A new Dutch term assurance product Innovation or back to basics? Elaine Turner
21 May 2018 “Good morning, have you heard, we are stopping selling fixed premium term assurance. Our new product will have a risk based premium which increases with age. What do you think?”
21 May 2018 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Agenda Mid blue R64 G150 B184
Light grey R220 G221 B217 Secondary colour palette Dutch market specifics for Term Assurance
Pea green Explanation of the Achmea Term Assurance product R121 G163 B42 Forest green Distribution R0 G132 B82 Bottle green Benefits & Challenges of the Achmea product R17 G179 B162
Cyan R0 G156 B200 Discussion, Questions and Comments
Light blue R124 G179 B225
Violet R128 G118 B207
Purple R143 G70 B147
Fuscia R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 3 R238 G116 29 Dutch market specifics • Term Assurance – Dutch v UK • Drivers of term assurance sales in Dutch market • Game changers • Market volumes
21 May 2018 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Term assurance Mid blue R64 G150 B184
Light grey R220 G221 B217 If the insured dies … Secondary colour palette …..within a specified amount of time…… Pea green R121 G163 B42
Forest green R0 G132 B82 …the beneficiary receives a benefit.
Bottle green R17 G179 B162
Cyan R0 G156 B200
Light blue R124 G179 B225
Violet R128 G118 B207
Purple R143 G70 B147
Fuscia R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 5 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Similarities between Dutch and UK market Mid blue R64 G150 B184
Light grey R220 G221 B217 For the basic product: Dutch term assurance = UK term assurance Secondary colour palette
Pea green Dutch market historically: R121 G163 B42
Forest green R0 G132 B82 • Endowment assurances were used to finance house purchases
Bottle green R17 G179 B162 • Products combining savings and protection products developed e.g. Unit Cyan R0 G156 B200 linked funds with shortfall covered by insurance Light blue R124 G179 B225
Violet • Separate term assurances were available R128 G118 B207 Purple R143 G70 B147 But there are some differences…… Fuscia R233 G69 B140 Red R200 G30 B69
Orange 21 May 2018 6 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Drivers of term assurance sales in Dutch market Mid blue R64 G150 B184
Light grey R220 G221 B217 • First purchase of a house Secondary colour palette • Re-mortgaging of house / moving house
Pea green • Protection of spouse and children: R121 G163 B42
Forest green – To cover financial responsibilities – rent, divorce alimony, other debts R0 G132 B82
Bottle green – Help with immediate costs – childcare, time away from work R17 G179 B162
Cyan – To cover children’s further education costs R0 G156 B200
Light blue – Focus on rental market R124 G179 B225
Violet • Business loans (bancassurance) R128 G118 B207
Purple • Key man R143 G70 B147 But mainly related to house purchase. Fuscia To understand the term assurance market need to R233 G69 B140 understand the house purchase environment. Red R200 G30 B69
Orange 21 May 2018 7 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Game changers – Distribution & Sales Mid blue R64 G150 B184
Light grey R220 G221 B217
Secondary colour palette Financial crisis Housing market dries up No new mortgages
Pea green R121 G163 B42
Forest green R0 G132 B82
Bottle green R17 G179 B162
Cyan R0 G156 B200
Light blue R124 G179 B225 Commission Advice costs Execution only
Violet R128 G118 B207
Purple R143 G70 B147
Fuscia R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 8 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Game changers – Product Mid blue R64 G150 B184
Light grey R220 G221 B217 Secondary colour palette Bank advantage on Low interest rate Endowments stop savings products Pea green R121 G163 B42
Forest green R0 G132 B82
Bottle green R17 G179 B162
Cyan R0 G156 B200
Light blue R124 G179 B225 Bad publicity Customer protection Transparent products
Violet R128 G118 B207
Purple R143 G70 B147
