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TRANSCRIPT
Discovery Insure 2012 Product updateFrancois Theron | COO Discovery Insure
Mainstream emergence of telematics technology as a
premium rating factor
1
AccelerationBraking
Cornering
Cornering
Background to the launch of Discovery Insure
Rising and volatile fuel price negatively impacting cost of
vehicle ownership
3
The relevance of Discovery’s behavioural economics
experience to short-term insurance
Understand and reward good driver behaviour
Mechanism to incentivise positive behavioral change
Ability to positively impact road safety
2
Causes of motor vehicle accidents
49%
9%
34%
8%
Pedestrian
related
Vehicle
safety
Road
conditions
Inappropriate
driving
Fuel price Oil price
0
20
40
60
80
100
120
140
160
R 0
R 2
R 4
R 6
R 8
R 10
R 12
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Actual fuel price (Rands) Actual oil price (US dollars)
The Discovery Insure Product Platform
Comprehensive motor insurance
State-of-the-art vehicle and passenger safety
Stolen vehicle recovery at no additional cost
ImpactAlert™:Pro-active emergency response
Vehicle Protector™: Tools to improve
vehicle safety
Family Protector™:Additional family
safety features
Fuel rewards
Get 50% of fuel spend back each month,
Or
100% of fuel spend to fund policy excess
Flexible options for household
and personal
cover
HomeProtector™: Security and emergency
accommodation
No excess on burglary, hijacking,
storm or fire
The better you drive, the higher your status,
the greater your rewards
Driver Quotient™ measures driver
performance
4
Discovery Insure: The year in review
Press coverage Key metrics
311 100 fuel transactions
7.7m ℓitres of fuel purchased at BP
R7.93 bncomprehensively
insured household and personal cover
20 100 driverstracked in real time with DQ-Track
R3.25 bnvehicles comprehensively insured
132 million kilometresof behavioural data
The Discovery Insure business cycle
Experience review
Product enhancements
Marketing and clientsupport
The Discovery Insure business cycle
Experience review
Product enhancements
Marketing and clientsupport
is having a
on client behaviourtangible impact
Vitalitydrive
1
Behaviour change manifests in three key areas
0
1000
2000
3000
4000
5000
6000
7000
8000
Jun
-11
Au
g-1
1
Oct
-11
Dec
-11
Feb
-12
Ap
r-1
2
Tiger Wheel and Tyre MultiPoint checks
Over 7 000 MultiPoint checks completed
High engagement in driver awareness and vehicle safety
activities
100
102
104
106
108
110
112
114
116
118
Month 1
Month 2
Month 3
Month 4
Month 5
Indexed Driver Performance Scores(Month 1 = 100)
17% improvement in Driver Performance Scores
Demonstrable changes in driver behaviour
BP National market share
Proportion of petrol spend at BP for
VitalityDrive clients
BP market share analysis
77% of fuel spend at BP outlets
Substantial shift in day-to-day consumer choices
77%
20%
Proportion of petrol spend at BP for
Vitalitydrive clients
BP national market share
in driver behaviour are directlycorrelated with
motor vehicle accidentsfewer
Improvements
2
and
insurance costslower
Driver behaviour is directly correlated with accident risk
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Base Neutral Engaged Advanced
Indexed loss ratios by Vitalitydrive status(Base = 100%)
100%
74%
54%
31%
facilitates a robust
of the underlying causes of motor vehicle accidents
understanding
DQ-Track
3
South Africa
Brazil
Russia
China
USA
India
UK
South Africa’s roads are amongst the most dangerous in the world
Source: List of OECD countries by traffic-related death rate
Broader societal costs associated with road accidents are substantial
Road fatalities per capita (per 100 000 inhabitants p.a.)
