maquette de magazine

N° 211N° 211January / February 2008

COVER STORY

InsuranceClaims managementInsuranceClaims management

European financial management & marketing association www.efma.com

FOCUSIslamic banking

FINANCIAL CRISISFrom subprime to thereal economy

SEBSME: a highpotential target

NEW SURVEYWorld insurance report2008 issue, by Capgemini

211_01_Couve Efmag_GB.qxd:000 8/01/08 15:45

Brussels, 31 January - 1st February 2008

Insurance

www.efma.com/insurance

The following experts will take the floor

Insurance companies use a high number of distribution channels:exclusive agents, brokers, partnerships with banking networks orwith CGPI, direct sales… The objective of this conference is a closereview of this selling approach: - Which client segment prefers which type of channel and for

which product?

- How the insurance companies coordinate this multichannelapproach?

- What is the future for insurance sales through the new channels? Each participant will receive a copy of the "World InsuranceReport 2008" prepared by Capgemini and dedicated to distributionchannel integration.

Multichannel management and customer challenges

� Nathalie Broutèle, Natixis Assurances

� Christa Decaestecker, ING

� Bernard Delas, Crédit Agricole

� Arnaud Giraudon, Suravenir

� Isabelle Grosmaitre, April Group

� Johan Hosselaer, Fortis Insurance International

� Michael Kehoe, Zurich Financial Services

� Dominique Monéra, AGF

� Laura Piatti, Intesa Sanpaolo

� Gert Rammeloo, Kredyt Bank & Warta

� Vincent Reina, Genertel

� Virgil Soncutean, Allianz

� Martial Stambouli, MMA Vie

� Eveline van Baar-Verwijmeren, Eureko

211_02_Autopromo_Assurance_GB.qxd:01 7/01/08 17:28 9

N°211 - January / February 2008 | 3 Efma(g)

>>>

EUROPEAN FINANCIAL MANAGEMENT & MARKETING ASSOCIATION16, rue d’Aguesseau - 75008 Paris - Tel.: 33 1 47 42 52 72 - Fax : 33 1 47 42 56 76

www.efma.com

Efma Magazine16, rue d’Aguesseau75008 Paris Tel.: 33 1 47 42 52 72 Fax: 33 1 47 42 56 76www.efma.com - [email protected] PublisherPatrick DesmarèsExecutive director, EfmaHead of content managementDaniel Lacotte, EfmaDeputy chief editorCharlotte Collonge, Efma EditorChristiane Rollin, EfmaLayoutFlorent Chagnon, Efma

EDITORIAL BOARDChief editorIan McDonaldHead of international clientsBarclays Bank plc France

Marc AlaurentBusiness relations directorLaserDominique ClaudelDirecteur des études stratégiquesbanque de détailSociété GénéraleEmmanuel GuianManaging directorQuintessJosiane LancelleStrategy directorBanque Fédéraledes Banques PopulairesPhilippe LaulanieResponsable du départementdéveloppements multicanauxBNP ParibasBernard NormandDirecteur central honoraireLCLJean-Christophe Picard, Chargé de mission, Direction généraleadjointe AssuranceMACIFYannick PicardDirecteur du marketing de l’offreMAAF AssurancesChristophe PreschezDirecteur Internet et innovationCNP AssurancesStéphan SalberterGroup CommunicationsABN AmroPhilippe WallezDirecteur du marketingING BelgiumILLUSTRATIONSNicolas LemanPRINTED BYGroupe Corlet imprimeur 14110 Condé-sur-Noireau

ISSN : 1771-4222

� Interview with BernardDe Gryse“From industrialisation to financialisation” ................. p. 34

� United Kingdom“Pay as you drive” insurance ........ p. 36

� JapanAn urgent need to encounter customers............. p. 39

� MMA in UKOutsourced claims handling ........ p. 42

� SpainRepairing instead of financing ...... p. 44

� Genworth Staying ahead of customer expectations........... p. 46

� France Service offerings improveclaimants’satisfaction .............. p. 48

� United States Redefining the claims process ..... p. 50

� Bancassurance Reinforcing customers’ loyalty ..... p. 53

Focus• Interview with Zamir Iqbal, World Bank

“Emphasizing the concept of justice”. . . . . . . . . . . . . . . . p. 22

• AnalysisIslamic investment management, the way forward . . . . . . . . . . . . . . . . . . . . . . . . p. 24

Products and markets• Wealth management

Serving the UHNWI (Ultra High NetWorth Individuals). . . . . . . . . . . . . . . . . . . . p. 26

Trend• Financial crisis

From subprime to the real economy . . . . . . . . . . . . . . . . p. 30

And more...�News and trends p. 4 to 8� People p. 55�Books p. 56� Event to come p. 58

