Analyst Day

Analyst Day
16 June 2016
Follow us on Twitter: @TrygIR
Pricing, innovation and efficiency
Christian Baltzer, CFO
Building pricing power
Pricing competitiveness
2013
2015
2017
25
33
Percentage
Percentage
67
75
3
16 June 2016
Tariffs less advanced than peers
Tariffs at peer level
Tariffs more advanced than peers
25
Percentage
75
Pricing roadmap going forward
4
16 June 2016
Dynamic market pricing
Detailed development of Tryg’s pricing scheme
Differentiated (2012-2017)
Average ( - 2012)
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5
= Risk & cost
Market based (2015 - )
Customer 1 Customer 2 Customer 3 Customer 4 Customer 5
= Profit
Other industry players already
working with market based pricing
”The single most
important decision in
evaluating a business is
pricing power”
Warren Buffet, 2011
5
16 June 2016
Customer life time value approach
- a new tool to profitable sales and growth
Customer Value Model
Calculate on an individual level
– The customer’s expected life
time value based on expected
life time, risk and claims ratio
to optimise lead-, and sales
process
Benefits
Reduced
level of
discount
Higher
hitrate
Decrease
in claims
ratio
Increase
3+
customer
ratio
6
16 June 2016
How do we work with our existing portfolio?
Migration
Simple renewal
From old-product and price
Automated Price
Update
To new product and price
Renewal price based
on price optimisation
Add-ons
Extended water damage
More safety
Cosmetic differences
Home help
7
16 June 2016
Making the cake bigger!
Growth products
M&A
Children portfolio
A lean innovation set-up
8
16 June 2016
Capitalise on the new bonus model
Reductions in expenses and claims
Efficiency programmes
Delivered
DKK 1,000m
Expense ratio
16.4
On track
For DKK 750m
15.6
15.3
14.6
2012
2013
2014
15.6
15.3
15.1
14.9
2015
Q1 2015
Q1 2016
Adjusted for one-off effects
FTE development
Sourcing as a key driver for efficiency
3,913
3,703
Franchise
3,599
2012
2013
2014
3,359
3,333
2015
Q1 2016
IT
Sale
Accounting
9
16 June 2016
Claims handling
Continuous focus on efficiency
Continuing our journey’s …
…and utilise other areas
DKK 2.0bn
of total cost
Sourcing
Distribution power
DKK 1.4bn
of total cost
Claims handling
Process efficiency
10
16 June 2016
Efficiency through insights
DoT - Digitalisation of Tryg
Lars Bonde, COO
Jane Kaasgaard, Programme Director of Digitalisation
The global market expects growth in digital channels
New premiums sold online today
8% in life
10% in P&C
More digital after purchase
37% increase in customers’ use of
digital for after-purchase inquiries
A recent study
shows that…
and servicing
Less contact center use
79%
26% decrease in customers’ use of
contact centers
Shorter product development
A decrease in product development
time, from 11 months to 7.4 months
Over next 3-5 years (insurers’ forecast)
More auto-underwriting and
auto-adjudication
20 percentage points rise in share of
15% in life
23% in P&C
business that is automatically
underwritten and claims that are
Of consumers world wide
say they will use a
digital channel for
insurance interactions
over the next few years
automatically decided using software
Lower level in the Nordics of new
premiums sold – but expected growth
12
16 June 2016
Source: Bain Digital Insurer of the Future Benchmarking, 2014-2015
Digitalisation is important for customers’ experience
”Min Side” the most important customer solution
Min side
29%
15%
Telephone
22%
Webpage (information)
22%
Personal Contact
51%
33%
Insurance-app
27%
28%
Social medier
1 Not important
2
16%
19%
29%
Letter
18%
4
2 of 9
0 of 9
82%
Danes feel comfortable with using digital
solutions containing information about economy.
13% 8%
20%
3
4 of 9
29%
33%
76% Danes is predominantly positive towards the
digitalisation of customer service.
32%
26%
25%
7 of 9
35%
35%
Personal digital contact
Development
focus
7%5% 0 of 9
5 Very important
How important is digital access?
All generations are predominantly positive
100%
80%
60% 98%
83%
89%
86%
40%
30%
20%
19%
25%
20%
11%
4%
1%
6%
4%
7%
7%
Netbank
Insurance
Pension
0%
1 Not important
13
41%
40%
16 June 2016
2
3
4
18-29
80%
85%
30-39
83%
87%
40-49
79%
87%
50-59
80%
82%
60-69
75%
75%
70+
64%
74%
Digitalisation of customer service predominantly positive
Danes feel comfortable
5 Very important
Source: Digital Finans 2016, FW Insight & Wilke
Where did we come from? (Tryg -1year)
Tryg already delivers strong digital services in several areas …
!