South Africa’s fatality rate is significantly higher than other BRIC countries, with 14 000 road fatalities per year
33.2
18.5
19.9
16.5
12.3
11.1
3.59
Unique insights into the causes of motor vehicle accidents
53%
37%
32%
16%
5%
Late night driving
Braking Speeding Accelerating Cornering
Note: Drivers can have more than one type of risky event prior to an accident
Type of risky behaviour displayed prior to an accident
Drivers displaying risky driving behaviour 15 minutes or less prior to a serious accident
No39%
Yes61%
Measureable behaviours are directly correlated with accident risk
1.3 1.40.8
9.7
Morning Lunch time Early evening Late night
Relative accident risk, 2011 Insure data
There is a ten times higher likelihood of having a motor vehicle accident at night
9.7
0.81.41.3
are emerging between
and other drivers of insurance risk
driving behaviour
Strong correlations
4
Cross-company analytics provide unique insights into the drivers of insurance risk
37%
48%
67%
82%
Base Neutral Engaged Advanced
10%
8%
4%
1%
Base Neutral Engaged Advanced
P(Credit default) is the probability of being 3 months in arrears or worse at least once during a year
Case study 1: Wellness outcomes are directly correlated with driving behaviour
Percentage of healthy* drivers by Vitalitydrive status
*Note: Healthy is defined as being on Gold or Diamond Vitality status
82%
67%
48%
37%
Credit default rates by Vitalitydrive status
Case study 2: Credit risk is directly correlated with driving behaviour
1%
4%
8%
10%
is providing
levels to clients
high coverage
The core product
5
Discovery Insure claim payments reflect comprehensive product offering
Discovery Insure claims payout ratios
Repudiated2%
Approved98%
Analysis of repudiated claims
No cover44%
Fraud22%
Pre-existing damage
16%
Other9%
Unlicensed driver
9%
The Discovery Insure business cycle
1
2 3 4
5
Experience review
Product enhancements
Marketing and clientsupport
Rewards change client behaviour
98% benefit coverage ratios
Unique client data provides strong predictor of insurance risk
Young adults display high risk driving behaviours
Vitalitydrive engagement lowers accident risk
2012 Strategic product objectives
1
2
3
Restructure Vitalitydrive to simplify and enhance the benefits
Create targeted incentives to drive a step change in road safety for young adult drivers
Enhance coverage levels across the product
2012 Strategic product objectives
1 Restructure Vitalitydrive to simplify and enhance the benefits
2
3
Create targeted incentives to drive a step change in road safety for young adult drivers
Enhance coverage levels across the product
Discovery Insure launch
R 7.00
R 7.40
R 7.80
R 8.20
R 8.60
R 9.00
R 9.40
R 9.80
R 10.20
R 10.60
R 11.00
R 11.40
R 11.80
R 12.20
R 12.60
Jan
-10
Feb
-10
Mar
-10
Ap
r-1
0
May
-10
Jun
-10
Jul-
10
Au
g-1
0
Sep
-10
Oct
-10
No
v-1
0
Dec
-10
Jan
-11
Feb
-11
Mar
-11
Ap
r-1
1
May
-11
Jun
-11
Jul-
11
Au
g-1
1
Sep
-11
Oct
-11
No
v-1
1
Dec
-11
Jan
-12
Feb
-12
Mar
-12
Ap
r-1
2
May
-12
Jun
-12
Increasing relevance of the fuel benefit construct
Fuel price progression since the launch of Discovery Insure(Rand per litre)
Gauteng Prices (Pricing Zone 9C), 95-Octane unleaded
R8.45
R10.23
R11.67
Composition of Vitalitydrive rewards
DiscoveryCard22%
Travel3%
Fuel75%
Composition of Vitalitydrive fuel rewards
Rewards at other stations4%
Rewards atBP stations96%
Analysing the different rewards structures available through Vitalitydrive
Factors informing the restructure of Vitalitydrive rewards
75% of Vitalitydriverewards in fuel
96% of all fuel rewards earned at BP
More than 1 in 3 Insure clients do not have a DiscoveryCard
Excess Funder Account balances
R4m
1 3
75%
96%
Registrar guidelines to remove ‘non-risk’ travel and card rewards
Risk-based
reward
Experience on supported policies
20%+
in
Boost BP fuel cash back
01
Clients can now get up to 50% of their BP fuel spend back
Complete and pass the Tiger Wheel & Tyre Annual MultiPoint
check
You automatically get 20% cash back on your monthly BP
fuel spend
20%You get
50%Cash back on your BP fuel spend every
month
INSURE YOUR CAR AND HOME AND ACTIVATE
Note: Your monthly fuel rewards are based on your number of DQ Points earned
Boost your Excess Funder Account and double your fuel rewards to
100%
Factors informing the restructure of Vitalitydrive rewards
