Insurance Australia Group Ltd · ASX:IAG
Insurance Australia — Investor Day (April 2014)
48 slides from Insurance Australia's investor day presentation, Apr 15, 2014
Slide 1: IAG in Focus: Australia Direct
15 April 2014 ABN 60 090 739 923 IAG IN FOCUS AUSTRALIA DIRECT
Slide 2: Important Information
IMPORTANT INFORMATION This presentation contains general information in summary form which is current as at 15 April 2014. It presents financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Stan
Slide 3: Agenda
AGENDA WELCOME AND IAG OVERVIEW Mike Wilkins AUSTRALIA DIRECT Andy Cornish CUSTOMER INSIGHTS & DIGITAL Alison Ledger PRICING Tracy Green SUPPLY CHAIN & CLAIMS Anthony Justice SUMMARY AND Q&A Andy Cornish 3
Slide 4: IAG Overview
IAG OVERVIEW Mike Wilkins Managing Director and Chief Executive Officer
Slide 5: IAG Strategic Priorities
IAG STRATEGIC PRIORITIES A CLEAR FOCUS ON AUSTRALIA, NEW ZEALAND AND ASIA 5
Slide 6: Australia Direct: A Substantial and High-Performing Business
AUSTRALIA DIRECT A SUBSTANTIAL AND HIGH-PERFORMING BUSINESS % OF GROUP GWP* % OF GROUP INSURANCE PROFIT* 48% 54% *Based on 1H14 results 6
Slide 7: Australia Direct Overview
AUSTRALIA DIRECT OVERVIEW A SUSTAINABLE BUSINESS IN A STRONG MARKET POSITION Andy Cornish Chief Executive Officer, Australia Direct
Slide 8: Australia Direct: A Leading National Presence with Iconic Brands
AUSTRALIA DIRECT A LEADING NATIONAL PRESENCE WITH ICONIC BRANDS KEY OPERATIONAL STATISTICS ~3.5 million customers Multi-channel model − >200 branches and agencies − 7 call centres across the country (~7.2 million phone calls per annum) − Internet and mobile device offering ~500,000 short-tail
Slide 9: Diversified Product and Geographical Mix
DIVERSIFIED PRODUCT AND GEOGRAPHICAL MIX ANNUAL GWP IN EXCESS OF $4.5 BILLION GWP BY CLASS* GWP BY STATE* 2% 5% 5% 7% NSW/ACT 19% Motor Victoria 44% Home 19% Queensland CTP WA Other 67% SA/Tas/NT 32% *Based on 1H14 results 9
Slide 10: Extended Record of Superior Performance
EXTENDED RECORD OF SUPERIOR PERFORMANCE MAINTAINING STRONG PROFITABILITY AND MARKET POSITION 5,000 GWP AND MARGINS: FY09-1H14 25.0% 4,500 19.7% 20.1% 19.5% 4,000 20.0% 16.9% 3,500 15.2% 3,000 15.0% 12.1% 15.9% 14.9% 15.1% 2,500 14.3% 13.5% 2,000 12.0% 10.0% 1,500 1,000 5.0% 3,381 3,653 3,891 4,299 4
Slide 11: Scale and Efficiency: Relentless Drive on Costs
SCALE AND EFFICIENCY RELENTLESS DRIVE ON COSTS EXPENSE RATIOS: FY09-1H14 Disciplined focus on cost effectiveness in a streamlined operating model 21.8% 4.1% 19.8% 19.4% 19.7% 19.2% Realised savings reinvested to 18.2% 4.2% enhance ability to deliver customer 4.4% 5.1% 2.2% 5.2% 4.7% focused stra
Slide 12: Australia Direct's Strategy
AUSTRALIA DIRECT’S STRATEGY FOCUS ON CUSTOMER EXPERIENCE AND COST EFFECTIVENESS AUSTRALIA’S FAVOURITE LOCAL INSURER Our colleagues consistently deliver great customer service Multi-channel Build and sustain winning partnerships CONSISTENT ACCESSIBLE CUSTOMER INFORMED Assessment and management of ris
Slide 13: Customer Insights
