •   Major life changing
                      illness
                       • Debt repayment
                       • Family security = income
                         replacement
                  •   Prolonged illness
                       • Family security = income
                         replacement
Happy customers


                  •   Financial
                       • Debt repayment
                       • Family security = income
                         replacement
                  •   Non-financial
                       • Health/well-being
                       • Recovery help
Happy customers


                  •   Non-financial
                       • Health/well-being –
                         rewards for staying
                         healthy?
                       • Access to early
                         diagnosis
                       • Recovery help
                       • Counselling
                       • Lifestyle advice
Happy customers


                  •   Financial
                       • Debt repayment
                       • Family security = income
                         replacement
                  •   Non-financial
                       • Health/well-being
                       • Recovery help
                  •   Clarity
                       • What is NOT included
                       • Easy to understand
                       • Little medical jargon
Happy customers


                  •   Clarity
                       •   Chatty language
                       •   No jargon
                       •   No medical jargon
                       •   What is covered
                       •   What is NOT covered
                       •   No small print
                       •   No surprises
Summary


•   Financial
     • Debt repayment
     • Family security = income
       replacement
•   Non-financial
     • Health/well-being
     • Recovery help
•   Clarity
     • What is NOT included
     • Easy to understand
     • Little medical jargon
Product

 Financial
 • Death
      • Debt repayment
      • Family security = income   Life cover?
        replacement
 •   Major life changing
     illness
      • Debt repayment             Critical illness?
      • Family security = income
        replacement
 •   Prolonged illness
      • Family security = income   Income protection?
        replacement
Product


 •   Death
      • Debt repayment
      • Family security = income
        replacement              Life cover?
                               Fits bill
                               Probably should sell more
                               income benefit – value
                               for money
Product


 •   Major life changing
     illness
      • Debt repayment
      • Family security = income Critical illness?
        replacement
                                Complex to explain
                                definitions
                                Gaps
                                Windfalls
Product


 •   Prolonged illness
      • Family security = income
        replacement
                                   Income protection?
                                   Idea meets needs but:
                                   Complex
                                   Don’t know what you’ll
                                   pay or what you’ll get
Language - communication
Where now?          PMI

             IP
                    CIC
              FIB
Where now?



      “Buy one
      “In the event that you procure one
      item, as defined by the appropriate
      boxed quantity and confirmed by
      the electronic point of sale


      get one
      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


      free”
      monetary transaction, as defined by
      an exchange of currency, would be
      needed”
Communications


• Communication has got to be simple
• How do retailers sell financial services?
Claims tidal wave - solutions


 Critical illness is easy to understand
 “If you get one of the illnesses on the list and you get a
 stack of cash”


 “If you get one of the illnesses on the list and it meets a
 quite complex medical definition then you get a stack of
 cash”
What IFAs want?


IFAs say tighter CI definitions
better than losing guarantee
By Sonia Speedy
IFAs would rather see definitions on guaranteed critical-illness policies continually tightened than lose
them altogether, according to research by Legal & General. L&G's survey of 400 IFAs found that new-
generation CI cover products should be based on today's model rather than "radical" new designs. Fifty-
seven per cent of the IFAs offer only guaranteed premiums to clients while 42 per cent offer both
guaranteed and reviewable rates.
ABI - Definition creep
• Any malignant tumour characterised by the uncontrolled
  growth and spread of malignant cells and invasion of tissue.
  The term cancer includes leukaemia and Hodgkin’s disease,
  but the following are excluded:
   • All tumours which are histologically described as pre-malignant, as
     non-invasive or as cancer-in-situ
   • Any skin cancer other than invasive malignant melanoma
   • All forms of lymphoma in the presence of any Human
     Immunodeficiency Virus
   • Kaposi’s Sarcoma in the presence of Human Immunodeficiency Virus
   • All tumours of the prostate unless histologically classified as having a
     Gleason score greater than 6 or having progressed to at least TNM
     classification T2N0M0
   • All tumours of the bowel unless progressed to and measured by
     some meaningless medical measure
   • All tumours of the liver unless progressed to and measured by some
     other meaningless medical measure
Communications


• Many articles state that the female market
  should be targeted more. Nowhere in
  these articles does it ever say how to do
  this.
• Suggestions of articles in females glossies.
• The female network
Traditional triggers
Modern triggers
So what does this mean for
current product developments?
The future of critical illness cover


 Concerns
 • Medical
   advancements
 • Claims tidal wave
 • Non disclosure
What consumer
need is critical
 illness cover
    meeting?
What consumer need is critical illness
meeting?
 Evolution – Reviewable definitions


                       •   The public don’t trust
                           our existing small
                           print
The CIC Plan           •   Now we expect them
                           to accept variable
                           small print?
                       •   Could only work with
                           independent body
                           who agrees when
                           something can be
                           changed
Evolution – Severity underpin


 •   Retains existing
     problems at an
     individual definition
     level                   The CIC Plan
 •   Expectations – “I’ve
     still got cancer”
 •   More small print to
     explain
 Evolution – Tiered benefits


                       •   Split between severe
                           and mild illnesses
The CIC Plan           •   More complex
                           medical definitions
                       •   More to explain
                       •   Chance of making
                           the wrong decision
Challenges


             •   More complexity
             •   More explanation
                 required
             •   More small print
             •   More declined claims
Evolution – acceptable guaranteed
product
       The CIC Plan




       • Bin angioplasty, CABG
       and other heart surgeries
       • Introduce age limit of 65
       • Introduce cover limit -
       £250,000
Lump sum into income
 £250,000 lump sum




                       £30,300pa for 10yrs
 Income generator
                       £22,100pa for 15yrs
                       £18,100pa for 20yrs
                       £15,700pa for 25yrs
 Whatever we do
 with CI – people
need more income
   protection!
Summary
• Design propositions for the consumer, get buy
  in from the distributor, give them the tools to
  sell
• Think beyond the “financial bit” – what is the
  whole end to end proposition
• Research, research, research, test, test, test
• Include communication and service innovation
• Design a product based on the needs of the
  person buying it

				
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