Digitalisation has been on the
agenda in Tryg for quite some time.
In 3 years the number of digital customers in Tryg has
skyrocketed …
We have focused on the absolute
basic functionalities, and are now
ready to put it into a more strategic
context.
25% -> 80%
20% -> 63%
… But there is significant potential for improvements
1 claim has in average 4 follow-up
contact points ~ 1.6m follow-up
contacts each year
Online claims forms available, but
complicated and low completion rate
~1/5 of incoming DK calls generate
approx. 4/5 of sales
Digital presence, but not responsive
across devices
14
16 June 2016
25-30% of all claims are high volume (>1000)
with low pay-out.
Digitalisation of Tryg: Self-service and up sale
• Existing customers
• Meeting current needs
• Making it easy and accessible
Focus
Customer experience
Customer
centric
Always
available
Transparency
15
16 June 2016
Basic functionalities
Calculate
Up sale
Self-service
Claims
The customer’s digital insurance universe
Anders And
!
16
•
Customisation
•
Advisory and upselling
•
Lead-generation
•
Responsive across all devices
Lykkevej 10, Andeby
•
Chat and access for customer
service
Lykkevej 10, Andeby
16 June 2016
Digital claims filing
The delivered claims forms (Content, Travel, House
85% of the claims for Danish
private customers - and 65% of all DK claims
and Car) cover
All Private claims covered in DK by end 2016.
Faster response time and
fewer follow-up
Supports customer experience
Drives digital traffic for cross
experience:
- Prevention
- Upselling
17
16 June 2016
Tryg is the best digital insurance company in Denmark
”
Tryg comes second in both evaluation of the best digital
customer solutions and in the best internal digital setup, giving an
overall first place.
The evaluation of the best digital customer favored Alm. Brand due
to the weighting of customer versus expert opinions. As Tryg rated
higher on expert opinions, while Alm. Brand rated higher on
custormers’.
- Digital Finans, 2016
”
Score for digital customer
solutions
Score for internal digital setup
Combined score
Tryg
69
77
72
Alka
65
83
71
Alm. Brand
69
73
70
Topdanmark
63
67
64
Codan
62
66
63
If
56
71
61
GF-Forsikring
58
62
59
LB Forsikring
60
55
58
Købstædernes Forsikring
i.o.
60
i.o.
Gjensidige Forsikring
61
i.o.
i.o.
18
16 June 2016
Source: Digital Finans 2016, FW Insight & Wilke
Private Denmark
Johan Kirstein Brammer, Senior Vice President, Private Denmark
Private Denmark
Private DK
National
Focus
Work
Smarter
Faster Decision
making
FCR 83%
PRIVATE
20
16 June 2016
Customer
Focus
NPS 32
Innovation
Key figures
Development in key figures Private
600,000 Households
Main products
Premium
5,094
4,903
4,832
4,853
2012
2013
2014
2015
87.7
86.0
2012
2013
85.4
82.5
Combined ratio
(NO+DK Private)
How is performance?
Retention
89.7
89.7
Q1
Q2
2014
89.8
2015
89.9
90.0
• Strong profitability
• Positive topline development driven by price increases
Q3
Q4
• Focus on 3+ to deliver on ambitious 3+ target
• Stable development in NPS now at 32
• Growth in employee satisfaction, +2 to 76
+3 Customer
ratio
56.9
Q1
57.2
Q2
2015
21
16 June 2016
57.5
Q3
57.7
Q4
Q1
58.0
Q1
2016
Competitor position in DK (Private)
Net Promotor score
Performance 2015
5
7
100%
Expense %
86.6%
96,5%
22%
17.7%
16.3%
35
86%
85.4%
80%
13%
12%
Growth premiums
Overall Brand
attraction
15%
-1.4%
18%
23%
16 June 2016
2%
0.4%
-1.1%
25%
Note: Combined ratio is Private DK/NO, but the rest of the key figures are at Private DK level
22
29
Combined ratio
-2%
Q4 2015
28
10
37%
40%
Overall strategy
Focus
Must win
battles
BALANCED
CUSTOMER
EMPLOYEE
GROWTH
EXPERIENCE
ENGAGEMENT
• Intelligent Pricing
• ≥ 3+ Master Plan
• Customer Front Sale &
Claims
• New Revenue Streams
• Loyalty Programme
• Work smarter & FCR
• Sales & retention
• Customer Journey & SL
• United Private DK
CONTINOUS DISTRIBUTION & EFFECIENCY IMPROVEMENT
23
16 June 2016
New attractive product offerings strengthens
our profitability and growth
#1 in DK consumer reports
New module based product portfolio
•
•
•
•
A range of new and attractive products
Products are module based with add-ons
Improved customer experience
Contents insurance
Products and pricing are grounded in our strong
analytical capabilities
Car insurance
Customers converted to the new products
in 2016
• Customers will be converted to the new products in
2016.
