Ever since she scraped re-election in October, all eyes have been on Dilma Rousseff’s next move in anticipation of drastic fiscal reforms that would revive the nation’s economy. But it’s mixed messages all round from the Brazilian president, who has approved an $11.7bn loan to a state bank in the same breath as promising investors that tightening the government’s purse strings is her top priority.
Her critics were quick to voice their condemnation of the move
Rousseff has been widely criticised for her part in the deterioration of the Brazilian economy, which risks ending 2014 with its first annual primary deficit for two decades. Having recently appointed renowned fiscal hawk Joaquim Levy as finance minister, she pledged in a letter to investors: “Our new economic team will work to gradually but structurally lift our primary surplus so we can stabilise and reduce the public sector’s gross debt in relation to GDP.” She also said that the adoption of more market-friendly policies, and the implementation of measures to expand long-term credit from private sector banks – most notably to fund necessary infrastructure projects – are next on the agenda.
In spite of this, the transfer of 30bn reals ($11.7bn) to state development bank BNDES was approved by her government the following day. Naturally, her critics were quick to voice their condemnation of the move, claiming the loans have contributed to the country’s gross debt without stimulating the economy.
Brazil’s central bank has been unable to contain annual inflation within its target of 6.5 percent for the past two months, and it’s not showing any signs of slowing down. Growth predictions for 2015 are not much more promising than 2014, which is, at present, dangerously close to ending on zero.
Launched in 1997 by Malaysia’s fourth Prime Minister, Tun Dr Mahathir Mohamad, Cyberjaya is a well-planned, intelligent city, located midway between Kuala Lumpur city centre and Kuala Lumpur International Airport (KLIA). Hailed as the ‘Silicon Valley of Malaysia’, Cyberjaya is the first hub of the Multimedia Super Corridor (MSC-Malaysia) – the area the government has identified as the new growth engine for the IT industry in the country.
Today, the city has become the destination of choice for more than 500 multinational companies. It possesses cutting-edge amenities and facilities and is easily accessible via major highways. With a total land area of 7,000 acres, Cyberjaya will be developed into a self-sustainable township with world-class ICT infrastructure, low-density urban enterprise and state-of-the-art commercial, residential and institutional developments.
More than 24 developers are currently involved in transforming Cyberjaya into a more complete future city to live, study, work and play. Important players include, OSK Property Holdings, SP Setia, Mah Sing, UEM Sunrise, MCT, Emkay Group and Paramount Properties.
Across the 7,000 acres of land in Cyberjaya, 48 percent will be reserved for public amenities and greenery, such as public parks, lakes and the beautiful rainforest in Malaysia (see Fig. 1). Looking into this, developers took heed in planning and developing a master plan to meet the Green Building Index standard. Developers are leaving ample space for green facilities and landscape in their developments, offering residents the nature-inspired lifestyle that they have always desired.
Source: Setia Haruman
Mirage by the lake at Cyberjaya is built with this green concept in mind. The project consists of a mix of luxurious villas and condominiums, with natural water corridors and lush greenery forming a truly environmental landscape. Complemented by 3.5 acres of land for landscaping, the 12.14-acre development’s unique circular layout is designed around three central lakes, affording prime water frontages and picturesque views to each home.
A global hub
Cyberjaya, has an excellent fibre optic network infrastructure, to be fully wired with high-speed broadband at 100mb per second. This is in line with Malaysia’s aspiration to become a hub for data services and is expcted to contribute MYR2.4bn to the country’s revenue by 2020. According to the New Straits Times, Cyberjaya’s unique and independent high-speed carrier network has influenced many prominent ICT industry players to base their operations in the city.
Its competitiveness as a global ICT hub has made Cyberjaya one of the top destinations for business support services and outsourcing in the world. It is home to more than 38 multinational corporations (MNCs) including HSBC, DHL, Shell, Motorola, OCBC, IBM, Ericsson, BMW and Fujitsu, as well as another 800 technology-oriented companies.
With well-designed residential projects in place, it is definitely an area that will grow in years to come
Cyberjaya is not only fast becoming the destination of choice for MNCs, but it also has the ambition to be among the top 20 most liveable cities in the world by 2020. Many call the city home, with popular residential developments such as Perdana Lakeview West, Perdana Lakeview East and Persiaran Bestari proving popular, and offering an array of accomodation.
Pan’gaea is a 16-acre project, which houses retail offices, residences, a shopping mall and a hotel. Drawing from the inspiration the ancient Pangaea, the development envisions a ‘world in one place’ concept where the diversities of modern living are brought together under one common freehold address. The aims of the project are to establish the Pan’gaea as a landmark within the city, and to create a unique and vibrant public forum for entertainment, retail and entrepreneurial activities, while creating and maintaining it as a highly desirable place to live.
With well-designed residential projects in place, it is definitely an area that will grow in years to come. This will further create job opportunities due to the vast stretches of land available for high-impact companies to expand their business in the city. In the next five years, most of the major developments will be complemented by recreational parks, entertainment centres and other amenities in anticipation of increasing population. According to the master developer of Cyberjaya, the population for this township is predicted to reach 100,000 by 2016, from the current 70,000.
Inside a villa. Cyberjaya aims to be among the top 20 most liveable cities in the world by 2020
State-of-the-art security
Cyberjaya is eminent for its gateless community. The development and architecture in the city blends into the western style of living, which many locals and foreign professionals have affirmed as their preference. These residences have strict security enforcement to ensure a safe and guarded community under the watchful eyes of the security team.
In addition, Cyberjaya has a natural secure surrounding due to its peaceful environment. Compared to the crime rates in Klang Valley, Cyberjaya is enjoying increasing security, and the township is more than halfway towards achieving its target of being a safe city with a crime rate of zero.
This is largely due to the fully integrated Malaysian Emergency Response System (MERS) 999 CCTV system. Launched in 2009, Cyberjaya’s CCTV system is the only system in the country that has been linked to the MYR10m MERS 999. The system is designed to be able to operate round the clock, in all types of weather conditions and capture quality daytime and night-time images, utilising Cyberjaya’s fibreoptic backbone system. The CCTV operation, part of the Cyberjaya Citywide Surveillance System, boasts 30 cameras across the city, with a high traffic volume and large population.
[T]he township is more than halfway towards achieving its target of being a safe city with a crime rate of zero
According to Cyberview, six parties were involved in the planning and design of the MERS 999 CCTV system in Cyberjaya – Cyberview itself, Telekom Malaysia, the Royal Malaysian Police, Sepang Municipal Council, Tenaga Nasional Berhad and Multimedia Development Corporation.
The objectives of the installation of the system continue to be to ensure the safety of the community at large, which consists of locals and many foreigners, as well as to enhance the township management services of the Cyberjaya Flagship Zone.
In recent years, the steady growth of the student population has been led by top local and international learning institutions. These include international-standard universities such as Multimedia University (MMU), Limkokwing University of Creative Technology (LUCT), University Malaysia of Computer Science and Engineering, Cyberjaya University College of Medical Science, Cyberjaya Putra College and Kirkby International College. The presence of international universities and multinational corporations encourage good tenants and foreign purchasers for properties in Cyberjaya.
The current universities, colleges and schools in Cyberjaya attracted a large number of foreign students, which created an international environment, allowing for more exposure and growth. The latest statistics show that the student population has reached 25,000 in the city and is on the rise. Of these students, 40 percent are foreign students from 80 countries worldwide.
In the next five years, most of the major developments will be complemented by recreational parks, entertainment centres and other amenities in anticipation of increasing population
Ease of accessibility
Cyberjaya is an ideal investment location with excellent accessibility and connectivity. It is well served by major access roads and a series of well-developed public transportation systems. Even for professionals working outside Cyberjaya, it is possible to get to work on time with highways such as the Maju Expressway (MEX), B15 Expressway and the North-South Expresswway Central Link (ELITE Highway) enabling you to reach key points like the Kuala Lumpar city centre in 20 minutes. Frequent flyers would also be happy to hear that it takes no time at all to reach KLIA and KLIA 2, which are only a mere 28km away. If your schedule is packed with business trips and you would like a place to unwind, rest your head and be assured you won’t miss that important flight, then this is the place to do just that.