CUSTOMER INSIGHTS DRIVING VALUE THROUGH DEEP CUSTOMER UNDERSTANDING Alison Ledger Executive General Manager Product, Pricing and eBusiness
Slide 14: Australia Direct's Strategy
AUSTRALIA DIRECT’S STRATEGY FOCUS ON CUSTOMER EXPERIENCE AND COST EFFECTIVENESS AUSTRALIA’S FAVOURITE LOCAL INSURER Our colleagues consistently deliver great customer service Multi-channel Build and sustain winning partnerships CONSISTENT ACCESSIBLE CUSTOMER INFORMED Assessment and management of ris
Slide 15: Building Deep Customer Understanding
BUILDING DEEP CUSTOMER UNDERSTANDING USING HUMAN CENTRED DESIGN TO BUILD EMPATHY Human Centred Design (HCD) is an innovation process with three iterative phases: Insight DESIRABILITY Co-creation Action HCD enables us to: Develop deep customer knowledge and understanding VIABILITY FEASIBILITY
Slide 16: Designing Experiences to Meet Customer Expectations
DESIGNING EXPERIENCES TO MEET CUSTOMER EXPECTATIONS DELIVERING VALUE WITH A SUPERIOR EXPERIENCE DIFFERENTIATED, VALUE-DRIVING EXPERIENCES THAT BOTH CUSTOMERS AND COLLEAGUES ENJOY Using our expertise to help customers make wiser ACTIVE ASSISTANCE decisions about risk and insurance Ensuring customers
Slide 17: Quickly Deploying Customer Insights to Market
QUICKLY DEPLOYING CUSTOMER INSIGHTS TO MARKET BETTER RECOGNITION OF LOYALTY AND VALUE A LOYALTY DISCOUNT THAT’S EASY TO UNDERSTAND 25+ 12.5% 15% 17.5% 20% 22.5% 25% Locked in YEARS OF RELATIONSHIP 10-24 10% 12.5% 15% 17.5% 20% 22.5% 5-9 7.5% 10% 12.5% 15% 17.5% 20% 3-4 5% 7.5% 10% 12.5% 15% 17.5% 0-
Slide 18: Evolving Customer Advocacy Program
EVOLVING CUSTOMER ADVOCACY PROGRAM EMBEDDING NET PROMOTER SCORE AS AN OPERATIONAL DISCIPLINE HOW LIKELY WOULD YOU BE TO RECOMMEND OUR INSURANCE TO FAMILY, FRIENDS OR COLLEAGUES? 18
Slide 19: Focused on Driving Customer Advocacy
FOCUSED ON DRIVING CUSTOMER ADVOCACY POSITIVE TREND AND VALUE ESTABLISHED PROMOTERS, PASSIVES AND DETRACTORS Promoters are more valuable because they: Hold more policies with us 28% 39% Spend more money with us Promoters Stay with us longer 33% Passives 37% Detractors Are worth 2.8 times mor
Slide 20: Digital Offering
DIGITAL OFFERING PROVIDING MARKET LEADING SOLUTIONS Alison Ledger Executive General Manager Product, Pricing and eBusiness
Slide 21: Australia Direct's Strategy
AUSTRALIA DIRECT’S STRATEGY FOCUS ON CUSTOMER EXPERIENCE AND COST EFFECTIVENESS AUSTRALIA’S FAVOURITE LOCAL INSURER Our colleagues consistently deliver great customer service Multi-channel Build and sustain winning partnerships CONSISTENT ACCESSIBLE CUSTOMER INFORMED Assessment and management of ris
Slide 22: Technology Development: Rapid Change to Continue
TECHNOLOGY DEVELOPMENT RAPID CHANGE TO CONTINUE WHAT WILL THIS SCENE LOOK LIKE IN 2021? St Peter’s Square, Papal announcement Source: NBC Today show 22
Slide 23: Online Website Traffic Growth
ONLINE WEBSITE TRAFFIC GROWTH A SIGNIFICANT SHIFT IN CUSTOMER PREFERENCE SHARE OF TOTAL INSURANCE SECTOR WEBSITE The NRMA lnsurance brand leads the insurance TRAFFIC - TOP 6 GENERAL INSURERS sector (both general and life) in terms of website traffic, with 1.3 million visitors in February 2014 Tr
