1. business and industrial
2. advertising and marketing
3. telemarketing

Admiral Group plc - Why we are successful.
Pricing – Peter Marissen
24/02/2010 14:55:37
Pricing
We decide which price to charge each customer
Mainly pricing analyses focus on how different parts of the
portfolio perform relative to each other
Decisions are based on claims results and price sensitivity
24/02/2010 14:55:37
Data
We ask more questions than other insurers
e.g. occupations, licence months
We are major users of external data
Credit data
Vehicle data
Demographic data
Claims data (CUE)
The q
quality
good
y of our data is very
yg
direct insurer
monitoring
external data
post-sale validation
24/02/2010 14:55:37
Analyses
•
Emphasis on in-house developed methods
•
A high level of detail
•
Use of traditional pricing methods (GLMs) where appropriate
•
Constant review of rates, and quick implementation of changes
24/02/2010 14:55:37
Ratechanges for 2008 (so far)
Q1 2008
4-Jan
4
Jan
7-Jan
7-Jan
11-Jan
11-Jan
16-Jan
16
Jan
23-Jan
25-Jan
29-Jan
29-Jan
31-Jan
1-Feb
6-Feb
8-Feb
8-Feb
13-Feb
15 F b
15-Feb
22-Feb
22-Feb
26-Feb
4-Mar
4-Mar
11-Mar
19-Mar
Q2 2008
Voluntary excess
TP Only on Confused
Confused: Females 3+ vehicles to Admiral
GC, MSM & Bell AGP Int all same rates
DD +2% on aggregators
NCBP on MoneySuperMarket +5%
5%
Modifications
Lic Years 0-12 for GoCompare
OwnUse Standard & MultiCar
Scrutiny high premium rule to £4,000
MSM Males to AD from Bell
Tesco Compare Live AD & DI
TP Only on Go Compare
Rule: Unemployed Class of Use
MSM Bell Business
Modifications for Minis
M ltiC Ri
MultiCar
Risks
k vs D
Drivers
i
Age change for Northern Ireland
CTM quote for all risks AD & DI
Base Rate New Business
Right Hand Drive
UK residency
Base Rate New Business
Call Connection Live AD & DI & EL
4-Apr
4
Apr
4-Apr
11-Apr
15-Apr
15-Apr
23-Apr
23
Apr
24-Apr
25-Apr
29-Apr
7-May
19-May
21-May
22-May
13-Jun
13-Jun
18-Jun
18 J
18-Jun
26-Jun
27-Jun
Q3 2008
Equal Instalments - 100% Live
Base Rate New Business
TP Only on BTQ
Socio-Demographics
Rated Driver Rule Age criteria change
Block business use for Delivery Driver
LTSB Insurance.co.uk Live AD & DI & BL
Bell Business cheapest on LTSB
Imports from Confused filter change
Price Trials
TP Only on IW
Retired under age 45
Bell Business Call Connection Live
Post Code Town
MultiCar Region
Bell Business for Call Connection
I
Imports
t from
f
Confused
C f
d rate
t change
h
Cover VehAge Value
Remove Renewal price trial
15-Jul
15
Jul
15-Jul
16-Jul
18-Jul
22-Jul
24-Jul
24
Jul
29-Jul
29-Jul
1-Aug
14-Aug
15-Aug
22-Aug
22-Aug
28-Aug
1-Sep
EEC License
Non-Motoring convictions
AGP Direct Internet AD, DI & EL, MSM AD
Remove New Business price trial
Max Vehicle age Rule
Convictions
Exotics
Voluntary excess
Base Rate increase
Bell Business for Go Compare
Named Driver Lic Years
Sex and Age
Unemployed by class of use
Tracker
Base Rate increase
24/02/2010 14:55:37
Philosophy of pricing : what is a good risk?
We like everyone – as long as the price is right
24/02/2010 14:55:37
Our approach to new initiatives
Some new initiatives focus on specific segments of the market
 e.g. Northern
N th
IIreland,
l d utility
tilit vehicles,
hi l
exotic
ti vehicles,
hi l
…
New initiatives often have a pricing angle that we explore
 e.g.
e g An example is MultiCar
Claims – Stuart Morgan
24/02/2010 14:55:37
Why are we successful?
24/02/2010 14:55:37
 Because we’re good at handling motor
i
insurance
claims.
l i
24/02/2010 14:55:37
More Specifically
 Getting customers back on the road following
a crash
 Dealing with their liability to third parties
24/02/2010 14:55:37
 Customers
C t
lik
like us
 91% say they
th would
ld renew their
th i policy
li
following a claim
 Sometimes we can’t pay them what they want
24/02/2010 14:55:37
 We settle third party bodily injury claims
faster than ever
24/02/2010 14:55:37
% BI CLAIMS SETTLED WITHIN 12 MONTH
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000
2001
2002
2003
2004
2005
2006
2007
24/02/2010 14:55:37
Liability scenarios
 Hit in rear
 Misleading signals
 Pedestrians
24/02/2010 14:55:37
 We settle 25% of claims without a lawyer
getting
tti
a fee
f
24/02/2010 14:55:37
 We reserve conservatively
24/02/2010 14:55:37
We’re good at detecting fraud
 Soft fraud
 Hard fraud
24/02/2010 14:55:37
People
 Claims Management over 150 years experience
 10% attrition in general staff
 We laugh a lot
 Especially at fraudsters
UK Operations – Nick Weng Kan
24/02/2010 14:55:37
What does UK operation cover?
Sales
Sales
Customer service
Customer services
Renewals
Opening hours
Mon - Fri 8am - 10pm
Sat 9am - 5pm
Sun 10am - 4pm
Outbound
Renewals
Quality
0800 118 1644
Opening hours
Mon - Fri 8am - 10pm
Sat 9am - 5pm
Sun 10am - 4pm
Opening hours
Mon - Fri 8am - 10pm
Sat 9am - 5pm
Sun 10am - 4pm
0871 882 2233
0844 848 0050
24/02/2010 14:55:37
Where are we based?
Halifax, NS
Cardiff, Swansea
Bangalore
GMT - 4:00
GMT
GMT + 4:30
Sales, Renewals
All
Customer Service
24/02/2010 14:55:37
Our structure until June 2008
Swansea
Sales,, CS,,
Renewals
Cardiff
Shared resources
Sales, CS,
Renewals
Outbound, Quality
Sales, CS,
Renewals
Sales, CS,
Renewals
24/02/2010 14:55:37
Importance of aggregators
Sales by channel
80.00%
70.00%
60.00%
50.00%
Telephone
l h
Internet
Aggregator
40.00%
30.00%
20.00%
10.00%
0.00%
H1 07
H2 07
H1 08
24/02/2010 14:55:37
New structure
 Sales
Halifax
Swansea


