alhuda cibe - best practices from e-insurance to e-takaful by sami guello
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Sami Guellouz Dubaï 06-04-2005 1
Best practices : from e-insurance to e-takaful1st e-takaful seminar
Dubaï 06-04-2005 2
OverviewE-business definitionE-business strategy road mapE-insurance overviewE-takaful
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E-business
m-commerce
Electronic commerce
E-Business
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E-businessUse of of electronic means to conduct an organization’s business internally and/or externallyInternal e-business
Better info sharing, knowledge dissemination management reporting
External e-business Formulation of a sales promotion, Collaboration with partners
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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)
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m-commerceSubset of e-commerceSimilar online activitiesUnderlying technology is more specific
Limited to mobile telecom networks Accessed through wireless hand-held
devices (mobile phones, hand-held computers, personal digital assistants)
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OverviewE-business definitionE-business strategy road mapE-insurance overviewE-takaful
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E-business strategy roadmap
Vision formulationBusiness objectives definitionCustomer value creationMarket segmentation and targeting Organizational set upE-business model formulation
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Pre-requisitesManagers need to be «catalysts of change » Combine positive traits of both the « visionary »
and the « efficient performer » High levels of both creativity and analytical
ability Know that ideas by themselves are not enough
to build a profitable business Able to find new ideas by analysing state-of-the
art cies within their industry and across other industries
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Vision formulationTwofold goals : Focus attention and effort of top
management and employees around a common task
Encourage creativity and innovation by expanding your thinking beyond the existing boundaries of the cy and its environment
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Business objectives definition
Objectives have to be measurableAllow progress tracking Ex : % of savings amount due e-business strategy implementation
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Business objectives definition
Objectives have to be measurableAllow progress tracking Ex : % of savings amount due e-business strategy implementation
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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)
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Market segmentation Closely linked to value creationTwo steps : Select criteria for dividing you market
into segments age, income for instance Consumer (personal lines), corporate
(commercial lines) Decide which segment to target
Segment’s needs driven products and services
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Organizational set upWhat scale? Analysis of expected cost structure of e-
business activities Analysis of each activity of the value chain Analysis of its underlying cost drivers
What scope? Products scope Leverage the internet to establish partnerships
with complementorsHow integrated?
Which e-business activities to perform in-house and which ones to outsource?
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Organizational set upHow to align physical-world strategy with e-strategy? Stragtegic decisions
Branding, pricing, IT and channel conflictWhat structure? Integrated into the existing organization
Leverage brand to attract customers to online channel
Multi-channel offering becomes possible, cross promotions, shared IT
Set up inside a separate entity
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Business modelCost structure? Consider individual parts of te value chain
Production, IT, marketing, sales an after sales service How 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
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OverviewE-business definitionE-business strategy road mapE-insurance overviewE-takaful
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Business models for e-insurance
Insurance cy’s websites homepages of individual insurers
Products portals Comprehensive standard websites for insurance
Aggregators Internet insurance brokers
Online risk markets Large risks placed with trading partners
Point of sale portals product marketing through various theme-based
pages
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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)
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Internet-product suitability
Low HighProduct complexity
Lo wTr
ansa
ctio
n vo
lum
eH
ig h * Large commercial risks
* Health insurance
* Commercial motor
* Household
* Motor
* Term life
More advice/ Less
suitable
* Index linked life products
* Annuity products
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E-insurance advantagesImportant market share gain potential
Standardised personal lines insuranceLimited suitability for sale via internet
Most life and pension products, health insurance, commercial insurance
Enormous potential for improvements in quality and service levels
Better tailored products Shorter reponse times Greater flexibility in cover structure Better risk management support
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E-business increases efficiency
Sales, administration, claims settlement, claims payment expenses
decrease for both personal and commercial lines
Personal lines cost cut potential > Commercial lines cost cut potential
High level of advisory services and tailor made products
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Market entry barriers lowered
New entrants can avoid long and expensive setting up of traditional sales network“Lateral” from other sectors benefit from easier access
Financial services, internet cies, banks, online brokers, internet service providers
Internet presence and brand name to add insurance to their product range
More efficiency Established insurers face growing competitive pressure
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Towards more integrated e-business models
E-business makes it possible to disseminate information quickly and in large volumesTraditional value chain is deconstructed and certain links are outsourced to specialist providers
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Internet impact on value chain
Product development & rating Standardisation, data availability and analysis, new risks
Marketing New marketing opportunities, deintermediation,
reintermediationAdministration
Standardisation, automationAsset management
Better informationClaims management
Automation, proximity to the customer, additional services
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Potential providersProduct development & rating
Actuarial firmsMarketing
Trading cies, financial services providers, virtual brokers and markets
Administration Policy administrators, IT companies
Asset management Asset managers, funds, banks
Claims management Professional claims managers, call centres, Repair
companies
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Role of traditional brokers is shifting
Standard products Considerable competition
Products that need more advice and for which prices and benefits are not easy to compare
Using e-business, more finance management and risk consulting services
Ex : complex pension products, commercial lines
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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
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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
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OverviewE-business definitionE-business strategy road mapE-insurance overviewE-takaful
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Insurance not permissibleUncertainty (Gharar)Gambling (Maisir)Interest (Riba)
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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
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E-takafulYoung industry Can leverage on the conventional insurance e-
experience Comprehensive e-business strategies should be
built (eventhough takaful is a high level brand)Takafulconcept & internet suitability E-business enhances the transparency
(involved by the takaful concept) E-business favor the participant’s
empowerment (involved in the takaful concept)
Sami Guellouz Dubaï 06-04-2005 35
Thank youSources
Swiss Re, Sigma n° 5/2000Strategies for e-business, Prentice
Hall, Financial Times
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