The advice challenge: understanding what clients value Banaf Davies – Senior Client Development Manager

agenda Background What are the insurance client segments? How can insurers add value to the clients? Key takeaways

01 Life as we know it

Family time

Australian Life Insurance Market 61% of consumers from the ages of 18 to 54 find purchasing life insurance online attractive. PwC Direct to consumer life insurance 2015 ?

FACTORS ACCELERATING CHANGE Consumers are more informed and empowered than ever before Digital technology lets consumers compare value and expand their choices Data disruption allowing new people to venture into financial services Growing consumer self sufficiency Old notions of value and loyalty are breaking down How do we stay relevant to our customers? Services better than ever which need to be provided at a lower cost ‘New normal’ level of expected customer service Customer expectations

THE CHALLENGE TO STAY AHEAD Understand what clients value Deliver on what they value effectively Stay relevant

02 Client segments

How are you servicing your clients? 90% or more clients say their adviser provided: Tailored insurance advice Trusted adviser relationship Excellent customer service Help with product and provider selection Transparent communication about fees Less than 50% of clients say their adviser provided: Education Value for money Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

What do your clients want?

Three Client segments Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

02 client segments Now we are going to look in more detail around the clients segments

Ethical and independent advice Claims management assurance purists A tailored insurance plan customised to their needs, circumstances, goals and objectives Ethical and independent advice Claims management assurance Positive impacts when Purists feel confident that ethical and independent advice is provided 25% stronger relationships 28% uplift in perceived value Purists place no value on help with product and provider selection, service, the relationship or peace of mind. Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

purists “My adviser was focused 100% on finding a solution to my insurance needs and providing the most competitive and suitable products available.” Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

personalised advice seekers A tailored insurance plan customised to their needs, circumstances, goals and objectives Personalised Advice Seekers are least concerned with getting significant value for money. They believe in the value of advice and inherently know that they will get a better outcome using an adviser than going direct. However, they are the hardest to please. Only 10% more loyal if their needs are met Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

personalised advice seekers “My adviser explained in detail what our options were, listened to our questions and answered them satisfactorily, made changes that we requested and didn’t pressure us into taking out insurance that was excessive or didn’t meet our needs.” Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

value seekers Value Seekers want to know that the value of taking out insurance through an adviser outweighs the premiums or fees they pay. They want high quality communication to reflect their perception of value. 16% more loyal when they feel they’ve received significant value for money 25% more loyal when quality communications are received Clients need to know that advisers are ‘earning their money’ rather than adopting a ‘set and forget’ approach. Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

value seekers “Quick action. Thorough answers to my questions, good explanations. Quick to get back to me with queries. Was able to lift exclusions my spouse had on her previous insurance cover.” Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

Working together to deliver value Value of advice Policyholder Return on Premium (PROP)

Why does it matter? There is a strong correlation between meeting the unique needs of each segment and the level of client satisfaction, loyalty and advocacy. Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

Insurer-client value drivers 03 Insurer-client value drivers

What do clients value from their life insurer? Claims management assurance Life industry pays $4.9bn in claims in 2014* AIA Australia paid out $861m in claims in 2014 *http://www.riskadviser.com.au/news/13190-life-industry-pays-4-9-billion-in-claims-in-2014 Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

Policyholder return on premium

75% Life insurance prop How can insurers add value? of clients highly value being able to lower their life insurance premiums by participating in a health and wellness program as a part of life insurance that is based on dynamic underwriting. Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

AIA Vitality – more than the traditional life insurance Dynamic pricing providing more value to the member

04 Key Takeouts

Personalised Advice Seekers conclusion Value Seekers Never assume that a prospect understands the value that the adviser will bring to the insurance relationship. Demonstrate to your clients what you have done and are continuing to do to ‘earn their money’ rather than simply taking a ‘set and forget’ approach. Deliver relevant, timely and easy to understand communications on an ongoing basis to keep them informed of their insurance plan and changes that are relevant to them. Personalised Advice Seekers Clearly demonstrate that your recommendations and advice is customised to your clients’ needs. Communicate that tailored advice is core to your service and incorporate these messages into your marketing and communication material. Purists Demonstrate to your clients that you are behaving ethically and how your advice is unbiased and independent. Regularly reassure your clients that you will be there to manage a claim should the need arise. Clearly convey the message that tailored, ethical and independent advice is core to your service and incorporate these messages into your marketing and communication material. Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015

Thank you

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