Cyberjaya is an ideal investment location with excellent accessibility and connectivity
Cyberjaya is surrounded by highly populated areas such as Putrajaya (Federal Administrative Centre of Malaysia), Puchong, Kajaang, Bangi and the whole southern corridor of Klang Valley. The increased offerings of activities, amenities and accessibility are expected to attract crowds from most of the neighbouring areas. Project such as Pan’gaea are located in the heart of Cyberjaya. Gearing to become one of the biggest mixed developments in Cyberjaya, Pan’gaea offers home owners and businessmen the chance to park themselves at a premium address. A fancy, modern and stylish living lifestyle is something that comes naturally.
With the world-class IT infrastructure, low-density urban enterprise, as well as the future plans of many state-of-the-art residential, commercial, business and institutional developments, it will continue to add value to the townhsip as an ideal place to live, study, work and play.
The outlook in Italy’s insurance market is beginning to change. This has been reflected by ratings agency Fitch, which has revised its projections from negative to stable, with expectations that insurers profit and capital adequacy will be able to bear the brunt of the country’s economic shortcomings. It also suggests that the Italian insurance market has managed to reduce its overall credit risk, which is impressive, considering that Italian insurers’ ratings are so closely linked to national debt, as a result of their large holdings in Italian Government debt.
One of the big players responsible for the market’s success is Società Reale Mutua di Assicurazioni (Reale Mutua). Year-on-year the company has managed to reduce premiums for non-life policies, while offering higher returns on life plans, and, as of this year, it has begun providing dedicated product packages. Due to the nature of mutual insurance, the importance of building a dialogue with policyholders is amplified. Furthermore, by facilitating discussion, the process of creating and implementing new platforms, which satisfy the needs of policyholders, helps improve their effectiveness.
The success of online banking apps, which provide greater speed and accessibility to their customers, is something that the company has adapted and refined to suit the needs of its members. By developing these systems in partnership with its members, the company created a restricted area on their website, where policyholders can access their entire insurance history, as well as producing a dedicated app for checking policies, handling claims and managing the main due dates for car insurance policies. They even provide a loyalty scheme, which they launched in 2011, for long-standing customers.
Customer loyalty
Luca Filippone, Vice Director of Reale Mutua, told World Finance how the scheme aims to reward loyal members with exclusive services and offers. “More importantly and strategically, Reale Mutua is developing a multi-channel and multi-access CRM [customer relationship management] platform that will make it possible to differentiate workflows and SLAs [Service Level Agreements] to accommodate the needs of customers and their life cycle,” says Filippone. “This will be used by all corporate functions that directly or indirectly communicate with insured members on a day-to-day basis.”
How technology is utilised determines whether it is a successful tool or a wasteful investment. In insurance, a recent innovation has been the use of black boxes, also known as telematics car insurance. These little boxes provide insurers with sophisticated methods for monitoring motorists driving behaviours, allowing underwriters to assess policyholders, rewarding careful drivers with lower premiums. There has been an uptake in the use of telematics technology, as it has cut prices by nearly 25 percent. Unsurprisingly, young drivers in particular have jumped on board with the new money-saving device. Italy is the market leader for black boxes associated with motor insurance policies according to a study published by the Italian Association of Insurance Companies (ANIA).
“With the introduction of these devices, we have succeeded in turning some problem areas typical of this sector into an opportunity, differentiating our offering and making important progress towards tailoring tariffs,” says Filippone. “Looking to the future, the integration of systems that use home automation and biological parameter monitoring technology, which are increasingly being employed, might open up new opportunities for growth.
“Technology will also enable us to improve relations with our customers, through new multi-access platforms that will allow us to manage all aspects of interaction and use all the devices currently available on the market,” says Filippone.
Filling the void
Italians, as a whole, are under-insured by comparison to their European counterparts. Roughly, only five percent of the population has supplemental health insurance, compared to almost 90 percent in France; and just 20 percent of Italian households have taken out home insurance, while in the UK and the Netherlands, 75 percent of homeowners have opted in.
In order to fill the insurance void, Reale Mutua has embarked on a strategic plan: focusing on developing multichannel business models in order to take advantage of its retail networks; innovating its market approach, concentrating on developing welfare products in a bid to counteract the harmful effects of Italy’s economic outlook; investing in new technologies, allowing for the digitilisation of their existing processes; and looking for acquisitions in both the domestic and European markets to increase economy of scales and their market share.
If Fitch’s outlook is anything to go by, the Italian insurance market will be one that will continue to grow in the new year, even if the rest of its economy continues to struggle.
Digital technology has transformed the way insurers do business recently. Along with meeting the growing demand for easily accessible financial services, technological innovation contributes to growth and business development. It creates new trends, opportunities for growth in new and existing business, as well as improving efficiency and customer satisfaction. Consequently, the insurance market is currently in a key dynamic phase with business models changing drastically, along with consumer behaviour.
In Greece the majority of insurers use digital technology at a basic level to support customer experience. As competition is strong and consumers have become more demanding and less loyal regarding non-life products, firms are now putting particular emphasis on client retention. To this end, Interamerican has been one of Greece’s leading insurance companies as it continues to reshape its business in accordance with a new digital era.
[Interamerican’s] strategy focuses on simplicity by standardising processes, as well as creating simple and transparent systems
Clear cut goals
Having succeeded in its differentiation in the Greek insurance market, thanks to key investments in innovation and technology, Interamerican has an emphasis on internal process improvement, as well as to high quality customer service, by enhancing customers and producers’ experiences. “Interamerican’s brand ideal and shared goal is to improve peoples’ lives, making them feel safe at every moment in their life journey. This is our guide to the way we recruit, unite, build and inspire all the people that we touch with our business, from employees, to sales networks and customers,” said Chief Operations Officer G. Mavrelis.
As such, the company’s strategy focuses on simplicity by standardising processes, as well as creating simple and transparent systems, moving procedures from back to front office, creating a lean business through monitoring and capitalising on technological developments in order to reduce cost and create a customer driven culture throughout the organisation.
Additionally, the company develops advanced front-end portals for customers providing unique functionality for personalisation, a/b testing and supporting advanced digital marketing actions. There is also focus on data driven decisions and rapid execution, using advanced digital analytics, reporting and attribution modelling.
The launch and development of the direct-online insurance brand ‘Anytime’ is Interamerican’s most impressive success story and a major catalyst in its transformational process. The Anytime brand and concept of direct insurance was launched in 2006, during very premature market conditions. In 2008, its car insurance customer base was 2,000 policies and has recently surpassed 200,000.
In this respect, the product has revolutionised the way Greeks buy their insurance by offering simple, standardised, high value products and services, focusing on auto, health and home insurance. On the other hand, the creation of a loyalty club – offering special services and benefits to Anytime’s customers – has enhanced customer satisfaction and loyalty.
Amplifying the brand
Following this, Interamerican has established Assistance services, successfully handling more than 285,000 incidents per year and delivering a unique level of care at crucial times for the customer. Interamerican Assistance holds the first position overall in the Greek insurance market, contributing to the creation of a strong brand image, unique brand awareness and high levels of customer satisfaction. This particularly comes down to a unique infrastructure providing a differentiated value proposition to the market, while at the same time controlling claims and operational costs.
The more people operate in a digital world the faster it is needed to consider about handling big data for uncovering hidden patterns
Along these lines, the firm has also endeavoured to streamline its business through one integrated information system (OnE), which has simplified, standardised and unified products and processes across its business units. The automated process workflow has clear underwriting authorisation rules, a user-friendly web interface for policy issuing and portfolio administration, as well as better control of claims handling and reinsurance. This has improved efficiency across sell and upsell, increased sales, reduced cost and simplified procedures.
Close collaboration between business and IT in the implementation of various digital projects – such as CRM, e-mobile, use of social media as a service point, adopting cutting edge technology like telematics and virtual electronic office system ‘ask me’ – is helping to transform the company into a ‘new generation insurer’, aiming for operational excellence, through state of the art digital services to customers.
Needless to note that, the more people operate in a digital world, the more urgent the need is to consider how to handle big data for uncovering hidden patterns, unknown correlations and other useful information for decision making.
‘Genius’ is the first electronic underwriting system in Greece, which automates the process of risk assessment and policy issuance in life and health business. The use of Genius drastically reduces the productive time required of associates and simplifying – as well as accelerating – customer service. The system was designed in cooperation with major reinsurance organisations and, for the first time, is now available to sales associate networks worldwide.
