Best practices : from e-insurance to e-takaful1st e-takaful seminar

OverviewE-business definitionE-business strategy road mapE-insurance overviewE-takaful

E-businessm-commerceElectronic commerceE-Business

E-businessUse of of electronic means to conduct an organizations business internally and/or externallyInternal e-businessBetter info sharing, knowledge disseminationmanagement reporting External e-businessFormulation of a sales promotion,Collaboration with partners

E-commerceFocus on facilitating transactions and selling of products and services online,By internet or any other telecom network,Encompasses all trading steps :Online (marketing, ordering, distribution), e-payment Buy-side activities (suppliers)Selle-side activities (customers)

m-commerceSubset of e-commerceSimilar online activitiesUnderlying technology is more specific Limited to mobile telecom networksAccessed through wireless hand-held devices (mobile phones, hand-held computers, personal digital assistants)

OverviewE-business definitionE-business strategy road mapE-insurance overviewE-takaful

E-business strategy roadmapVision formulationBusiness objectives definitionCustomer value creationMarket segmentation and targeting Organizational set upE-business model formulation

Pre-requisitesManagers need to be catalysts of changeCombine positive traits of both the visionary and the efficient performer High levels of both creativity and analytical abilityKnow that ideas by themselves are not enough to build a profitable businessAble to find new ideas by analysing state-of-the art cies within their industry and across other industries

Vision formulationTwofold goals :Focus attention and effort of top management and employees around a common taskEncourage creativity and innovation by expanding your thinking beyond the existing boundaries of the cy and its environment

Business objectives definitionObjectives have to be measurableAllow progress tracking Ex : % of savings amount due e-business strategy implementation

Business objectives definitionObjectives have to be measurableAllow progress tracking Ex : % of savings amount due e-business strategy implementation

Customer value creationLow price Become cost leader within the industryDifferentiation advantage :Superior brand name, high service quality, broad product selection,Leverage information available to create benefits for your customers (by data mining techniques for instance)

Market segmentation Closely linked to value creationTwo steps :Select criteria for dividing you market into segments age, income for instanceConsumer (personal lines), corporate (commercial lines)Decide which segment to target Segments needs driven products and services

Organizational set upWhat scale?Analysis of expected cost structure of e-business activitiesAnalysis of each activity of the value chain Analysis of its underlying cost driversWhat scope?Products scopeLeverage the internet to establish partnerships with complementorsHow integrated?Which e-business activities to perform in-house and which ones to outsource?

Organizational set upHow to align physical-world strategy with e-strategy?Stragtegic decisionsBranding, pricing, IT and channel conflictWhat structure?Integrated into the existing organizationLeverage brand to attract customers to online channelMulti-channel offering becomes possible, cross promotions, shared ITSet up inside a separate entity

Business modelCost structure?Consider individual parts of te value chainProduction, IT, marketing, sales an after sales serviceHow can we use internet to lower costs across the value chain?Revenue structure?Transaction fees, advertising revenues, subscription fees (in B2C e-commerce)Assess sustainability of business model Intensity of competition, substitutes, etc.Leveraging data mining techniques to analyse customer information

OverviewE-business definitionE-business strategy road mapE-insurance overviewE-takaful

Business models for e-insuranceInsurance cys websiteshomepages of individual insurersProducts portals Comprehensive standard websites for insuranceAggregatorsInternet insurance brokersOnline risk marketsLarge risks placed with trading partnersPoint of sale portalsproduct marketing through various theme-based pages

E-insurance difficultiesComplexity of some productsClaims settlement difficult to standardiseInternet suited for products where the contact with the cy is more frequentInternet viewed as insecure medium for high amountsRegulation (licences)

Internet-product suitabilityLowHighProduct complexityLowTransaction volumeHigh* Large commercial risks* Health insurance* Commercial motor* Household* Motor* Term lifeMore advice/ Less suitable* Index linked life products* Annuity products

E-insurance advantagesImportant market share gain potential Standardised personal lines insuranceLimited suitability for sale via internet Most life and pension products, health insurance, commercial insuranceEnormous potential for improvements in quality and service levelsBetter tailored productsShorter reponse timesGreater flexibility in cover structureBetter risk management support

E-business increases efficiencySales, administration, claims settlement, claims payment expenses decrease for both personal and commercial linesPersonal lines cost cut potential > Commercial lines cost cut potentialHigh level of advisory services and tailor made products

Market entry barriers loweredNew entrants can avoid long and expensive setting up of traditional sales networkLateral from other sectors benefit from easier accessFinancial services, internet cies, banks, online brokers, internet service providersInternet presence and brand name to add insurance to their product rangeMore efficiency Established insurers face growing competitive pressure

Towards more integrated e-business modelsE-business makes it possible to disseminate information quickly and in large volumesTraditional value chain is deconstructed and certain links are outsourced to specialist providers

Internet impact on value chainProduct development & ratingStandardisation, data availability and analysis, new risksMarketingNew marketing opportunities, deintermediation, reintermediationAdministrationStandardisation, automationAsset managementBetter informationClaims managementAutomation, proximity to the customer, additional services

Potential providersProduct development & ratingActuarial firmsMarketingTrading cies, financial services providers, virtual brokers and marketsAdministrationPolicy administrators, IT companiesAsset managementAsset managers, funds, banksClaims managementProfessional claims managers, call centres, Repair companies

Role of traditional brokers is shiftingStandard productsConsiderable competitionProducts that need more advice and for which prices and benefits are not easy to compareUsing e-business, more finance management and risk consulting servicesEx : complex pension products, commercial lines

Customers benefitsGreater transparency, lower prices and improved servicesE-business opens up new ways of reducing costsHardening competition ensures that these benefits are passed on to the customerInternet offers a number of possibilities of increasing the value creation for customers by means of increased transparency and improved services

E-insurance conclusionFrom purely info and communication medium to important distribution channelFocus from selling products to consumers (B2C) to selling to commercial clients (B2B).Internet does not only impact the distribution but the entire business process Challenge of continuously optimizing the business processes

OverviewE-business definitionE-business strategy road mapE-insurance overviewE-takaful

Insurance not permissibleUncertainty (Gharar)Gambling (Maisir)Interest (Riba)

E-takafulPrevent al-gharar, uncertainty and ambiguity in the transactionProvide to the consumers with comparative informations between products availableLead to more informed decision by consumersScope of the cover, benefits and exclusionsRate of tabarru for takaful vs saving

E-takafulYoung industryCan leverage on the conventional insurance e-experienceComprehensive e-business strategies should be built (eventhough takaful is a high level brand)Takafulconcept & internet suitabilityE-business enhances the transparency (involved by the takaful concept)E-business favor the participants empowerment (involved in the takaful concept)

Thank youSources Swiss Re, Sigma n 5/2000Strategies for e-business, Prentice Hall, Financial Times