75% of Vitalitydriverewards in fuel
96% of all fuel rewards earned at BP
Excess Funder Account balances
R4m
1 3
75%
96%
Experience on supported policies
20%+
in
Boost BP fuel cash back
01
Ensure maximum level of fuel reward is
available to all clients
02
Registrar guidelines to remove ‘non-risk’ travel and card rewards
Risk-based
reward
More than 1 in 3 Insure clients do not have a DiscoveryCard
The revised fuel rewards structure ensures that the maximum level of fuel rewards are available to all clients
Policy type AutomaticMultiPoint
check
Car only 10% 25%
Car and home 20% 50%
Paymentmechanism
AutomaticMultiPoint
check
Other 10% 25%
DiscoveryCard 15% 40%
2011 BP fuel rewards structure 2012 BP fuel rewards structure
Factors informing the restructure of Vitalitydrive rewards
75% of Vitalitydriverewards in fuel
96% of all fuel rewards earned at BP
Excess Funder Account balances
R4m
1 3
75%
96%
Experience on supported policies
20%+
in
Ensure maximum level of fuel reward is
available to all clients
Boost BP fuel cash back
01
02
Embed an Excess Funder Account in all Vitalitydrive policies
03
Registrar guidelines to remove ‘non-risk’ travel and card rewards
Risk-based
reward
More than 1 in 3 Insure clients do not have a DiscoveryCard
Vitalitydrive members automatically get up to 10% of their premiums paid into their EFA each month
Percentage of car insurance premium paid into the Excess Funder Account every month
0%
Base
2.5%
Neutral
5%
Engaged
10%
Advanced
status
Plan excess
R 900R 1 800
R 2 700
R 3 600R 4 500
1 2 3 4 5
The Excess Funder Account Booster in action
End Year 2 End Year 3 End Year 4 End Year 5End Year 1
R9,600
R19,200 R28,800 R38,400 R48,000
Excess Funder Account Booster
Embedded Excess Funder Account
Opportunity for clients to build real long term insurance equity
Access 50% of the fund after three years
Excess Funder Account balance for a client on Advanced status with a motor premium of R750 per month and R400 monthly fuel rewards
Factors informing the restructure of Vitalitydrive rewards
75% of Vitalitydriverewards in fuel
96% of all fuel rewards earned at BP
Excess Funder Account balances
Maximum fuel rewards available to all clients with
supported policies
Boost BP fuel cash back
Embedded Excess Funder Account
R4m
1 3
75%
96%
Experience on supported policies
20%+
in
01
02
03ExcessFunder
Account
10%
Registrar guidelines to remove ‘non-risk’ travel and card rewards
Risk-based
reward
More than 1 in 3 Insure clients do not have a DiscoveryCard
2012 Strategic product objectives
2Create targeted incentives to drive a step change in road safety for young adult drivers
1
3
Restructure Vitalitydrive to simplify and enhance the benefits
Enhance coverage levels across the product
ExcessFunder
Account
50%
Young adults account for a disproportionately high frequency of motor vehicle accidents and accident related deaths
Over 90% of young adults drive late at night
Proportion of young adults driving late at night, 2012 survey
Drive during the day8%
Drive late at night92%
Motor vehicle accidents account for 75% of young adult deaths
Proportion of young adult deaths by cause
Natural25%
Motor vehicle accidents75%
NightDriver gives
discounted home drive services and preserves the
Rewards Fund balance
The Discovery Insure Young Adult plan
Up to 50% of
their BP fuel spend back in cash
25% of car
premiums into the Young Adult
Rewards Fund
• Up to R200 per month
paid into Rewards Fund based on Vitalitydrive status
• Reduced by R10 per km driven between 23:00 and
04:30
MONTHLY
BOOSTER
The Young Adult plan in action
25% of car premiums into Young Adult Rewards Fund
01Regular feedback to improve your driving
02
Every six months, you can withdraw the available money in the Fund
05
For every kilometreyou drive between 23:00 and 04:30, R10 is deducted from the Fund
04 NightDriver gives you access to RoadTrip or SmartGuyz at a substantial discount
or
23:00
04:30
Note: Extensive night driving will result in a premium increase after six months
Boost your Fund by driving well
03Drive Well
Base - R 200
Neutral R 0
Engaged R 50
Advanced R 200
Young adults can earn unprecedented rewards with Discovery Insure
• Name: Dan• Age: 22
Profile
• Fuel spend: R 800 per month• Car premium: R 680 per month
(no home insurance)• Driver status:
• Engaged for 2 months• Advanced for 4 months
• Night driving: 45 kms