In this respect, it is considered an innovation for the Greek and international insurance market, offering competitive advantages to both intermediaries and customers. This is essentially why Interamerican is considered an insurance leader at the forefront of the Greek industry.
The Philippine non-life insurance sector has seen a compound annual growth rate of 15.7 percent. One organisation at the forefront of innovation in the sector is Standard Insurance Company. World Finance speaks to its President and CEO, Patricia Echauz Chilip, to find out more.
World Finance: Patricia, the local non-life insurance sector is expected to continue to grow, but what is likely to impact its development? Patricia Echauz Chilip:Well as you said, we’ve had excellent growth through the last couple of years; some very strong economic growth.
In terms of the non-life insurance industry, we’re seeing a lot of regulatory requirements. One of them is the increasing capitalisation.
In 2013 your capital as an insurance company – as a non-life insurance company – had to be at PEP 215m; and by 2022 it has to be at PEP 1.3bn. Every few years they increase the capitalisation requirement, and we’ve seen insurance industry players for non-life shrink from 107 players, to 87 players, now we’re at 64 players. And we see further consolidation.
[W]e’ve had excellent growth through the last couple of years; some very strong economic growth
Right now our tax rates are at 12 percent VAT and 12.5 percent for DST. Because of this it’s a little bit pricey for consumers to have non-life insurance: their car insurance, their home insurance. We’re hoping that we’ll be able to lower this. We’ve already tried to pass a bill in congress, and we’re hoping it does well for our industry.
The life insurance industry was successful in lowering their tax rates and their growth rate has been amazing, so we hope to follow suit.
World Finance: Now, the growing automobile sector over there is one of the real driving forces behind the non-life insurance industry. How have you been capitalising on this? Patricia Echauz Chilip:Just today’s paper said that the automobile industry here has reached a 29.6 percent growth rate compared to last year. We’ve sold 250,000 units in the Philippines year to date, and next year they expect to hit 300,000. So, we have a lot more cars than we do road! But it’s been very good for us. Especially for Standard Insurance, as we are the leader in automobile insurance in our country.
World Finance: Now you were talking earlier about the consolidation you were expecting to see; it’s always been a very competitive market over there, so how has Standard Insurance been staying ahead of the game? Patricia Echauz Chilip:Well, we’ve been consistent in our strategy, and we call our strategy ‘STAND’.
S is for Speedy claim service, which, as you know in our country we have a lot of catastrophes. So speedy claim service is very important.
We have a Trusted and knowledgeable salesforce, and they’ve been around for years. They, I think, are one of our strongest factors in keeping our clients comfortable.
We’re also Accessible through many distribution channels. We’re online, we sell through dealers, we have a multitude of agents. And so you’re able to buy our insurance in very many ways.
We also love New thinking; innovation. And that’s been amazing in keeping our costs lower, in keeping us efficient.
And then at the end of the day, Disciplined underwriting. It keeps our portfolios safe, and keeps us sustainable.
World Finance: So, what are your latest innovations? Patricia Echauz Chilip: Recently we have our online client management portal. You can manage your policy online, we send you renewals so that you never miss or expire policy. We send any update on your claims online. So it’ll really help our clients manage their policies and coverage better.
Another thing we have is Emergency Protect. That is a new feature we give for free to all of our motorcar insurance clients. When you are in an accident, we’ll give you free ambulance cover, so, we’ll take you to the hospital whether you’re here in the Philippines or anywhere in the world.
Well, the beauty of the non-life insurance sector in the country, hopefully, is that it’s really growing at a rapid rate
It’s consistent with our strategy of being there when you need us the most. So we don’t only take care of your car; we also take care of you.
We’ve also launched this year a large facility in the south wherein we study a lot of repair costs, we study claims; to further reduce our costs and make it easier for customers to buy our insurance.
World Finance: Now of course the Philippines is plagued by extreme weather conditions, so having a very good catastrophe response must be very important for you. Patricia Echauz Chilip:It is; we have a very large manpower complement at 900 people. Of which 250 people are claims and technical people. We’re able to send right away a contingent down there to check not only on their cars, but of course on our clients.
It’s very important to be there on the ground, sort of hold their hand through all of it, when things like that hit.
I mean I think in Haiyan we had 900 motorcar claims. And we were able to adjust those right away. But more importantly we were able to show support to our customers.
The government’s doing it best to rehabilitate these disaster-hit areas, but for us in the insurance industry we fortified our manpower complement in some of these areas so that we’re sure to respond quickly in a disaster.
So for a nation, we’re just helping each other get through these disasters.
World Finance: Finally, what do you see as the key trends and opportunities in the non-life insurance sector moving forward? Patricia Echauz Chilip:Well, the beauty of the non-life insurance sector in the country, hopefully, is that it’s really growing at a rapid rate.
If we’re able to make it more affordable for customers then we will be able to make the insurance penetration rate better in our country. And I think it’s good for the consumer overall.
The insurance sector is bound to grow, as it does for any growing economy. There’s no question of awareness; every so often you have a typhoon, and it makes you aware that you need to protect all your assets, as well as the future of your family. So it bodes well for the insurance industry here in the Philippines.
Portugal is located in the southwest corner of Europe, and in the 15th and 16th centuries it expanded a Western influence, establishing the first global empire. The country reigned as one of the world’s first major economic centres, with a strong political and military presence.
Known for its rich history, the country has also demonstrated a strong ability and will to overcome challenges and hurdles. This has been the case for several centuries now, and looks set to continue. Since 2008, the Portuguese economy has experienced immense challenges, with the emergence of the financial crisis hitting the international markets, creating internal turmoil. In 2013, the economy continued to be significantly conditioned by the external de-leveraging and fiscal consolidation process required by the Troika agreement. GDP fell by 1.4 percent during 2013. Investment and private consumption fell once again, and unemployment remained high.
Exports continued to perform well, but were insufficient to compensate for the downturn in domestic demand. Although the three last quarters showed a positive performance in terms of GDP, the remainder of 2014 and the coming years will continue to be very challenging.
It is critical to be the first go-to provider of the agents when a client wants an insurance
Falling figures
In 2013, the Portuguese market of non-life insurance amounted to $4.92m, and has been falling since 2011. In 2013, with the exception of health, all major product lines decreased. The mandatory insurances, workmen’s compensation and motor product lines were the most affected. Workmen’s compensation decreased eight percent (down 31 percent) due to an increase in the unemployed and the increasing competition between insurers. Motor insurance fell 5.8 percent (down 18 percent compared to 2008) due to the economic environment and, again, due to an aggressive price-based competition between insurers. Consequently, the market’s non-life insurance combined ratio (104 percent) continued to be problematic.
The Portuguese insurance market needs to invert the existing strong pressure on price, in order to recover adequate levels of solvency, since this sector has been operating with a combined ratio exceeding 100 percent for many years. A sustainable development of the sector requires a proper adjustment of prices to risk, but also focus on factors such as product innovation, service excellence, operational efficiency, or commercial effectiveness.
Tranquilidade was founded in 1871 and is the second largest non-life Portuguese insurer. It is an ‘agent company’ with a wide and diversified national distribution network of more than 1,800 professional points of sale. The network of Tranquilidade has 80 brokers, 1,400 multi-brand agents and 400 tied partners, covering the entire national territory.
Tranquilidade provides the full range of non-life products with customised solutions for all customer segments: individuals and families, SMEs and large corporations. Through its life insurer, T-Vida, it also offers life, retirement and financial products. Even in the difficult environment in Portugal, Tranquilidade gained 0.8 percentage point market shares to 8.4 percent, while improving its claims ratio over the last five years. The fact that Tranquilidade has a clear vision and strategy drives very consistent initiatives, and allows the organisation to face the future with confidence.
The company grows organically and selectively, continuing to rebalance profitability and focus on service quality and efficiency, ensuring that the entire organisation is fully aligned and motivated around the vision of being the best choice for customers and distribution partners. The distribution of non-life insurance in Portugal relies heavily on the agents and brokers channels, which represent about 73 percent of sales. This is essentially a multi-brand market, since tied agents represent just over 10 percent.
The Tranquilidade network
>1,800
professional points of sale
80
brokers
1,400
multi-brand agents
400
tied partners
Face-to-face business
For customer facing services, the insurance agent is the main port of call. This person assumes the role of insurance consultant, ensuring a personalised relationship and after sales service. They are critical players in this sector, even more than in other retail industries, since they tend to direct the relationship with the clients. For them, the insurance companies are product suppliers. This is especially the case for multi-brand agents, as they’re the ones that drive the clients’ choice of insurance company.