The European challenge• Regulation

“Solvency II”, issues at stake in Europe . . . . . . . . . . . . p. 9

Studies• Online consumer behaviour

Internet keeps the pressure . . . . . . . . . . p. 11

• WIR 2008New opportunitiesemerge for insurers p. 12

• European retailersBanking at the mall . . . . . . . . . . . . . . . . . . . p. 16

Strategy• SEB

SME: a high potential target . . . . . . . . . p. 19

In t

his

issu

eInsurance:

claims management

COVERSTORY

211_03_Sommaire_GB.qxd:000 7/01/08 15:51 Page 1

4 | January / February 2008 - N°211Efma(g)

Newstrends

STRATEGY AND ACQUISITIONS

Santander sold Antonveneta

The insurance company AXA has decided to merge itsbanking subsidiaries in Germany (AXA Bank), Belgium (AXABanque Belgium), France (AXA Banque) and Hungary (EllaBank) into a single European bank, called AXA BankEurope and which will start operating in 2008. AXA BanqueBelgium will be the centralizing legal entity and the otherthree banks will operate as subsidiaries. This Europeanbanking cluster is intended to enable AXA to improve andintensify its range of retail banking products and serviceson national markets where competition is tough.

AXA launched a European retail bank

The British insurance company Aviva has concluded anexclusive fifteen year partnership agreement with thePolish bank Bank Zachodni WBK (BZ WBK). Under thisagreement BZ WBK will distribute life insurance andgeneral insurance products in Poland. Aviva and BZ WBKwill set up two joint ventures and will each contribute50% of the total £13.2 million capital for the newcompanies. The life and general insurance productsdeveloped by the two joint venture companies will bedistributed by the BZ WBK network which has400 branches and 1.4 million customers.

A Polish partnership for Aviva

The Spanish banking group Santander has sold theItalian bank Banco Antonveneta, that it recently acquiredas part of the ABN Amro break-up, to Monte dei Paschidi Siena (MPS) for a consideration of €9 billion. MPS isfinancing 50% of the acquisition via a share issue andanother 20 to 30% via asset disposals. Santander willmake a profit of €2.4 billion on the sale, while this

acquisition will make MPS Italy’s third largest bank,increasing its market share from 6.2 to 9.3%, behindUniCredit and Intesa Sanpaolo. The deal will also addmore than 1,000 branches to its network, i.e. 3,022 intotal, with a particularly strong presence in the north ofthe country.

211_04_08_Bre?ves_GB.qxd:Mise en page 1 7/01/08 16:35

N°211 - January / February 2008 | 5Efma(g)

... so did Munich Re

Swiss Life is selling itsprivate bank

ING to launch a retailbank in Ukraine

The German company Munich Re, the world’s secondlargest reinsurer, announced in mid-October that it hadreached an agreement to acquire the American insurer,Midland, in a deal valued at $1.3 billion (€917.3 million)payable in cash. This deal will enable Munich Re to doubleits operations in the USA. Midland, which is headquarteredin Cincinnati, Ohio, is present in all American States andhas 1,200 employees. In 2006 it generated some$832 million in premium income for a net profit of$71 million. The projected synergies are expected togenerate savings of $11.2 million in 2008 and up to$62.5 million in 2012.

The Swiss insurance company Swiss Life is selling itsprivate banking subsidiary, Banca del Gottardo, to BSIthe banking subsidiary of the Italian insurance companyGenerali in a deal valued at 1.87 billion Swiss francs(€1.13 billion). BSI and Banca del Gottardo, whichalready work closely together, in particular sharing thesame IT platform, are expected to be merged once thedeal has been finalised, probably in the first quarter of2008. As both banks are headquartered in the Italian-speaking Swiss canton of Ticino, a large part of theirbusiness involves high net worth clients in Northern Italy.

Mapfre acquired anAmerican insurer Mapfre, the leading Spanish insurance company,announced at the end of October 2007 that it hadacquired the Commerce Group, America’s twentiethlargest insurance company, in a deal valued at$2.2 billion (€1.53 billion). Commerce, which isheadquartered in Massachusetts, is particularlyactive in non-life insurance and has 31% of theautomobile insurance market in its home state.Commerce, which operates in 17 other states,generated €1.368 billion in premiums and a netprofit of €168 million in 2006. Mapfre’s existingsubsidiary in the United States will be mergedwith Commerce.