Driving experience over 6 month period
Dan gains R2 670 overall from the Young Adult plan over 6 months
R 0
R 200
R 400
R 600
R 800
R 1 000
R 1 200
1 2 3 4 5 6
Month
Cumulative fuel rewards
Rewards fund after 6 months
R 0
R 500
R 1 000
R 1 500
R 2 000
25% of premiums
Vitality status booster
Night time driving
Cumulative value
Dan gains R1 200 from his fuel benefits
Dan gains R1 470 from his Rewards Fund
+
2012 Strategic product objectives
3 Enhance coverage levels across the product
1
2
Restructure Vitalitydrive to simplify and enhance the benefits
Create targeted incentives to drive a step change in road safety for young adult drivers
ExcessFunder
Account
50%
25%
Enhancements to liability cover and offroad use
Liability cover introduced for sailboats and jet skis
Caravan contents included in all risk cover
Enhancements to cover, removed restrictions on use of
car and extended territorial limits
Improved cover for accidental damage, goods in open and
cover for goods away from home
Broader range of cover for unspecified items
Cover enhancements effective 1 August 2012
Marketing support: Plan Guide
2012 Strategic product objectives
1
2
3
Restructure Vitalitydrive to simplify and enhance the benefits
Create targeted incentives to drive a step change in road safety for young adult drivers
Enhance coverage levels across the product
50%
25%
ExcessFunder
Account
10%
The Discovery Insure business cycle
1
2 3 4
5
25%
Experience review
Product enhancements
Marketing and clientsupport
Rewards change client behaviour
98% benefit coverage ratios
Unique client data provides strong predictor of insurance risk
Young adults display high risk driving behaviours
Vitalitydrive engagement lowers accident risk
Up to 50% of BP fuel spend back
Up to 10% of premium paid into your Excess Funder Account
Up to 25% of car premium paid into Young Adult Rewards Fund
Benefit enhancements in each area of cover
50%
ExcessFunder
Account
10%
2012 Marketing and client support
1
2
3
Leverage our breadth of data and analytic capabilities to improve premium efficiency for Select clients
Focus on areas to enhance the service experience for clients and advisers
Digitalise the advice and new business process
“Big data” can be used to generate significant financial value
Source: McKinsey Global Institute analysis
US health care
• $300 billion value per year
• ~0.7% annual productivity growth
US retail
• >60% increase in net margin possible
• 0.5–1% annual productivity growth
Global personal location data
• >$100 billion revenue for service providers
• Up to $700 billion value to end users
Manufacturing
• Up to 50% decrease in product development, assembly costs
• Up to 7% reduction in working capital
Discovery Insure is uniquely positioned to understand insurance risk
VEHICLE CHECK
Select client pricing model
Save
5%on premiums
Select clients automatically qualify for
a 5% discount in premium
Vitality status: Silver, Gold or Diamond
Select client qualifying criteria
1 2
DiscoveryCard: Goldor Platinum
Discovery Life plan ofR3 million or more
Silver
Gold
Diamond
ANDOR
Wellness engagement Socio-economic factors
100 000 clients automatically qualify for 5% premium discount
Select client pricing model
Save
5%on premiums
Select clients automatically qualify for
a 5% discount in premium
DiscoveryCardCredit risk profile and retail behaviour
Discovery Vitality Wellness choices
Discovery LifeBenefit choices and risk attitudes
Discovery Invest Risk attitudes
Dynamic behaviouralalgorithm assesses risk profiles across multiple
variables
Save up to
25%on premiums
Select clients can save as much as 25% on their
premiums
Automatically applied during quoting process
R 2,000
R 1,125
R 500
R 300
R 0
R 500
R 1,000
R 1,500
R 2,000
R 2,500
Discovery Insure premium Select discount Fuel rewards Excess Funder Effective premium
R500
The impact of being a Discovery Insure Select client
R150
Case study: Select client; R1 000 pm BP fuel spend; 1000 DQ Points; Car insurance premium: R1500
ADVANCED
R1 150 NetsavingR2,000 R500
R850
2012 Marketing and client support
2Focus on areas to enhance the service experience for clients and advisers
1
3
Leverage our breadth of data and analytic capabilities to improve premium efficiency for Select clients
Digitalise the advice and new business process
Save up to
25%on premiums