The multi-brand agents decide which suppliers to propose to their clients based on criteria as diverse as the price, the quality of the product and the service offered to their clients and to themselves, the level of commissions and incentives, the reputation of the insurer, among others. Given the importance of this channel, the investment of insurance companies in the growth and consolidation of partnerships within its network is essential.
The value proposition offered to them must be distinctive and dynamic, which is the key to obtaining success. Whether Tranquilidade is the first-choice provider of an agent or not makes all the difference in business development. It is critical to be the first go-to provider of the agents when a client wants an insurance.
In its aspiration to be the ‘best choice’ of professional agents, Tranquilidade is focused on four operational priorities. To offer competitive products with price discipline, innovation and diversification in business, guarantee exceptional quality of service, and reinforce proximity to its distribution network. It does not compete only based on price, as many of its competitors do. In a very competitive market such as insurance, this is only possible in cooperation with the distribution partners, ensuring that all other operational levers are at their best.
There is a culture of innovation in products and services at Tranquilidade. It faces innovation as a way to avoid the price trap. The company continuously and systematically seeks new business opportunities and improvements to the current product portfolio, and also invests significantly in tools to simplify the agents’ sale process, its customer retention and cross sell.
The quality of service offered to clients and agents is embraced in an almost manic way. In fact, regular surveys of customer satisfaction are conducted at different touch points to ensure that all operations are performing as best practices. The results show high levels of satisfaction, with 85 percent of customers recommending the company. Another important indicator is the number of complaints submitted by clients, which is less than 0.25 percent of serviced clients, and has been falling for five years consecutively, in counter cycle with the global figures of the market.
The quality of service offered to clients and agents is embraced in an almost manic way
Finally, the proximity to the agents network has to be comprehensive. It begins with having a deep individual knowledge and understanding of all the distribution players in the market. This competitive advantage is difficult to replicate as it currently stands.
This proximity to distribution networks involves not only commercial teams on a daily basis, but also the central departments and even the board, who has regular brainstorming sessions with key agents. The focus is on their concerns and suggestions of improvements that are evaluated and fed back to operational plans for implementation.
This culture and commitment at Tranquilidade has allowed the company to become a reference in the market. According to several independent institutions, it is setting the standards, with recognition and acknowledgement of several consecutive distinctions.
Earlier this year the company again received the awards it had won in the previous two years: insurer with the best reputation in Portugal (and second in the Iberian Peninsula) by the Reputation Institute; ‘Consumer’s choice’ in the insurance category from the Consumers’ Choice Awards; ‘Seal of Excellence’ by Superbrands; and ‘Best Call Centre in the insurance industry’ by the Portuguese Association of Call Centres.
Explaining its decision, Moody’s cited uncertainty over whether the country could achieve its ‘fiscal deficit reduction goals’ and ‘the timing and effectiveness of growth enhancing policy measures’.
Once hailed a saviour for the Japanese economy, Abe has sinced faced intense criticism for his economic policies
Specifically, one Moody’s representative linked the downgrade to Prime Minister Shinzo’s Abe’s delay to raise sales tax due in 2015. The increase was postponed after an initial sales hike reduced consumer spending, throwing the country into a recession. But some argue Japan should have stuck to its guns, as this lag could compromise its ability to cut its budget deficit by 2020.
The rating has come at an inconvenient time for Abe, due a snap election in two weeks’ time. Once hailed a saviour for the Japanese economy, Abe has sinced faced intense criticism for his economic policies – deemed ‘Abenomics’ – which include large government spending and making financial credit more easily available. With a public debt that’s twice the size of its economy, and the yen hitting a seven-year low against the dollar on Monday, all indications are that Japan has a long way to go to compete with other major economies.
Still, Abe has remained confident in his policies, which he described as “the only way to end deflation and revive the economy”.
Japan’s current credit rating is now one level lower than South Korea and China’s, four lower than the US and Germany, with a “stable” outlook.
The digital world is moving faster than ever, driven by technological breakthroughs, demographic changes and new consumer demands. Consumers have fully embraced the opportunities the internet has to offer – from everyday shopping for books, clothing and groceries, to finding their next home and saving for retirement. At the same time, consumers expect the full attention and service of the seller or service provider, no matter whether interaction is digital or face-to-face.
The banking industry is no exception to consumer demands: our customers want banking to be easy, convenient and relevant. This is both an opportunity and a challenge for us as retail banks. It is a unique opportunity to be present in the daily lives of our customers and play a proactive role as their financial adviser. But at the same time, we need to make sure that whatever channel our customers prefer, it will be a positive experience for them every time we are in touch – anywhere, anyhow and anytime.
Customer behaviour has changed significantly over the past 10 years, and we need to acknowledge that we as banks need to design our products and processes to fit our customers’ true needs rather than to force customer needs to fit our products and processes. So instead of the conventional product-driven customer approach, we need to fully support the entire journey of our customers in all life events.
Creating a customer-centric omni-channel business model takes strong commitment and proactive understanding of customers’ needs, dreams and challenges. Only that way can we as banks achieve the trust of our customers and make them ambassadors of our businesses.
The banking industry is no exception to consumer demands: our customers want banking to be easy, convenient and relevant
At Danske Bank, we have worked intensively with further strengthening the way we serve our retail customers in all channels. Over the past years, we have identified a number of key drivers to boost customer satisfaction. We have launched a number of game-changing initiatives to create a unique value proposition based on the ambition to make banking and financial decisions easy and coherent for our customers.
We believe that the fundamental requirement of all customers is that they have a fair deal with their bank. With our Customer Programme, launched in 2013, we wanted to introduce a programme that systematically rewards customers for the business they trust us with. Basically, the programme is offering customers favourable prices and benefits based on their business volume with us. The more business (loans, investment and savings), the more benefits and favourable interest rates and prices we offer, and in terms of primary touch points, our service model ranges from personal advisers to contact-centre advisory service. Now, 18 months later, more than one million of our customers in Denmark (a country with some five million inhabitants) have signed up, and we have successfully launched a similar programme in Finland.
Strong online presence
Customers want banking to be easy and convenient, and we consider presence on all digital platforms crucial for maintaining a strong relationship with customers and acting proactively. Danske Bank has been first mover in the Nordic region with our award-winning eBanking, mobile and tablet solutions and our P2P app, MobilePay.
Over the past year, we have expanded our online offering with an easy eBanking solution, primarily for elderly customers who find the digital world challenging; introduced online meetings as an alternative to advisory meetings at the branch and, most recently, established the Danske Guide feature in our eBanking and mobile solutions that proactively gives customers targeted recommendations on their financial opportunities.
Consumers shop at conventional shops, pop-up shops and flea markets, as well as at online shops through their laptops and mobile phones. Consequently, our customers demand easy, secure and fast payment solutions that match their shopping preferences at any time. This demand has attracted a number of new market players, like Google and Amazon, which have the ability to create digital eco-systems which include payment services.
At Danske Bank, we want to meet customers’ expectations and make sure that all our customers have convenient payment solutions at their disposal – regardless of whether they are online savvy or find it difficult to navigate in the digital world.
Therefore, we offer a range of products tailored to customers’ individual preferences:
• With the MobilePay app (our P2P app) we have made smartphones a new channel for easy and quick payment between mobile users and between mobile users and businesses. The app is market leading in Denmark and the most flexible and user-friendly solution for both customers and non-customers.
• With contactless and combo MasterCards, paying with a card at shops becomes even faster and customers can decide whether to pay now or at a later time.
• With our cash card we offer customers an alternative to cash. It can be used in shops and ATMs in Denmark. The card is especially helpful to customers who are not comfortable with PINs and passwords or who sometimes have other persons do their shopping.
Danske Bank’s customer-centric omni-channel business model is designed to travel across borders
Customer-centric culture
As retail banks, we need to be extremely aware of the fact that customers want more options – but with less complexity. Conventional online banking and payment solutions will not be enough in the future, we have to think about how we use our substantial knowledge about customers to build and further strengthen their relationship with us. To me, there is no doubt that we have to act proactively and build strong eco-systems that generate additional value for our customers and a new profit pool for us.