Slide 24: Digital Offering: Providing Choice and Leading in Mobile
DIGITAL OFFERING PROVIDING CHOICE AND LEADING IN MOBILE DESKTOP & TABLET IPHONE ANDROID 24
Slide 25: Self-Service Centre
SELF-SERVICE CENTRE EMPOWERING CUSTOMERS TO ‘DO-IT-YOURSELF’ 25
Slide 26: Fully Responsive Across All Devices
FULLY RESPONSIVE ACROSS ALL DEVICES INTEGRATED MULTI-CHANNEL PLATFORM 26
Slide 27: Pricing
PRICING LEADING RISK ASSESSMENT AND SELECTION CAPABILITY Tracy Green Head of Commercial Pricing & Underwriting
Slide 28: Australia Direct's Strategy
AUSTRALIA DIRECT’S STRATEGY FOCUS ON CUSTOMER EXPERIENCE AND COST EFFECTIVENESS AUSTRALIA’S FAVOURITE LOCAL INSURER Our colleagues consistently deliver great customer service Multi-channel Build and sustain winning partnerships CONSISTENT ACCESSIBLE CUSTOMER INFORMED Assessment and management of ris
Slide 29: International Pricing Capability Benchmark
INTERNATIONAL PRICING CAPABILITY BENCHMARK A GLOBAL LEADER IN UNDERSTANDING RISK 2009 2013 International best practice Pricing Capability Assessment Motor Home 1 2 3 4 5 1 2 3 4 5 • A. Data quality and extent Technical • B. Modelling capabilities and techniques pricing capabilities • C. Cost trendin
Slide 30: Pricing Granularity Capabilities
PRICING GRANULARITY CAPABILITIES LEVERAGING DATA TO OUR ADVANTAGE ANOTHER INSURER’S RISK (with limited or no geocoding AUSTRALIA capability) DIRECT’S RISK (based on geocoding that incorporates topography) 30
Slide 31: 1:1 Pricing
1:1 PRICING DEEP AND GRANULAR UNDERSTANDING OF TECHNICAL RISK LOCATION BASED RISK bushland bushland park 31
Slide 32: Global Leaders in Geospatial Data
GLOBAL LEADERS IN GEOSPATIAL DATA PROTECTING CUSTOMERS AND IDENTIFYING PROFITABLE RISKS Australia Direct’s geocoding capability is world class It enables rapid response to customer insights to meet changing needs – e.g. identifying where a house is located on a property produces a more accurate
Slide 33: Supply Chain
SUPPLY CHAIN LEVERAGING SCALE TO IMPROVE QUALITY, COST AND CUSTOMER EXPERIENCE Anthony Justice Acting Chief Operating Officer
Slide 34: Australia Direct's Strategy
AUSTRALIA DIRECT’S STRATEGY FOCUS ON CUSTOMER EXPERIENCE AND COST EFFECTIVENESS AUSTRALIA’S FAVOURITE LOCAL INSURER Our colleagues consistently deliver great customer service Multi-channel Build and sustain winning partnerships CONSISTENT ACCESSIBLE CUSTOMER INFORMED Assessment and management of ris
Slide 35: National Supply Chain
NATIONAL SUPPLY CHAIN A UNIQUE PROPOSITION IN THE AUSTRALIAN INSURANCE SECTOR PARTNERSHIP COMMERCIAL CUSTOMER Mutual dependency Reduced cost Quality Self-selected Improved brand reputation Choice Benchmarking opportunity Fewer rectifications Speedy repairs DRIVING SIGNIFICANT IMPRO
Slide 36: Partnership: Transformation Over the Last 5 Years
PARTNERSHIP: TRANSFORMATION OVER THE LAST 5 YEARS OPTIMISING THE NUMBER OF QUALITY PARTNERS CREATING STRATEGIC PARTNERSHIPS WITH A SMALLER NUMBER OF SUPPLIERS 2009 Metropolitan areas only SUB-SCALE, FRAGMENTED AND INEFFICIENT Smash repairers Builders Contents suppliers 2009 500 110 200 2014 150 49 3