SmartService is providing Insure clients with a unique service experience
New business
• Over 16 000 plans already activated
• 84% of new business applications are finalised within 4 hours
• 96% of underwriting is completed within 4 hours
DQ-Track installations
• Over 20 000 installations completed by our experienced technicians
• Focus on client experience: currently rated at 9 out of 10
• Continue to see a positive trend
Rewards
• Over R8 million paid out in Vitalitydrive rewards
• Over R4 million held in Excess Funder Account balances
Benefits and services
• Over R60 million paid out in claims
• 76% of stolen vehicles recovered by DQ-Track
FastTrack service from SmartClaims
Laptops GPS devices E-readers
Smartphones Cameras MP3 player
Tablets
FastTrack Claims Promise
If we fail to deliver on our promise, we will waive the excess on your claim
FastTrack approved items will be replaced within 24 hours in Gauteng or 48 hours in other large metropolitan areas
NightDriver from Discovery Insure
NightDriver– providing Vitalitydrive members access to a network of accredited home drive services
Subscribe to RoadTrip or SmartGuyz
• Subscribe and receive a discounted monthly fee based on Vitalitydrive status
• Allocated number of kilometres per month - charged thereafter
• Discounts up to 25% based on Vitalitydrive status
NightDriver is available in the larger metropolitan areas
Use SmartGuyz services without a subscription
• Contact SmartGuyz and pay a flat fee of R100 – first 10km included
• Normal tariffs apply thereafter
• No registration necessary –SmartGuyz will verify Vitalitydrivemembership
OR
2012 Marketing and client support
3 Digitalise the advice and new business process
1
2
Leverage our breadth of data and analytic capabilities to improve premium efficiency for Select clients
Focus on areas to enhance the service experience for clients and advisers
Save up to
25%on premiums
The Discovery Insure product platform generates unprecedented value for clients
Dave’s carR1 300 premium
R1 000 Fuel spend800 DQ Points for
six months
Linda’s carR750 premium
R1 000 Fuel spend1000 DQ Points for
six months
Home insuranceR530 premium
The case study of Dave, his wife Linda, and his son Dan illustrates the key benefits
Dan’s carR680 premium;
Young Adult plan;R1 000 Fuel spend;
800 DQ Points two months; 1000 DQ Points four months;
45km of nighttime driving
Dave’s total insurance premium: R 3 407 per month
R 20 442
R 1 470R 840
R 8 200
R 16 400
Premium Cash rewards Excess Funder Account
The Discovery Insure and Vitalitydrive product platform generates unprecedented value for Dave and his family
Premium compared to cumulative rewards in 6 months
Young Adult Rewards Fund
Embedded Excess Funder Account
Cash fuel rewards
25% ExcessFunder
Account
10%
47% of Dave’s premiums paid out in cash rewards
R 20 442
R 1 470
R 8 200
R 16 400
Premium Cash rewards Excess Funder Account
The Discovery Insure and Vitalitydrive product platform generates unprecedented value for Dave and his family
Premium compared to cumulative rewards in 6 months
Young Adult Rewards Fund
Embedded Excess Funder Account
Cash fuel rewards
Excess Funder Account Booster
84%of Dave’s premiums paid into his Excess Funder Account
100%BOOSTER
SmartQuote from Discovery Insure
2012 Marketing and client support
1
2
3
Leverage our breadth of data and analytic capabilities to improve premium efficiency for Select clients
Focus on areas to enhance the service experience for clients and advisers
Digitalise the advice and new business process
Save up to
25%on premiums
The Discovery Insure business cycle
1
2 3 4
5
25%
FASTTRACK
SMARTQUOTE
Save up to
25%on premiums
Experience review
Product enhancements
Marketing and clientsupport
Rewards change client behaviour
98% benefit coverage ratios
Unique client data provides strong predictor of insurance risk
Young adults display high risk driving behaviours
Vitalitydrive engagement lowers accident risk
Up to 50% of BP fuel spend back
Up to 10% of premium paid into your Excess Funder Account
Up to 25% of car premium paid into Young Adult Rewards Fund
Benefit enhancements in each area of cover
Select clients get up to 25% off their
premiums
FastTrack replaces portable possessions
within 48hours
Digital advice process for Insure
advisers
50%
ExcessFunder
Account
10%
Discovery Insure 2012 Update