At Danske Bank, our next step in strengthening our digital offering to make everyday life easier is developing customer-friendly digital solutions to cover all events in a customer’s life. The first area we will work on is home purchases – from the customer’s interest in a property to the signing of the loan agreement and handing-over of the keys.
No matter how many digital banking solutions we introduce, no bank will survive without a highly-skilled and motivated front-line staff to advise customers. Whether our advisers meet with customers at face-to-face or online meetings, they are key to ensuring that customers feel welcome, confident and acknowledged, and to making sure that customers experience easy-to-understand, competent and proactive advice that creates value for them in the long term. Only that way can we as banks achieve the trust of our customers and make them ambassadors of our businesses.
At Danske Bank, we believe that developing and preserving a customer-centric culture requires that advisers have sufficient time for their customers. Consequently, we focus on reducing the administrative workload and delegating decision-making authority to give advisers time and room to serve customers. Through an idea bank, we received more than 600 suggestions from employees on how we can simplify procedures to create more time for customers and we have seen proactivity increase 25% in just one year.
New business opportunities
Danske Bank’s customer-centric omni-channel business model is designed to travel across borders, giving us a competitive edge in new markets because of synergies and a strong, agile organisation. While Danske Bank is market leader in Denmark, Finland and Northern Ireland, we hold a challenger position with much potential in Norway and Sweden. We want to realise this potential and grow our market position, and we believe that our business model and attractive value proposition provide a strong foundation for further expanding our business in these markets.
There is no doubt that the years ahead will be challenging for the banking industry worldwide and that competition will be fierce. Disruption from new digital entrants will be profound and what we have seen so far is just the beginning. Consumer behaviour and preferences will continue to develop and we must be ready to respond to them. But the future also holds much potential if we can develop simple and easy-to-use solutions to the complex requirements that our customers have and seize new market opportunities while keeping a strong focus on customer satisfaction.
US retailers may have shot themselves in the foot this Black Friday by offering deals and special offers consistently throughout the year, suggests a National Retail Federation (NRF) report. On average, consumers in the US spent $380.95 per person, down 6.4 percent from 2013, and overall sales fell by 11 percent.
The disappointing result of the so-called Superbowl of shopping is down to a shift in consumer spending habits
The disappointing result of the so-called Superbowl of shopping is down to a shift in consumer spending habits, particularly a steady growth in online shopping, the report claims. 42 percent of shoppers did so online, spending an average of $159.55 – down 10.2 percent from last year, when the average was $177.67.
“A strengthening economy that changes consumers’ reliance on deep discounts, a highly competitive environment, early promotions and the ability to shop 24/7 online all contributed to the shift this weekend,” said NRF President and CEO Matthew Shay, adding that this is a trend expected to continue for years to come. The lower-than-expected sales surprised many, who saw positive economic data as a sign of a stronger holiday period, but consumers are now more confident that they can expect further deals throughout the holiday season.
Discounted high-end clothing, televisions and toys were the hottest items flying off the shelves, with traffic driven largely by millennials – those aged between 18-34. Surprisingly, 35 percent of those who responded to the NRF’s survey said they utilised email circulars from retailers to keep track of deals over the weekend.
The Black Friday phenomenon is yet another US import to find its way across the Atlantic in recent years. Shops across the UK descended into chaos as customers jostled and fought over televisions and coffee machines, resulting in temporary store closures, countless injuries and several arrests being made.
Collapsing oil prices have seen the rouble hit a new low against the dollar in late November, and steep declines in the days since have left the already ailing economy vulnerable to further damages. As the country’s primary source of foreign-currency revenue, an almost 40 percent fall in oil prices has prompted central bank intervention to avert an approaching catastrophe.
The central bank announced in November that it would allow the rouble to float freely and intervene only if further currency losses posed a real threat to its economic stability. The banks’ intervention, therefore, shows just how significant the situation is, and marks yet another backwards step for what was until recently the world’s eighth biggest economy.
The banks’ intervention, therefore, shows just how significant the situation is
At its worst, the currency sunk nine percent in early morning trading, though recovered swiftly after reports emerged that the central bank would soon step up its efforts to stave off the damage. At its worst, on the last Friday of November, the rouble was trading at a low of little over 50 against the dollar, though the first day of December brought further damages, as the central bank mobilised to stop the rot, and, in doing so, halved the losses to only four percent.
However, even after the measures were introduced, the daily drop clocked in at four percent, the worst since the 1998 default crisis, and investor sentiment was little changed from the week previous with the currency having suffered a 15 percent decline.
To compound the country’s woes, conflict in eastern Ukraine continues to drag down Russia’s reputation, with sanctions imposed by western economies damaging long existing trade relations, most notably in Europe. The oil and gas sector accounts for two thirds of the country’s exports, and without sustaining the same numbers it has done in years passed, Russia’s economy will worsen further still, and the oil dependent superpower will struggle to keep its currency afloat.
What do you get when you take the oil production capacity of Saudi Arabia and put it in the middle of the US, the world’s largest economy? An economic engine that will drive domestic growth in the US and Canada for years to come.
The situation is, in fact, already a reality: the US overtook Saudi Arabia and Russia as the world’s largest producer of oil and natural gas this past year (see Fig. 1). When Canada’s oil and natural gas production is added to that of the US, North America is by far the clear global leader in energy production.
The US produced the equivalent of about 12.3 million barrels a day of oil, natural gas liquids and related fuels at the end of 2013, compared to a daily output of 11.6 million barrels and 10.5 million barrels from Saudi Arabia and Russia respectively, according to the US Energy Information Administration. Canada is the world’s fifth-largest producer, with a daily output of 4.1 million barrels.
US oil production had been in decline for more than 20 years until 2006, when new technologies, such as horizontal multi-frac drilling, unlocked the latent potential of tight shale oil and gas trapped within its sandy deposits.
The last time North American oil flowed to such an extent, crude sold for $28 a barrel, Reagan was still president, and Back to the Future had just
been released
Since that trough, total US oil and liquids production has increased by five million barrels per day to the aforementioned 12.3 million barrels per day at the end of 2013. This is primarily due to three major resource formations being unlocked: Eagle Ford in Texas, the Permian Basin in New Mexico and Texas, and the Bakken Formation in North Dakota and Montana. Canada is also producing much more oil, – 4.1 million barrels per day today – mainly from Alberta’s oil sands and the Bakken Formation in Manitoba and Saskatchewan. The last time North American oil flowed to such a great extent, crude sold for $28 per barrel, Ronald Reagan was still the US President, and the first Back to the Future movie had just been released. In 2006, prior to the unlocking of Eagle Ford, Permian and Bakken, the average price for West Texas Crude Oil was $66 per barrel. In 2014, the price of an equivalent barrel has risen to a range of $80 to $107.
The US’ ascent is starting to create tectonic shifts in terms of trade, money flows and economic growth. Indeed, this remarkable shift in the world’s energy production is translating into a major economic windfall for the US and Canadian economies, and we believe it will continue to do so for many years.
Economic impact
The magnitude of the economic boon from this rise is staggering. Assuming oil prices at $100 per barrel, the increased production in Canada and the US means that as much as $212bn per year, that would otherwise be used to purchase OPEC oil, is now staying in North America and being put to use here.
The gains are, in fact, much larger when we include the virtuous cycle of new high-paying jobs supporting energy transportation and services, and the associated manufacturing renaissance that comes with a highly skilled, well-educated labour force and stable energy prices.
According to the US Bureau of Labor Statistics, 264,000 new jobs have already been created in oil and gas extraction and related industries since 2006. The average salary for these jobs is over $76,000 per year, or an aggregate of $20bn per year. If we assume a simple 2.5 multiplier effect (see Fig. 2), based on a conservative estimate of 60 percent marginal propensity to consume, the energy boom translates into approximately $500bn per year. That’s equivalent to nearly three percent of US GDP. It is clear that North America’s energy sector is partially fuelling the current economic recovery.
We believe this economic windfall is sustainable and that our estimates may be conservative. Indeed, more than $100bn worth of announced or approved infrastructure-related facilities projects in downstream gas, liquefied natural gas (LNG) and chemical plants will be developed in North America over the next five years, according to CIBC Asset Management’s Utilities and Power Senior Sector Specialist Dominique Barker. The economic stimulus from our largest trading partner is good news for Canada in terms of trade, tourism, energy security and growth.