Slide 37: Customer: Motor Repair Quality Framework
CUSTOMER: MOTOR REPAIR QUALITY FRAMEWORK PROTECTING CUSTOMERS, DRIVING BETTER REPAIR OUTCOMES QUALITY At least 10% of vehicles repaired are subject to a Quality Inspection Use of genuine parts Public reporting on quality, safety and fraudulent repairs, as well as annual audits of smash repair
Slide 38: Commercial: Motor Supply Chain Efficiencies
COMMERCIAL: MOTOR SUPPLY CHAIN EFFICIENCIES REDUCED REPAIR COSTS, IMPROVED CUSTOMER SERVICE AVERAGE MOTOR REPAIR COSTS Reduced complexity and cost of supplier management SA ROLLOUT NSW & ACT ROLLOUT VICTORIA ROLLOUT WA Deeper understanding of supplier ROLLOUT business and ability to share in inc
Slide 39: Creating Customer and Repairer Advocacy
CREATING CUSTOMER AND REPAIRER ADVOCACY 39
Slide 40: Claims Management
CLAIMS MANAGEMENT TRANSFORMING OUR OPERATIONS TO LEAD IN CUSTOMER EXPERIENCE Anthony Justice Acting Chief Operating Officer
Slide 41: National Claims Operating Model
NATIONAL CLAIMS OPERATING MODEL EVOLVING TO MAINTAIN MARKET-LEADING CUSTOMER SERVICE OUR PEOPLE ‘One team’ Engaged Optimised workforce and enhanced productivity NATIONAL OPERATING MODEL MARKET- CUSTOMER-CENTRIC PROCESSES Home Claims Motor Claims Niche Claims Management LEADING Operations Asses
Slide 42: A Strategic Differentiator in Claims Experience
A STRATEGIC DIFFERENTIATOR IN CLAIMS EXPERIENCE DRIVING VALUE AND EXCEEDING CUSTOMER EXPECTATIONS END-TO-END End-to-end claims management – lodgement, assessment, management and settlement MANAGEMENT Reduced cycle time MULTI-CHANNEL Ability for the customer to lodge via their preferred channel
Slide 43: Major Event Response
MAJOR EVENT RESPONSE A CLEAR SERVICE DIFFERENTIATOR Exceptional responsiveness to customers during major events − First on the scene − Mobilise local expertise − Customer certainty Scale and capability allow us to respond to multiple events without compromising service Streamlined and consiste
Slide 44: Using Technology to Increase Speed and Quality
USING TECHNOLOGY TO INCREASE SPEED AND QUALITY WE LEAD THE MARKET IN DIGITAL CLAIMS CAPABILITIES 44
Slide 45: Australia Direct: A Sustainable Business in a Strong Market Position
AUSTRALIA DIRECT A SUSTAINABLE BUSINESS IN A STRONG MARKET POSITION Andy Cornish Chief Executive Officer, Australia Direct
Slide 46: Australia Direct's Strategy
AUSTRALIA DIRECT’S STRATEGY FOCUS ON CUSTOMER EXPERIENCE AND COST EFFECTIVENESS AUSTRALIA’S FAVOURITE LOCAL INSURER Our colleagues consistently deliver great customer service Multi-channel Build and sustain winning partnerships CONSISTENT ACCESSIBLE CUSTOMER INFORMED Assessment and management of ris
Slide 47: Australia Direct – FY14 Outlook
AUSTRALIA DIRECT – FY14 OUTLOOK FLAT GWP, IMPROVED UNDERLYING MARGIN FY14 REPORTED UNDERLYING UNDERLYING INFLUENCES OUTLOOK GWP GWP MARGIN Motor ↔ ↔ ↑ Home ↔ ↑ ↑ Cessation of Victorian FSL CTP ↓ ↑ ↑ Competitive changes (Queensland / ACT) Australia Direct ↔ ↑ ↑ FY14 OUTLOOK Australia Direct Relativ
Slide 48: Questions
QUESTIONS
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