Post on 28-Dec-2015
The Marketing & Servicing of Short Term BusinessDirect or Intermediary?
IISA Conference – Sun City 10th – 12th June 2012Perspective by :
Guy Scott
CEO Aon Risk Solutions
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10 th – 12th June 2012
Agenda
Market dynamics A place for both The Customer/Consumer Evolution of social media driving consumer behavior Professionalism of our Industry Concluding remarks Q&A – audience participation
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012 2
Consumer triangle
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012 3
Consumer drivers
Buying indicators (commoditised business): Simplicity and transparency. Value clearly demonstrated, reflecting a balance between price, product features and
that product is right for their needs. Buying process convenient and transparent to enable purchasing with confidence. Service delivery against expectations. Factual advice Exceptional claims service
Buying indicators (mid market): Simplicity and transparency. All of the above and advice using judgment Bespoke broking
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012 4
A Case for Intermediation
McDonalds – “hot coffee law suit” Liability Matter : Liebeck v Mc Donald’s Restaurants
– Compensatory Damages – R 1.6m
– Punitive Damages – R 21.6m
Total Claim – R23.2m
What liability limits and spectrum of cover do SA franchised operations have?
Will they get the requisite advice in terms of liability cover going direct?
Will a proper risk analysis be done?
What is the impact on brand and how do you mitigate this risk?
5Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012
Professionalism – The FAIS Act
Market conduct legislation – the financial services market in its entirety Codes of conduct amongst other things include:
– Avoidance of fraudulent and misleading advertising, canvassing and marketing
– Certain direct markets are practicing undesirable business practices Giving advice which incorporates the exercising of judgment
– Make a recommendation
– Provide guidance
– Provide a proposal Differentiated from factual advice Most intermediary’s provide a combination of both intermediary service and advice Higher level of competency in the intermediary model through registered key
individuals and representatives Continuous professional development
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012 6
Professionalism – Unethical Business Practice
- Last Tango Advert “Cut out the middleman” Undesirable business practice in terms of Section 34 of the FAIS Act: Registrar needs to consider the following:
7
The business practice must have, or is likely to have, a direct or indirect effect resulting in:
•Harming the relationship between FSP’s or any FSP or category of FSP’s, and clients or the general public. •Unreasonable prejudice to clients. •Deceiving any client. •Unfairly affecting any client. •Continuation will defeat one or more of the objectives of the FAIS Act.
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012
Advantages of Intermediation
Significant product knowledge Pricing awareness Independence Affordability Knowledge of emerging risks - risks are changing Market leverage Innovation Qualified skills – KI’s and reps Specialist knowledge Client centric Broad spectrum of choice Claims advocacy Trusted advisor – no vested interests
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012 8
Concluding Remarks
A place for both – SA will remain a strong intermediated channel. Market share will stabilise at the global average of 75/25 in favor of the
intermediated channel. The shift in market share will be determined by which channel adapts to market forces
quickest. Professionalism and ethical standards should be consistently applied – direct
markets flaunting the advertising standards and FAIS Act should be taken to task. Technology - internet, mobile telephony will play a major role in the process but
traditional channels will remain important. The consumer, customer, client “is king “ and still wants face to face interaction
– Listen to the voice of the customer
– Customers want to be able to buy with confidence
– Trust a major factor
“Long live the intermediary”
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012 9
Q&A – Audience Participation
Questions to audience:
1. Do you think that there is a role for both channels direct and intermediary channels?
– 1. strongly disagree 2.disagree 3.not sure 4.agree 5. strongly agree
2. Is technology going to be the main driver of change in the insurance sector?
– 1. strongly disagree 2.disagree 3.not sure 4.agree 5. strongly agree
3. Are ethical standards being adhered to by certain direct markets in advertising?
– 1. strongly disagree 2.disagree 3.not sure 4.agree 5. strongly agree
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012 10
Q&A – Audience Participation
Questions to audience:
Drivers of customer choice – rank highest to lowest:
1. Online access i.e. internet when researching & purchasing
2. Personal interaction when buying
3. Call center communication
4. Simplicity and transparency of product offering
5. Brand of business
Choice of interaction in insurance purchasing – rank highest to lowest:
1. Via an intermediary
2. On line purchasing - internet
3. Via direct market
4. Mail shot
5. Face to face
Aon South Africa (Pty) Ltd) | Aon Risk SolutionsProprietary & Confidential) | IISA Sun City Conference 10th – 12th June 2012 11