A sustainable outlook
In order to ensure the sustainability of this growth, a responsible approach to the environmental and social impact needs to be adopted by the industry. Carbon footprints, water quality and land use all need to be appropriately balanced with overall economic benefits. Additionally, the quandary of access to market is a concern for Canadian energy producers, as trucking, rail and barging are neither the safest nor most efficient modes of transportation. The latest technologies utilised in pipeline construction and monitoring, such as acoustic detection systems, internal pressure wave based tools, and external cable and optical fibre systems, ensure that pipelines remain the safest and most reliable mode of transporting crude oil. As such, delays in cross border approvals for projects like TransCanada’s Keystone XL pipeline not only negatively impact the economics of crude transportation for Canadian producers, but also raise the risk of accidents and spills along already congested rail networks.
The US Energy Information Agency is calling for Americans to consume roughly 19 million barrels a day of oil in 2015. So, despite the US’ rapid growth in energy production, there are still no forecasts that predict complete energy self-sufficiency in the foreseeable future. We believe that, in the long run, energy self-sufficiency will become more viable in North America, but only if Canada’s oil sands and unconventional resources are exploited. Growing North American production is displacing foreign barrels; however, it is extremely unlikely that all sea-borne foreign barrels will entirely be displaced, due to the benefits of diversity of supply as well as foreign ownership of North American refineries.
Source: CIBC
Luckily for Canada, the US spent the better part of the past decade pouring billions of dollars and resources into reconfiguring its vast network of refineries on the Gulf Coast to accept the heavier type of crude produced from Canadian oil sands. These refineries convert crude oil into different types of fuel or end products such as motor fuel, aircraft fuel, heating oil, asphalt and petroleum coke. The majority of this monumental spending occurred between 2006 and 2011, prior to the recognition of the abundance of light oil coming from new US shale formations. As such, there remains a great deal of demand for heavy Canadian crude by US refiners, especially as heavy oil supply from Mexico and Venezuela is falling due to natural declines in those fields.
Today, the make-up of Canada’s crude oil production is almost evenly split between light oil and heavy oil. However, over the next decade, the vast majority of Canadian production growth is predicted to come from heavy oil regions like the oil sands. According to forecasts compiled by CIBC Global Asset Management’s Energy Specialist Brian See, by 2020 as much as two thirds of Canada’s production will consist of heavier crude slates, and thus the need to ensure end market customers is imperative for Canadian producers’ economic success.
Canada’s stable political climate is analogous to its highly predictable oil sands assets found in the foothills of Alberta. Unlike a well drilled in one of the US shale formations, which would have a natural decline rate of 30-40 percent, the decline rates of an oil sands mine can be drawn out over many decades without the need for capital being spent to replenish the lost production.
Simply put, there are no other large-scale untapped reservoirs that are located in politically stable countries that are open for trade and commerce, with such a well-educated and highly-skilled labour force. For the US to obtain self-sufficiency, it needs Canada. That’s why we believe Canada’s energy sector has a very bright future indeed.
The internal conflict that plagued Sri Lanka through most of the 1980s and the 1990s ended in 2009. Since then, the country has embarked on a programme of accelerated development. Throughout the civil war, Sri Lanka maintained some enviably high socio-economic indicators; according to the Sri Lankan Board of Investment, 50 percent of university graduates have studied technical or business disciplines, making the Sri Lankan workforce one of the most competitive in market terms.
Since then, the Sri Lankan government has been diligently ensuring the rest of the world knows that not only are the hard civil war days over, but that the island is open for business too. Finance is among the fastest-growing industries and foreign direct investment rose in 2013, from $1.38bn to $1.42bn, as the economy continues to grow. Over the last four years, while most of the world saw slow growth, Sri Lanka grew by an average of 7.3 percent annually. What’s more, the signs are looking very positive for 2014.
Insurance was nationalised in Sri Lanka in 1962 and remained a state-owned monopoly for 26 years
Continued improvements
This renewed interest for foreign investment, especially in sectors such as infrastructure development and hospitality has been positive for the finance industry. For life insurers, another important development has been the improved access to the northern and eastern provinces of the country. These were the areas worst affected by the conflict, and companies found it difficult to recruit and run offices in many parts of these provinces during this time.
Penetration of life insurance was, as a result, even lower than in the rest of the country. Since the conflict ended there has been rapid growth in sales of life insurance in these regions, and as a leading insurance provider in Sri Lanka, the accolades Ceylinco Life has earned throughout the years are in recognition of its diverse functions and innovative products in a country that has struggled with internal strife. With one of the highest solvency ratios in Sri Lanka, Ceylinco Life promotes and supports local development as well as advocating teamwork and diversity as an integral part of its business.
Key to its success is the firm’s efficiency in providing insurance to customers, as well as contributing actively to the economic wellbeing of the country through its products and initiatives. Some of the Ceylinco Life’s branches in the north and eastern provinces are among the best performing in the country. The increase in per capita income in recent years has also helped insurance and other businesses.
Insurance was nationalised in Sri Lanka in 1962 and remained a state-owned monopoly for 26 years. When the private sector was permitted to re-enter the market in 1988, the new players had to compete with two state giants, the Sri Lanka Insurance Corporation and the National Insurance Corporation. The new companies had to establish themselves, build public trust and confidence and develop new products to undermine the market dominance of these two entities.
Source: Insurance Board of Sri Lanka, Annual Report. Note: 2012 figures
“State entities continued to patronise the state corporations, and there wasn’t a level playing field at the beginning. However, penetration of life insurance was very low, so the market potential was high. By 2004, 16 years after it commenced operations, my company, Ceylinco Life, became the market leader in life insurance and has maintained this position since,” said R. Renganathan, the Managing Director and CEO of Ceylinco Life.
Today, the life insurance market is extremely competitive with 15 players including three international companies. According to the industry regulator, the Insurance Board of Sri Lanka, Gross Written Premium of the life insurance sector stood at $6.1m at the end of 2012, while total assets of the life insurance companies amounted to $3bn.
Increasing priorities
In this respect, life insurance is still a growing market in Sri Lanka with relatively low penetration levels. Four large players currently dominate the market and the products offered cater to different market segments based on levels of affluence, meaning there’s still significant room for growth and product diversification. Disposable income in many population segments is relatively low, which has generally made life insurance a low priority despite the high level of education and literacy in the country.
Awareness of the importance of life insurance is also lower than in more developed markets. But as the population becomes increasingly wealthier, delivery channels such as bancassurance and online insurance are growing in popularity and show major potential for development. “The penetration of life insurance as a percentage of the population is 12.1 percent, according to the 2012 Annual Report of the Insurance Board of Sri Lanka. When computed as a percentage of the work force, the figure is 29.1 percent, and as a percentage of GDP it’s 0.5 percent. This means that a substantial share of the potential market is still untapped. Life insurers will have to develop affordable products and innovative channels to increase penetration,” argued Renganathan, when offering perspective on the potential in Sri Lanka’s insurance market.
In order to promote the importance of life insurance and long-term savings products such as pensions, Ceylinco Life has developed two annual activities that are intended specifically to address the issue of inadequate awareness of the importance of life insurance and retirement planning. This includes the Life Insurance Week conducted in February every year, during which more than 4,000 sales personnel are deployed countrywide on a door-to-door campaign to speak to people and conduct a need analysis and explain about life insurance. The other promotional activity is the Retirement Planning Month conducted in May every year, which with a similar approach, focuses on the need for planning and investing in retirement plans. Both activities are supported by mass media advertising and events at branch level that directly engage the community.
Ceylinco Life also conducts possibly the largest and logistically most challenging customer promotion in Sri Lanka’s corporate sector annually, to reward and engage with policyholders and their families. Called the Ceylinco Life Family Savari, the promotion rewards more than 2,200 people every year with an all-expenses-paid, conducted overseas holidays to multiple destinations and a day-long excursion to a local theme park. Overseas holiday destinations have included Singapore, China, Paris and Japan, and the next edition will see policyholders and their families visiting Switzerland and Dubai. To date, more than 15,000 people have benefitted from the promotion.
Ceylinco Life invests majorly in the local community in order to cement the fact that the insurance industry is key to both Sri Lankans and the company’s future
Another promotional project is its educational tour of the city of Colombo, Sri Lanka’s commercial capital, for children of policyholders, conducted annually in conjunction with the distribution of school timetables to children across the country at the start of the academic year. All this contributes to overall awareness of life insurance and retirement planning products, improving sales.