• Customers are offered new attractive add-ons.
• Added benefit: Improved efficiency by having fewer
products and a simpler claims handling
24
16 June 2016
Highest level of repricing in 7 years
Customers
converted
Keep add-on
products
4 out of 10
9 out of 10
Customer bonus
Denmark's ‘biggest’family
Positive effect on retention
Private customers
getting bonus letter
‘I expect to be in Tryg next year’
Have heard about Customer bonus
93%
Have not heard about Customer Bonus
81%
> 780,000
individuals
Retention rate increase by 1 pct. gives approx.
DKK 50-150m reduction in expenses on group level
> DKK 400m
in bonus
Every 5th Dane receives bonus!
8% in 2016
Customers are already promised bonus for 2017
25
16 June 2016
> DKK 500
in average
Establishment of integrated ‘customer front’
with improved efficiency
Work smarter
Improve efficiency
Increased
employee satisfaction
Increased mandate
WF
M
Improved
customer satisfaction
Sales &
Service
Multi
skills
26
16 June 2016
Claims
handling
Increased sales
Incentive
Increased sales of niche products
Pet insurance
Child insurance concept
• 40% increase in sales after launch of new
•
•
•
•
•
•
•
•
•
pet insurance
Kitten & Puppy start-up kit incl. insurance
New retail sales channels – 60% of leads go to tied
agents – approx. 30,000 leads yearly
Market potential DKK 90-130m (dogs & cats)
Tryg potential DKK 30-45m
Bestand DKKm
62
60
58
56
54
52
50
48
Average premium
in market
Market penetration
Critical Illness
Kæledyr - DK
Q2 2015
16 June 2016
Market potential DKK 200-300m
Tryg potential DKK 60-80m
DK: DKK 700
SE: DKK 1,300
PETS DK
27
Large potential in DK – 1/3 are uninsured
New 360 degree child insurance
New sales channels and proposition packaging
Q2 2016
DK: 7%
SE: 70%
Tryg Procurement
- Releasing the full potential of Tryg’s cost base
Morten Hald, Procurement Director
28
20 June 2016
Annual spend
29
16 June 2016
Next Level Sourcing
Target and realised savings
DKKm
1.400
Target
1.200
1.192
945
Actuals
1.000
950
692
800
767
600
326
610
400
200
291
94
92
0
2012
2013
2014
Benefits
 Enhances Tryg’s bottom line directly
 Reduces the need of increasing insurance premiums
 Saving target in 2017 of EUR 160m equates ~1,200m
 Savings are validated by Corporate Finance
 + 130 projects
30
16 June 2016
2015
2016
2017
Procurement department
•
From 12 to 35 FTE
Next Level Sourcing initiatives
2017
500
E-auctioning/RFQ of major reconstruction tasks
•
•
Scalepoint Content
Consolidated network of craftsmen and damage control
Fixed prices on subtasks (incl. hourly wage and materials)
In4mo claims handling system
Stricter control of documentation
• Consolidated network of workshops and increased referral rates
• Consolidated network of glass repair suppliers
• Nordic roadside assistance supplier
2014
700
2012
31
•
•
•
•
DKKm
16 June 2016
•
Outsourcing/new supplier of Tryg’s emergency centre
•
•
•
Consolidated network of clinics and increased referral rates
•
•
Sourcing of contracts: cleaning, marketing, IT consulting, legal etc.
Concept development e.g. health support team
Outsourcing of Tryg’s health team
Enhanced fraud detection
High class systems as efficiency driver
- In4mo
Webportal
Mobile app
Reduced
cost
32
16 June 2016
Reduced
cycle time
Improved
customer
satisfaction
Improved
employees
satisfaction
High class systems as efficiency driver
- Scalepoint Home Content Solution
Branded Replacement Shop
Core features
Value Proposition
Self Service
Reduced pay outs
Online Settlement Tool
Reduced cycle time
Matching Engine
Optimised use of
business rules
Online Replacement
Shop
Electronic Voucher
(SMS)
33
16 June 2016
Procurement volume
utilised
Instant end-to-end
solution
Successful sourcing initiatives
Tryg Alarm – A successful outsourcing case
Benefits realised
•
Approx. 20% saving on cost after outsourcing
•
Improved service levels
•
Increased customer satisfaction
•
Customer complaints dropped
Outsourcing of the health team to Falck
FTE development - Claims
967
877
2012
34
16 June 2016
2013
861
860
2014
2015
Increased efforts against fraud
Today, we uncover fraud for approximately DKK 150m
Effort to fraud protects partly the honest
customers and partly Tryg against the
risk of anti-selection among fraudsters.
Further savings potential of more than 1pp of total claims ratio
35
16 June 2016