Fuscia R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 9 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Annual housing sales volumes - Netherlands Mid blue R64 G150 B184
Light grey R220 G221 B217
Secondary colour palette • In 2017 242,000 existing
Pea green houses were sold R121 G163 B42
Forest green • Excludes new houses R0 G132 B82
Bottle green • Sharp decrease following the R17 G179 B162 2008 financial crisis with a Cyan R0 G156 B200 slow recovery
Light blue R124 G179 B225 • In Netherlands about 4.4
Violet million owner-occupied homes R128 G118 B207
Purple • Turn over rate of 5.5% R143 G70 B147
Fuscia R233 G69 B140 Red R200 G30 B69 Orange 21 May 2018 10 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Sales volumes Mid blue R64 G150 B184
Light grey R220 G221 B217 Secondary colour palette • In 2017 over 200,000 term assurances sold in the
Pea green Netherlands R121 G163 B42
Forest green • Approximately 1.2% of the R0 G132 B82 population purchased in 2017 Bottle green R17 G179 B162 • Long term monthly sales between Cyan R0 G156 B200 15,000 and 20,000 per month
Light blue R124 G179 B225 • Has not seen as steep increase
Violet as housing sales after 2013 R128 G118 B207
Purple R143 G70 B147
Fuscia Based on figures from CVS (Centrum voor Verzekeringsstatistieks) R233 G69 B140 Red R200 G30 B69
Orange 21 May 2018 11 R238 G116 29 Explanation of Achmea term assurance product • Key product features • Guaranteed increasing premium rate - explanation to clients • Underwriting and use of technology • Dutch smoking approach
21 May 2018 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88 Achmea Overlijdensrisicoverzekering (ORV) Gold R217 G171 B22 Mid blue key features Term assurance R64 G150 B184
Light grey R220 G221 B217 Standard features Differentiating features Secondary colour palette • Fixed benefit or decreasing (by annuity or • No joint policies straight line) benefit Pea green • Premiums increase monthly R121 G163 B42 • Age at inception 15 to 68, Maximum end age Forest green • Premiums guaranteed for lifetime of R0 G132 B82 75 product Bottle green R17 G179 B162 • Minimum term 1 year, Maximum term 54 • Can cancel at any time Cyan years R0 G156 B200 • No reserve (pot) built up Light blue • Sum assured from €10,000 to € 2,000,000 R124 G179 B225 • On lapse no payment of reserve or paid Violet • Simple – no waiver of premium, critical R128 G118 B207 up policy illness, terminal illness or children’s benefit Purple R143 G70 B147 options Fuscia R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 13 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Does the policyholder understand? Mid blue R64 G150 B184 Light grey Various approaches R220 G221 B217
Secondary colour palette • Discussions with customer groups as part of product design Pea green • Make it clear from the start – premium increases R121 G163 B42
Forest green each month, no surprises R0 G132 B82
Bottle green • Use technology to explain in appealing ways R17 G179 B162
Cyan • Visuals and graphs – not just text R0 G156 B200
Light blue • Interactive tools for providing quote R124 G179 B225
Violet R128 G118 B207 But the chance that you die in the beginning Example Purple is smaller because you are younger R143 G70 B147
Fuscia • Infographic (Rabobank website) R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 14 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Interactive quotation tools & graphics Mid blue R64 G150 B184
Light grey R220 G221 B217 Rabobank website:
Secondary colour palette Premium Amount Level SA or type of decrease
Pea green R121 G163 B42 Forest green Average R0 G132 B82 Monthly monthly Bottle green premium R17 G179 B162 premium Cyan R0 G156 B200
Light blue R124 G179 B225
Violet R128 G118 B207
Purple R143 G70 B147 Term = 25 years Duration
Fuscia R233 G69 B140 First premium
Red Age at end date = 70 years 3 months R200 G30 B69
Orange 21 May 2018 15 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Guaranteed increasing monthly premium Mid blue R64 G150 B184
Light grey R220 G221 B217
Secondary colour palette
Pea green R121 G163 B42
Forest green R0 G132 B82
Bottle green R17 G179 B162