“Our most popular products are the Anticipated Endowment Plan and our Medical Plans; which include a critical illness policy covering 36 major illnesses; Ceylinco Life Major Surgery, covering 526 types of surgeries; and Family Hospital Cash, which makes a cash payment for every day a policyholder is hospitalised. Our retirement plans branded as Flexi Plans offer many flexibilities and are also very popular,” said Renganathan.
Constantly evolving
Looking ahead, the firm said that it’s also currently in the process of developing new products that will cater to the needs of Sri Lanka’s ageing population. One of the biggest challenges that the young insurance market faces is the lack of a sufficient talent pool in Sri Lanka. Recruitment and retention of sales agents is not easy, as insurance is not one of the preferred professions and this has made the fight for talent a key focus. “Ceylinco Life, has led the way with many programmes to improve the image of the life insurance salesman by promoting international training programmes and qualifications and through mass media campaigns,” explained Renganathan.
According to the firm, another challenge is the high incidence of policies lapsing, due to a combination of factors, including low disposable incomes, inadequate understanding of products, incorrect selling, and the existing commission structure, which makes it more profitable for an agent to sell a new policy rather than follow-up on overdue premium incomes. A lot of these issues come down to a lack of awareness regarding life insurance.
This is why Ceylinco Life invests majorly in the local community in order to cement the fact that the insurance industry is key to both Sri Lankans and the company’s future. Among this portfolio of value additions for policyholders is the annual Ceylinco Life Pranama scholarships programme that rewards the academic and extracurricular achievements policyholders’ children, and an annual Cash Bonus pay-out during the national new year season.
In total, the company to date has issued 1,770 scholarships, and when the next 160 scholarships are presented in February 2015, the cumulative value of the Pranama Scholarships will reach Rs100m. With this year’s cash bonus payments, the cumulative value of cash bonuses paid by Ceylinco Life every April over the past 11 years exceeds $1.6m.
Since the 2008 recession, the US commercial banking sector has faced a dramatic number of changes – particularly in regards to cyber security and regulations. World Finance speaks to Jean-Marc Torre, SEVP and Commercial Banking Group Head at Bank of the West, to find out how his organisation is helping companies navigate the labyrinth of new rules to stay competitive.
World Finance: Now Jean-Marc, you have a number of commercial banking clients; can you tell me about some of the trends you’re seeing among them? Jean-Marc Torre: The biggest trend now is innovation. Innovation that transforms and sometimes disrupts the business landscape.
The other trend is cyber security. Everybody now recognises that cyber-crime is a very important risk for businesses.
Another trend is probably that companies have to be more capable than ever to deal with uncertainty. Uncertainty with an environment that is changing a lot.
[C]ompanies have to be more capable than ever to deal with uncertainty
And I guess the last thing I’d like to mention is regulation. Regulation has increased, and its impact is now – particularly in the financial sector – a very important aspect.
World Finance: Now, can you tell me how companies are able to stay competitive in the ever-growing, ever-changing global marketplace? Jean-Marc Torre: Globalisation is not a new thing. But it’s fair to say that now it has different features.
One important feature now is the fact that all companies, because of their investments, their markets, their supply chain; they are international. And again, international is also uncertainties and change. It’s a changing environment.
So, companies have to recognise the change. Sometimes new difficulties, but also have to be quick to grasp opportunities. So I guess they try better to understand the markets, and keep their global view, but at the same time a local understanding. And this is where new challenges, as much as new opportunities, can be identified.
This dialogue, this understanding we have of the complexity of the world our customers have to operate in, is I think, critical. As much as it is for them to make sure that they have a strong support and understanding of the various countries and markets they are in.
World Finance: Now cyber-crime of course is a present issue in the marketplace; can you tell me how companies are addressing it? Jean-Marc Torre: To address cyber-crime is the same as to address the international uncertainty. Some studies show that cyber-crime costs to business are about to $444bn, which is almost one percent of global revenues.
And not only is it big, but it’s increasing. I think the increase last year is estimated at 18 percent over the year before. So not only is cyber-crime increasing in intensity, but it’s also more innovative and more diversified in the type of tactics and techniques they use.
So, to prepare for that, you need to look at partnerships. And banks in that instance, and Bank of the West in particular, is trying to support our customers that way.
One way to do it is to talk to customers, to make sure that they understand, and we understand, what are the risks. And the impact on their processes in the data.
[Our clients] appreciate the fact that we take that seriously, and look at that in partnership
It’s also a matter of training. You have cyber-crime techniques such as social engineering: to withstand this kind of attack, you have to have control and protection of data, but also training of your people.
What we do is keep an open communication with law enforcement, in order to be aware of new risks. Communication and cooperation with all players is very important.
Obviously investing in keeping our tools and our systems and our products up to date is important, and we provide of course a wide range of fraud prevention tools. Lastly, if and when some cyber-attack happens and hits, we also try and work on mitigating the impact of it.
World Finance: Can you tell me about how your clients are reacting once these tools have been put in place? Jean-Marc Torre: They appreciate the fact that we take that seriously, and look at that in partnership.
I think it’s critical to understand, and I think customers appreciate it, that it’s by being together, and looking at things end-to-end, that we are stronger. And as much as we can protect ourselves, finding ways where we are together in this partnership with our customers both stronger, is something which is critical.
I think customers are sensitive to the fact that our goal is to keep our customers financially viable, but also strong, and in the long run.
World Finance: Well many exciting developments; Jean-Marc, thank you for joining me today. Jean-Marc Torre: Thank you.
The third-largest city in the UAE – Sharjah – which has a GDP of over AED 100bn, a massive manufacturing sector, and is a leading centre for arts and culture – is becoming a hotspot for investment. World Finance speaks to Ahmed Obaid Al Qaseer, COO of Sharjah Investment and Development Authority, to find out about developments.
World Finance: Well Sharjah, maybe you can start by telling me, how well developed is the economy and infrastructure in the city, and where are the opportunities? Ahmed Obaid Al Qaseer:Sharjah has a state of the art infrastructure when it comes to roads, especially telecommunications, which is very well connected with high-speed internet: all required services by businesses.
Talking about opportunities; we have first of all tourism. As you said, Sharjah is a culture and arts hub. We have a lot of museums, a lot of places to visit. So what’s lacking currently and what we’re looking at, is five star hotels, where we have a lack of around 3,000 rooms.
And we’re also looking at food and beverage, which complements the tourism attraction. This is something that we’re looking to develop – we’re looking at restaurants, we’re looking at cafés. And we’re looking at a growth of around AED 1.9bn in this sector over the coming two years.
Sharjah’s well known as an industrial hub; 33 percent of the industries in the whole UAE are in Sharjah
Then we’re looking at another sector, an important sector, which is transportation and logistics. We’re looking here at air carriers, where they can land in Sharjah airport. We’re also looking at the ports. We’re expecting a AED 6.2bn growth by 2016.
Another sector we’re looking at is the healthcare sector. This is a sector where we expect a growth of AED 6.5bn by 2016. And here the government have taken an initiative where they have launched Healthcare City. Healthcare City will be a free zone, focused not only on hospitals, but we’re also talking about clinics, research centres, development centres. Pharmaceuticals is something important as well. So this is another big sector.
The last sector we’re focusing on is environment, where we’re talking about renewable energy and energy efficiencies. This is also something booming in the world, and again Sharjah has taken the lead here. Sharjah by 2015 will have zero waste to landfill.
And here we have a lot of opportunities; we have offers about wood recycling, plastic recycling, and also we’re looking at solar farms.
So these are the four sectors with a lot of opportunities with a return of at least 15 percent.
World Finance: Well how well set up is the business environment in Sharjah for investors, and where are the advantages or favourable regulations? Ahmed Obaid Al Qaseer: Sharjah’s well established when it comes to businesses. There are two types of companies that can be established in Sharjah.
One is a free zone company, where it’s 100 percent repatriation of profits, plus 100 percent tax free. The other is the inland companies, which are out of the free zones. They have slightly different policies, but still where you can make 100 percent of your repatriation, and still 100 percent tax free.
Sharjah has a diversified economy; none of the sectors contribute more than 20 percent to GDP. And Sharjah’s well known as an industrial hub; 33 percent of the industries in the whole UAE are in Sharjah. And Sharjah has around 21 zones only for industries.