 Customer service
Cardiff





 Outbound


 Quality

 Renewals

Bangalore


24/02/2010 14:55:37
What the new structure allowed us to do
 No change to the culture
 Manage a portfolio of brands
 Greater staffing flexibility
 Find staffing synergies
 Extend operating hours
 Etc…
24/02/2010 14:55:37
Discounting
 Discounting
g introduced 19 September
p
07
 Discounting of ancillary products only
 Increase ancillar
ancillary penetration
 Capture additional income at renewals stage
 First renewals coming now
24/02/2010 14:55:37
Discounting example
 Sale of p
policy
y is secured
 Sales person offer first ancillary
 Then second ancillar
ancillary
Confused.com – Carlton Hood
24/02/2010 14:55:37
Why we have been so successful
 Being
g first
 Being focused
 Being frugal
 ...and genuinely passionate about what we do
24/02/2010 14:55:37
Being first
 Confused
Confused.com
com was not the first
price aggregator
 But it was one of the first to go big
on TV...
 ...benefiting from high TV
response rates in early years...
 ...and higher rates of returning
customers today
24/02/2010 14:55:37
Being focused
1st position quote to sale ratio
[% ]
 Confused.com focused on p
price
comparison for car insurance
16%
14%
12%
10%
 Relentless attention to the detail of
the sales process delivered
industry leading conversion
rates
rates...
 ..and resulting higher volumes in a
single prod
product
ct area enabled the
negotiation of higher revenue /
sale from providers...
Source: Ebenchmarkers 2008
8%
6%
4%
2%
Confused
Co
used
MS
SM
Go Co
Compare
pa e
Tesco
esco
24/02/2010 14:55:37
Being frugal
# FTES
 Part of the Admiral “DNA”
transferred to confused.com
 Management overheads kept to a
minimum
 Clear focus on profitability of every
single transaction
24/02/2010 14:55:37
Future success
Not only...
...But also
Great at a single product
Great at multiple products
Lowest cost of acquisition
Highest cross sell / revenue per
customer
Fantastic direct response TV
Highest brand preference / top of
mind awareness
First
Focused
Frugal
+
Breadth / CRM
Brand
Right people
International
Balumba.es – Christophe Sanchez
24/02/2010 14:55:37
The Spanish market
Direct Players
GWP (m Eur)
14
12
9.8
10
10.6
11.2
11.5
12 2
12.2
12 5
12.5
8.9
8
8
6
4
GWP (m Eur) Market Share
Linea Directa
Direct Seguros
Genesis
Fenix Directo
Balumba
Click Seguros
Zurich Connect
644
210
201
56
21
2
new
5,13%
5
13%
1,67%
1,60%
0,45%
0 12%
0,12%
0,01%
new
Total
1133
9,00%
Mutua Mad
1216
9,69%
2
0
2000
2001
2002
2003
2004
Market GWP (m Eur)
2005
2006
2007
 Direct Players Marketing Spend in first Semester ´08:
08: Eur 36m (+29% vs ´07)
07).
Zurich Connect started in May and today represent 17% of the spend
24/02/2010 14:55:37
Balumba : half year results
 Vehicle count 60,000 at end June ´08 (+258%
on June ´07, +27% on Dec ´07)
 Total premium €13.8m (€6.6m at June ´07)
Loss Ratio development by
underwriting year
Month
2007
2008
 A
Ancillary
ill
contribution
t ib ti €2.0m
€2 0 (€0
(€0.9m
9 att June
J
´07). €73.6 per policy (€61.0 at June ´07,
increase 21%)
6
149%
107%
12
137%
-
 2008 Loss Ratio 107% (versus 149% for 2007
at the same point in time)
18
136%
-
 Loss in period GBP 800k (€1.1m)
 203 Staff based in Seville
24/02/2010 14:55:37
Balumba: approaching our 2nd birthday
 So far,
far Balumba has proved to be able:
 To generate leads and acquire business
 To generate additional income
 Challenge of year 2/3:
 Continue with the improvement of the loss ratio
24/02/2010 14:55:37
Balumba: improving the loss ratio (I)
 Maturity factors:
 Scale
 Age of portfolio
Market Frecuency for TPL (no BI) by age of policy
Frecuency
Age of policy
<1 year
1 year
2 years
3-4 years
2006
13,45%
12 05%
12,05%
10,45%
9,16%
2007
12,78%
11 53%
11,53%
10,02%
8,86%
Avg cost of claims
2006
928
898
876
872
2007
1003
964
934
903
24/02/2010 14:55:37
Balumba: improving the loss ratio (II)
 Internal factors:
 Pricing
 More questions and more data
 Underwriting quality
 Claims
 Approved repairers
 Proactivity
AdmiralDirekt.de – Sita Schwenzer
24/02/2010 14:55:37
German motor insurance market – key facts & figures
Key facts Germany versus UK
Technical results – German motor insurance
10%
Figure (2007)
Germany
UK
Number of private vehicles (in m)
GWP private vehicles (in b €)
Average Premium private cars (in €)
Split of cover (GWP)
Non comprehensive
Non-comprehensive
Comprehensive
Market share direct players
37
14
374
26
14
540
50%
50%
11%
89%
~10%
70%
Rates evolution and loss ratio
105%
410
100%
400
95%
390
90%
380
85%
370
80%
Premium
2000 2001
Loss ratio
2002 2003 2004
2005 2006 2007
Incl. 7-10% reserve releases and
~ 5% claims handling costs.
Source: Munich Re, GDV, Forrester, Psychonomics
0%
-5%
-10%
Average expense ratio
17%, excl. claims
handling costs
-15%
Seasonality of sales
420
1998 1999
% verd. Beiträge
5%
• Policy Renewal date is usually Jan 1st,
this is a tradition,, not compulsory
p
y
• Motor insurers focus their marketing efforts in Q4
=> Key operational challenge for motor insurer
24/02/2010 14:55:37
The internet – an irresistible force
E-mail;
Search
engines;
Surfing
Information about
leisure
Visit
company
/ brand
sites
Buy
goods/ services,
services
e.g. travel;
online banking
Buy at
auction;
Download
software
Buy financial
products, e.g. car
insurance
Immediate
1st y
year
2nd y
year
3rd y
year
4th y
year
5th y
year
Source: Forrester Research/ Analysis of Consumer Technographics 1999-2004.
Purchases travel online - forecast (€m)
B2C (total, in €m)
80000
20000
60000
15000
40000
2005: €5bn
2011: €19bn
10000
2005: €15bn
2011: €63bn
20000
0
1999
2000
Germany
2005
2008
2011
5000
0
2005
2008
2011
UK
Germanyy
Source: HDE/Bundesverband Digitale Wirtschaft 2005
UK
24/02/2010 14:55:37
Why Admiral Germany will be successful
Pricing
• Additional rating factors
• Deeper rating factors
• Usage of external data
• More sophisticated combig factors
nation of rating
Marketing
• Strongly cost driven
• More specific targeting
of customer segments
• Innovate and test
Sales
• Up-selling
• Motivated high
performing staff
General management
Culture
• Cost management
• Lower staff attrition rates
• Customer approach
• Flexible IT
Claims
• Efficiency
• Claim control
• Active claims
management
24/02/2010 14:55:37
Admiral – Milestones a year after launch
Achievements so far:
Launched a direct insurer in 8 months
Acquired over 9,000 customers in peak season, currently at 11,000 customers
Identified cheap Marketing channels resulting in low customer acquisition cost
Portfolio of products that the customer is familiar with and some product innovations
Set up network of external suppliers (aggregators, approved garages)
Staff: 100 employees
Different work environment, young enthusiastic team
Challenges:
Further identify
y attractive customer segments
g
Recruiting experienced insurance staff
Overcome operational
p
challenge
g of p
