© Swedbank

Bancassurance implementation in the Baltic countries

National Bancassurance Conference

Chisinau, November 2013

Mindaugas JusiusCEOSwedbank Life Insurance SE

© Swedbank

2. Convenience = simplicity

Our slogan “Peace of Mind”

• Simple • Convenient• Transparent (Open)

KISS

KeepItSimpleStandardized (Stupid)

Develop such products for the bank, which would your broker or tied agent will not be willing to sell at all.

© Swedbank

3. Target clients based on their needs

Bancassurance strength is access to:

• Customer income, age• Behavior data

• Lending- mortgage- consumer loans- leasing- credit cards

• Families• Childs

© Swedbank

Products and Processes

© Swedbank

Swedbank Life Insurance SE Bancassurance offering

Group Sub-Group Offering in

Latvia

Offering in Lithuania

Offering in

Estonia

Protection solutions Mortgage protection

Pure risk protection

Savings solutions Pension saving

Child saving

Investment solutions Investment (unit-linked) products

Other Corporate motivation schemes

Annuities

x

x

x

x

© Swedbank

Credit life..From “buy insurance with mortgage

loan” to protected mortgage loan

Product Credit life

Marketing name Protected mortgage loan

Positioning The aim is to cover mortgage loan in case one of mortgage borrower or co-borrower dies becomes disable during the contract term and not to leave obligations to relatives.

Targeted customers Swedbank Retail & Affluent customers with mortgage loans

Channel Mortgage sales channel

KPIs Volume based mortgage portfolio penetration

© Swedbank

Reviewed offering for the customer

7

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Previous traditional offer

New credit life

© Swedbank

Credit life process changes

8

Simplified health questionnaire

(8 or 15 easy to understand questions depending on the sum insured)

Fully integrated sales process with loan issuing (“one click”, no paper document

flow)

Tele-underwriting

Automatic premium collection from customers account

© Swedbank

Credit life penetration

9

Up to 80%

penetration with new loans

40%

penetration in the total mortgage portfolio

85%

Average loan protection

Credit life sales in Baltic Banking

0

5,000

10,000

15,000

20,000

25,000

30,000

2006 2007 2008 2009 2010 2011 2012

© Swedbank

Can price increase stimulate more sales?

10

New credit life sales in Latvia

2006 2007 2008

Grand Total credit life (with savings)

Grand Total credit life (pure protection)

Pure protection product can be considered 25% more expensive due to tax system, but simplicity and easy access creates more value for sales people and customers

© Swedbank

Can price increase stimulate more sales?

11

Pure protection product price was set based on customer survey

New credit life sales in Lithuania

2006 2007 2008

© Swedbank

Other products

© Swedbank

Positioning of protection insurance products

Product Credit life Simple term life Affluent term life

Marketing name Protected mortgage loan Family income protection Family income protection plus

Positioning The aim is to cover mortgage loan in case one of mortgage borrower or co-borrower dies becomes disable during the contract term and not to leave obligations to relatives.

The aim is to provide financial compensation for families in case family income decrease due to death of earner.

The aim is to provide financial compensation for families in case family income decrease due to death of earner.

Targeted customers Swedbank Retail & Affluent customers with mortgage loans

Swedbank Retail active Swedbank Affluent & VIP

Channel Mortgage sales channel Tellers Personal managers, Private banking

KPIs Volume based mortgage portfolio penetration

Net sales Net sales;

Risk under management

© Swedbank

Positioning of saving&investment insurance products

Product Pension insurance Saving insurance Investment insurance

Marketing name Safe Pension Fund Child fund Private portfolio, Investment fund portfolio

Positioning The aim is to accumulate sufficient money to be used after retirement.

The aim is to accumulate a fund which would enable financing studies or other needs of grown child.

The aim is to protect or increase the assets in medium-term perspective.

Targeted customers Swedbank Retail & Affluent customers & VIP

Swedbank Retail active & Affluent customers

Swedbank Affluent & VIP

Channel Tellers Tellers Personal managers, Private banking

KPIs Number of contracts Number of new contracts Assets under management

© Swedbank

Channels and processes

..from a stand alone solutions to fully integrated processes and systems

© Swedbank

Central IT System Supported by Insurance Dedicated IT team Is A Competitive Advantage

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takes info from:

• Internal core systems

sends info to

• Internal core systems • CRM systems• Payment systems • Finance systems • Data Warehouse • Alerts/Notice/Letter systems • Reporting systems • etc

Database & Code

Front-office application

(integrated to bank)

Internetbank application

(integrated to bank)

Back-office application

© Swedbank

Physical and E-Channels

• All products available in bank branch are also available in the Internet bank– Internet bank sales reached ca. 10%

• Majority of follow-up service functionality is available in the Internet bank (changes, reporting, graphs, etc.)– Ca. 50% of follow-up services done in the Internet bank

• Quality double-check, channel integration is used for “advice-intensive” operations – e.g. pre-advice over the phone is required before canceling an agreement in the Internet bank

• One application development & same interfaces – e.g. the advisor’s view is the same as the customer’s view in the Internet bank, making it easy to give

advice over the phone

• Straightforward processes (immediate, automatic execution)– e.g. >50% credit life policies are underwritten immediately at point of sales incl policy issue – e.g. ca. 80% of tele-interviews are completed within 2 working days followed usually by customer

confirmation using Internet bank

17

© Swedbank

Thank you!

© Swedbank

Key success factors

© Swedbank

1. Financial model

Profit sharing, but not sales commissions

Better customer selection, less claims

Interest for after-sales service

Open doors for integrated solutions

© Swedbank

4. Act as a regular wholesaler

How would you sell Santa Maria spices in ICA stores?

1 stepEnter

2 stepMake ICA customer choose you

© Swedbank

5. Integrate systems and processes

• Integrate insurance offering with other bank products• Align interface formats ”colors and fonts”

© Swedbank

Key Success Factors: Insurance Company <=> BankHow to Keep The Wheel Running?

• Systematic co-operation models • Mutual financial interest & bank support for the insurance business

• Clear, value-added productsand services, avoid internal competition

• Middle-class focus oriented to large volumes and scale effect

• Simplified products and processes (stand-alone risk vs. saving products, tele-underwriting)

• Integrated solutions (channels, IT systems, Internet bank, products, etc.)

• Remove all complexity from channels(e.g. claims and underwriting)

• Strong product support• Competent sales channel • Visibility and PR (both internal

and external)