World Finance: Well how does Sharjah compare with other cities in the UAE, such as Dubai? Ahmed Obaid Al Qaseer:The UAE by itself is a unique country, where we have different emirates. And as the UAE, we all complement each other. Every emirate has its own niche; as I said Sharjah’s diversified, and more focused towards the industrial zones.
World Finance: Well Sharjah of course has a very rich heritage, so how well developed is the tourism sector, and what challenges does it still face? Ahmed Obaid Al Qaseer: Sharjah’s well known as the cultural capital of the UAE. In 2014 Sharjah was voted the Islamic Cultural Capital. In 2015 we are celebrating the Arab World Tourism Capital.
It’s famous for its arts; we do have the largest arts event in the region, like the Sharjah Art Biennial. We have the Sharjah International Book Fair, which is the fourth-largest in the world. We do have the Formula One boat races. So we do have a lot of activities.
Yes, we do have some challenges, and that’s why we’re promoting the tourism sector. We have a lack of rooms; 3,000 rooms between now and 2016, so there’s a big chance of development of hotels here. Plus we have our own plans in promoting Sharjah as a tourist hub compared with other emirates.
World Finance: Well the Middle East is of course fraught with political instability, so what impact has this had on the city, and is it still a safe place to invest? Ahmed Obaid Al Qaseer:Well the UAE is a safe country – thank God it’s a safe country. Yes, there are some things happening around, but we are 100 percent safe.
We see a lot of increase in tourism, we see a lot of increase in investments; so yes, I would definitely stress that it’s a safe place to be in. A safe place to live, and a safe place to work.
World Finance: So finally, what are the priorities for your organisation moving forward? Ahmed Obaid Al Qaseer:As an investment and development authority, for investment side, as an IPA, we are now looking at the market again: updating our studies to focus on where to look for investors from, geographically, and what sectors to emphasise more.
Then again, as a development authority, we do develop projects. Especially in the tourism sector, where currently we’re developing two hotels in Sharjah, which are the Chedi Khorfakkan on the east coast, and we have a great hotel which will be managed by the five star über-luxury brand which comes out of Singapore: GHM, also under the Cheddi brand.
We have a famous destination, which is the waterfront, the Al Majaz waterfront. It has restaurants and cafés that have been successful. We’re now starting phase two, we’re adding more restaurants and cafés. And we’re adding offices into this project.
So yes; we do have a lot of things happening, whether it’s on the development side, or on the investment/attraction side.
The economic crisis hit Greece hard, and the financial services industry was caught in its wake. But ING, one of the country’s biggest insurance firms, saw the tough climate as a chance to find new opportunities, strengthening its customer focus and paving the way for innovation.
Rene Scholten, ING’s Chief Financial Officer, spoke to World Finance about how the insurance industry is changing, what ING is doing to step up to the challenges and why impeccable customer service is so important if companies want to succeed in the current economic environment.
How difficult has it been to run a financial services company during the financial crisis? I would prefer to use the word challenging. Running an insurance company during a financial crisis was and still is a big challenge, especially when the overriding priority for a lot of people is to support their families through basic provisions such as food, clothing and education, rather than buying insurance policies. That’s even more evident in Greece, where private insurance is less of a priority than in other northern European countries.
In periods of financial turmoil people change their purchasing habits, and their buying power is much lower. The environment it creates isn’t conducive to helping the industry grow and doesn’t enable insurance companies to provide all of the products they offer. That’s partly as a result of lower interest rates; pension products, for example, don’t appeal to customers because they can’t offer high returns when they mature, even though pension schemes would be the right move for a lot of people, ensuring they have enough money when they retire. The crisis made people realise the importance of having those sufficient funds when they retire, so ING adapted to that, understanding the need to offer relevant insurance plans to customers.
In periods of financial turmoil people change their purchasing habits, and their buying power is
much lower
What have the biggest challenges been for ING in Greece during the last few years? What we tried to do at ING was improve our offering to customers. We saw that Greek families were struggling to cope and wanted insurance cover for more basic needs. The challenge for us was to adapt to those changes and become more customer-orientated. We focused on improving our services and offering potential customers new products with lower premiums, and we helped existing customers change to new insurance plans that offered better cover at a lower price. We also implemented a corporate social responsibility programme in order to help the community, because ultimately our aim is to take care of people and ensure they can depend on us when they most need our help.
What opportunities have emerged from the crisis? With every crisis come new opportunities. At ING we witnessed that, and instead of holding back as many other insurance companies did when the crisis struck, we saw the opportunity and changed our strategy. We focused on becoming more customer-focused and making the company more ‘lean and mean’. We underwent a big transformation with regard to our product portfolio, customer service channels and internal procedures.
With the aim of improving our customer service, we developed an online portal in order to give existing clients direct access to our services. That was a huge leap given that Greek insurance companies don’t tend to offer much in the way of online services. We’re separating ING’s insurance and banking sectors so the online approach is also good preparation for that. ING Insurance International is planning a rebranding and we will become NN Group, embracing our heritage by returning to the brand name used prior to becoming ING. That’s good news for us, as NN is still strongly associated with the brand and its values.
How do you see the next few years progressing for Greece’s financial sector?The Greek financial sector will continue to struggle for some time, but it will eventually become healthy and strong again (see Fig. 1). Financial companies and the state are working very hard to bring the sector back and are determined to see it succeed. Although some individual companies may struggle to survive, there’s no doubt ING will recover.
As for any upcoming innovations in the market, I would say that online sales and services are very hot at the moment. Despite direct channels having been present in some countries for a decade, it’s new to Greece but we are catching up quickly.
ING Greece was recently named a National Champion for its customer service in the European Business Awards, which involved 24,000 participants from 28 European countries. That alone shows there is a future for companies in Greece, especially in the financial sector, as long as the next steps are well thought out. That’s important because, despite the fact I’m convinced the worst part has passed, there is still a way to go and we can’t let our guard down now. We need to be extremely careful regarding our next moves, because there are still a lot of challenges ahead of us.
One such challenge is Solvency II, which is fast approaching and which is going to have a direct impact on insurance companies’ reserves. Companies will need to be extremely healthy and have a strong capital base. It will change the market a lot and we expect to see a significant number of consolidations and take-overs, because there are a lot of small companies that won’t be able to adapt quickly enough to the new environment. We think the banking sector is somewhat ahead of the insurance sector in that respect. At ING we have already worked hard and prepared the company for this in order to ensure that we remain strong and healthy for our customers.
Why is ING leading the way in Greece’s insurance industry? We are customer-driven and our strategy is to invest in creating better services for that customer. There are several projects running at ING Greece and all of them share a common goal – to keep our customer happy and enable us to listen to their needs. There are a lot of controls in place, such as a quality of sales procedure, to ensure that what we offer is of the highest standard.
Source: International Monetary Fund. Notes: Post-2011 figures are IMF estimates
In our first point of contact with a customer we use the Needs Analysis Form in order to understand the needs of the prospective customer, so that we can then offer the relevant insurance product according to those specific needs. In addition to that we conduct a satisfaction survey using the Net Promoter Score (NPS) tool, which is a survey that we email out to any customer who has made a transaction with ING Greece, whether that’s buying a new policy, modifying an existing one or even contacting us to make a complaint. The tool enables us to check whether our service is meeting the standards both we and our customers want. ING Greece isn’t just about selling as much as possible – it’s about providing excellent customer service.
How can companies like ING change customers’ perceptions of financial institutions? Like every big multinational company, we have a set of business principles that require us to be open, clear and transparent towards our customers. In all our communication and marketing materials we try to be as clear as possible. The best example of that is our new policy book of general terms and conditions, which we made as clear and user-friendly as possible. It has an innovative design and is easy to read through and understand, enabling our customers to quickly find what they’re looking for. As we’re a financial institute that wants to earn the trust of our customers, we’re strict – but not unfairly so.
How is ING engaging with customers? We take pride from the fact that as a company we have several touch points where our customers can reach us. They can get in touch with us through our customer contact centre, located on the ground floor of our head office in Athens. For those who don’t live in Athens we have more than 50 offices across Greece with over 1,100 sales advisors servicing the clients, and of course our call centre, which is available 24/7.
We also have a big social media presence, with a large community following our Facebook page. We received a Best Practice Award for our contact with customers, and we take a fresh and informative approach that centres on our live well philosophy. We are always quick to respond to customers, with social media providing a constant source of contact.