peak season
ConTe.it – Milena Mondini
24/02/2010 14:55:37
Italy is a large profitable market ...
25.0
20.0
15.0
14.3
•2nd biggest market in
Europe:
£ 17.9b (€ 21.5b)
Gross Written Premiums
(€ b)
15.9
16.9
19 6
19.6
18.2
20 7
20.7
21.1
21.4
21.6
21.5
85%
10.0
5.0
0.0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
MOD
MTPL
•highest veichle density:
0.87 per person
•high avg. private car
premium:
£ 398 (€ 479)
Underwriting Results
Source: ANIA 2007
Exchange rate £:€ = 1:1.203 (Mid-Aug08)
49
24/02/2010 14:55:37
...with clear ongoing evolution.
3,5%
6,1(1)%
Agents
Italy is still dominated by tied agents,
Direct
Others
90,4%
Direct Indemnityy / reduced litigation
g
costs
No tied-agents mandates allowed
but new regulations aim at
increasing number
of switchers and price sensitiveness
No automatic renewal
Stricter transparency requirements
Customers education initiatives
Authorities restructuring
Internet Penetration (2)
60%
and online business is
growing!
+50%
Online Insurance %
3,0%
40%
2,0%
20%
1,0%
0%
0%
2003 2007
Source: Forrester Consumer Technographics, Nov 2005 & Online Insurance Forecast 06-11
(1) Include brokers and all insurance products, but car insurance is the main product
(2) Estimated on users age 15+ / total country population age 15+
+21%
•New aggregators
arising
•Direct model
2006 2007
awareness
increasing by 30%(3)
(3) Internal elaboration from focus groups 07 vs. 06
50
24/02/2010 14:55:37
6 direct players but only 1 real direct company …
Direct Players Total direct
GWP (€ m) % Direct Media invest: 06/07* 8,80%
2.911
8,40%
23%
216
1 90%
1,90%
2 692
2.692
8 00%
8,00%
22%
153
1,30%
2.252
6,80%
20%
102
‐11%
679
15,00%
29%
13
8,30%
4.191
0,30%
,
n/a /
248
18,10%
978
6,8%
GWP (€ m) 07/06 g% 246
Extrapolation estimate based on real investment jan-jul 06/07
Parent Company
34%
Tot.
25%
24/02/2010 14:55:37
….until May 30th!
Low Price
Easiness
= “ WithY
WithYou ”
Personal relation
Launched on May, 30th 2008!
52
24/02/2010 14:55:37
ConTe.it is innovative across the value-chain …
Marketing
Competitive independent
networks (loss-adjusters,
lawyers, doctors)
Anti-fraud kit
Working on new claims
settlement tools
Selective scouting /
strong partnerships
 PPP agreements
(penalties, rewards)
Product
Claims
Suppliers
Management
 In-house Data Center
 Edge technologies
Partnership with
major media (CPS agreements)
 Direct response and testing approach on alternative media
We are different!
Pricing
Sales
IT
Payments
 3 cover types
 1st to offer a named
drivers product in Italy
 up to 10 additional tariff
factors
Sophisticated
and flexible pricing model
 Lean process.
E.g..
g No signature
g
collection
Customer focus service
 Working
g on alternative
payment methods and installments
53
24/02/2010 14:55:37
… and on people management
Diversity
Young motivated
talents
Focus on
development
Entrepreneurial
E
t
i l
spirit!
• 6 nationalities, 10 Italian regions
• Multitude of industries and expertise
• Diverse senior management team (4 countries)
• 90% employees age <=35 vs. insurance industry 23%
• Average salary 40% lower than insurance industry average
• 55% graduated people vs. insurance industry average 30%
• Sales incentives 5 times market average
• Intensive, 360° training
• Meritocracy and internal promotions
• Consultants not call center staff
• Proximity and inter-department interactions
• Open space, appealing culture and a lot of fun!
54
Questions?