Cyan R0 G156 B200
Light blue R124 G179 B225
Violet R128 G118 B207 Purple • Interactive quote tool on Centraal Beheer website: R143 G70 B147 https://www.centraalbeheer.nl/verzekeringen/overlijdensrisicoverzekering/Paginas/premie-berekenen.aspx#/premie Fuscia R233 G69 B140 • Download a pdf of monthly premiums and sum assured Red R200 G30 B69
Orange 21 May 2018 16 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Guaranteed increasing monthly premium Mid blue R64 G150 B184
Light grey R220 G221 B217 Simple concept Secondary colour palette • People age, older people are more likely to die, thus as you get older premiums increase
Pea green But…. R121 G163 B42
Forest green R0 G132 B82 • Bespoke tools require that the customer interacts directly
Bottle green R17 G179 B162 • Works best with dedicated sales channels: Cyan R0 G156 B200 – Bancassurance Light blue R124 G179 B225 – Existing client base Violet R128 G118 B207 – Internet searches Purple R143 G70 B147 Fuscia R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 17 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88 Calculate premium
Gold R217 G171 B22 Underwriting and technology Mid blue R64 G150 B184 Complete details Light grey • Inclusive approach – in particular for dangerous occupations or R220 G221 B217 sports Secondary colour palette Receive SMS with link • One system for all sales channels Pea green R121 G163 B42 • In house technology Client completes Forest green questionnaire R0 G132 B82 • Y/N questions with additional questions/free text boxes depending Bottle green R17 G179 B162 on responses Real time review Cyan R0 G156 B200 • Machine learning Light blue R124 G179 B225 • Medical examination only allowed when sum assured > € 268,125 Clean acceptance, Violet premium uplift or R128 G118 B207 (Industry protocol) call back Purple R143 G70 B147 • Model questions (gezondheidverklaring) from the Verbond van Fuscia R233 G69 B140 Verzekering (Dutch Insurance Association)
Red R200 G30 B69 Orange 21 May 2018 18 R238 G116 29
Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 The Dutch approach – smoking Mid blue R64 G150 B184 Light grey Smoking means smoking substances with tobacco (cigarettes, cigars, pipe) or weed. R220 G221 B217 With smoking we also mean the use of other substances with nicotine. Secondary colour palette For example chewing gum, patches, tablets, inhalers and electronic cigarettes.
Pea green R121 G163 B42 • Non-smoker if not smoked during the previous 2 years
Forest green R0 G132 B82 • If a smoker stop smoking can send a declaration after 2 years of not smoking and premium rates
Bottle green reduce to non-smoker level R17 G179 B162
Cyan • Non-smoker declaration must received before 45th birthday R0 G156 B200 Light blue • If begin smoking obliged to inform insurer about new status R124 G179 B225 Violet • If a smoker who has been paying non-smoker premium dies they receive 50% of the sum insured R128 G118 B207 Purple • When calculating the age based premiums the adjustments for smoking status are based on relative R143 G70 B147 risk for that specific age Fuscia R233 G69 B140 Red R200 G30 B69
Orange 21 May 2018 19 R238 G116 29
Distribution • One product many channels • Achmea market share • Comparison websites
21 May 2018 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 One product, many brands and channels Mid blue R64 G150 B184
Light grey R220 G221 B217 • One team for product development and administration Secondary colour palette • One administration system and IT environment
Pea green • One product, same product conditions, same base pricing R121 G163 B42
Forest green • Execution only or advised sale R0 G132 B82
Bottle green • 4 brands with distinct marketing images: R17 G179 B162
Cyan – Interpolis (Bancassurance via Rabobank) R0 G156 B200
Light blue – Centraal Beheer (direct, worksite, internet) R124 G179 B225
Violet – FBTO (direct – internet only) R128 G118 B207
Purple – Woonfonds (financial advisors) R143 G70 B147
Fuscia • Price to policyholder varies by brand due to administration costs (initial and ongoing) R233 G69 B140
