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 R233 G69 B140 Based on figures from CVS (Centrum voor Verzekeringsstatistieks) 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….