Red • Advice costs are paid separately by policyholder, commission is not allowed R200 G30 B69
Orange 21 May 2018 21 R238 G116 29
Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Achmea sales volumes and market share Mid blue R64 G150 B184
Light grey R220 G221 B217 • Achmea’s leading channel is bancassurance = Interpolis 2017 market share: % of new TA policies administered Secondary colour palette Interpolis 21.7%
Centraal Beheer 2.1% Pea green Monthly sales volumes R121 G163 B42 30,000 FBTO 0.7% Forest green Woonfonds 0.7% R0 G132 B82 25,000 Bottle green Total 25.2% R17 G179 B162 20,000 Cyan R0 G156 B200 15,000 Market Light blue R124 G179 B225 Interpolis Violet 10,000 R128 G118 B207 Based on figures from CVS (Centrum Purple 5,000 voor Verzekeringsstatistieks) R143 G70 B147
Fuscia R233 G69 B140 - 2012 2013 2014 2015 2016 2017 Red R200 G30 B69
Orange 21 May 2018 22 R238 G116 29 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Comparison websites Mid blue R64 G150 B184
Light grey R220 G221 B217 • Tend to focus on price Secondary colour palette • Commodity product, no room to explain the specifics Pea green R121 G163 B42 • First mover challenge – liaise with the Forest green R0 G132 B82 comparison websites
Bottle green R17 G179 B162 • No longer the only product with age linked
Cyan premiums R0 G156 B200
Light blue • Comparison website now allows to select on R124 G179 B225 variable or fixed premiums Violet R128 G118 B207 • Products ordered based on total premiums Purple R143 G70 B147 paid – with a warning in the extra information
Fuscia that the value of money changes over time R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 23 R238 G116 29 Extract from www.independer.nl for € 250,000 level TA, 45 years old, 25 years term Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Comparison websites - Example Mid blue R64 G150 B184 • Variable premiums give extra comparison challenges Light grey Similar first R220 G221 B217 premium Secondary colour palette
Pea green R121 G163 B42
Forest green R0 G132 B82 Bottle green Very different R17 G179 B162 total premium Cyan R0 G156 B200 amount Light blue R124 G179 B225
Violet R128 G118 B207
Purple R143 G70 B147
Fuscia R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 24 R238 G116 29 Extracts from www.independer.nl for € 250,000 level TA, 45 years old, 25 years term Benefits & Challenges • Insurer perspective • Policyholder perspective
21 May 2018 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Benefits and Challenges Mid blue R64 G150 B184 Light grey Insurer perspective Policyholder perspective R220 G221 B217
Secondary colour palette Benefits • No reserves • Pay for what you get
Pea green • Removes lapse risk • Transparent R121 G163 B42
Forest green • Removes price sensitivity to discount rate • Portable - no loss if stop R0 G132 B82
Bottle green • No need to reprice on interest rate changes R17 G179 B162 Challenges • Explain the product • Long term affordability Cyan R0 G156 B200 • Fair comparison with fixed premium TA • No benefit in premium from expected Light blue lapses R124 G179 B225 • Complex administration of premium charging Violet • No paid up policy or reserve return R128 G118 B207 • Updated premium rates - should these also Purple R143 G70 B147 apply to old business?
Fuscia R233 G69 B140 • Higher lapses?
Red R200 G30 B69
Orange 21 May 2018 26 R238 G116 29 Innovation?
Back to basics?
Did the product disrupt the market?
21 May 2018 Colour palette for PowerPoint presentations Primary colour palette Dark blue R17 G52 B88
Gold R217 G171 B22 Mid blue R64 G150 B184 Light grey Questions Comments R220 G221 B217
Secondary colour palette
Pea green R121 G163 B42
Forest green R0 G132 B82
Bottle green R17 G179 B162
Cyan R0 G156 B200 Expressions of individual views by members of the Institute and Faculty of Actuaries Light blue R124 G179 B225 and its staff are encouraged. Violet R128 G118 B207 The views expressed in this presentation are those of the presenter. Purple R143 G70 B147
Fuscia R233 G69 B140
Red R200 G30 B69
Orange 21 May 2018 28 R238 G116 29