The Dutch bancassureur ING has announced itsintention to open a retail bank in Ukraine in 2008. Theretail banking sector is growing rapidly in Ukraine andING plans to invest some €100 million there over thenext two years. Several Western European banks, suchas BNP Paribas, Crédit Agricole, Erste Bank, IntesaSanpaolo and Raiffeisen, are already present in Ukraine,in most cases via the acquisition of a local bank. INGhas already launched a similar type of retail bankingoperation in Romania, where it has been operating since2004 and now has 140 offices and some400 000 customers.


trendsNews


Hard-to-please customers According to a pan-European study conducted by TNSon behalf of Fujitsu Services among 2 500 consumersin Germany, Spain, France, the Netherlands andSweden, bank customers want both online banking andface-to-face contact in a branch. Customers have a clearpreference for these two channels, without wanting tosacrifice one for the other. Call centre contact is theirthird choice, while mobile services came last. The surveyalso reveals a disparity between what banks thinkcustomers want and what users would really like. Whilebanks believe that a wide range of products is the keyfactor for customers, the latter attach the mostimportance to brand reputation and the quality of theinformation provided regarding products and services.

Société Générale to open aPan-African branchThe French banking group Société Générale recentlyopened a new specialised branch in Paris for customershaving close business ties with Africa, based on theconcept of “Your Bank here and over there”, whichoffers all the products and services available in Franceand their equivalent in Africa. The bank also hosts therep offices of four Société Générale subsidiaries inAfrica: the Cameroon-based SGBC, the Ivory Coast-based SGBCI, the Guinea-based SGBG and theSenegal-based SGBS. Société Générale has alreadyopened several co-branded branches: with itsSenegalese subsidiary in Paris and with its Moroccansubsidiary Société Générale Marocaine de Banque, alsoin Paris and in the Paris region, as well as in Lyons. It isalso planning to open shortly a branch in Marseilles withits Algerian subsidiary, Société Générale Algérie.

COMMUNICATION

A bidimensional adverting campaign for SabadellTo promote its mortgage product “Hypoteca Joven”aimed at young people (maximum age 30), the Spanishbank Banco Sabadell is using “bidi”, the bidimensionalcode technology developed by Movistar. Interestedcustomers take a photo with their mobile phone of thecode included, like a barcode, in a printed advert. Thiscode then enables customers to obtain additional

information and a promotional video presentation of theproduct on their mobile phone. This marketing operationis part of the “Instant Banking” innovation programme,the result of the cooperation agreement concluded inMay 2007 between Banco Sabadell and theoperator Télefonica.

DISTRIBUTION


Colombian fans of remotebanking services

A new product available via mobile phoneThe card issuer Visa Europe and the mobile phonesoftware provider Monitise are working together to offera prepaid account that can be accessed by mobilephone. Consumers will be able to load the account withfunds from either a bank account or a credit or debit card.They will then be able to use their account for onlinepurchases or to send it to a third party via their mobilephone. This new service is expected to be popular withyoung people and people wanting to offer gifts. Futureservices planned include checking account balances,money transfers, etc.

The banking licence granted to Banque Postale, thebanking subsidiary of the French Post Office, at the endof 2005 restricted its credit offering to mortgages.However, Banque Postale is to be authorised to expandits range of financial services to include consumer creditand it plans to launch its first consumer credit productsat the end of 2009 or in early 2010, once it hasselected a partner. This partner, with which it will set upa joint venture to develop products, will be selected viaa type of tendering procedure. Banque Postale intendsto offer consumer credit products at affordable priceswhile being particularly attentive to the need to preventover-indebtedness.

The Banque Postale launchsits first consumer credit


A private ATM dedicatedto retailers Bank of America is innovating by offering retailers anew cash management service. It is currently pilotinga new automated, secure, in-store cash storagesolution with the restaurant chain Chick-fil-A. Inaddition to storing cash, the solution counts theamount of funds received and allows funds to becredited immediately to the retailer’s account. Thissystem has several advantages: notably, thecustomer’s account is credited very rapidly, evenbefore the funds are physically transferred, the bankhas an immediate real-time view of transactions onthe retailer’s account and the system is more securewith fewer fund transfers. Retailers can also withdrawcash from the system as and when needed, with theamount being debited immediately to their account.This new system functions in effect like an ATMdedicated to a single user.

PRODUCTS AND SERVICE OFFERINGS

At the end of November 2007, Colombia’s largest bankingnetwork Redeban Multicolor, the country’s mobile phoneoperators and Gemalto, the digital security specialist,launched a mobile phone based remote banking service.A secure software application storing the subscriber’sspecific data is inserted in the phone’s SIM card and aserver interprets the messages exchanged between thebank and the SIM card. Customers can use this solutionto perform secure banking transactions, check theiraccount balance, transfer money, pay bills, etc. Since thisnew service was launched more than half a milliontransactions have been recorded, i.e. approximately sixtransactions, per active user, per month.



Sale of credit cardbusinesses by HSBC

Western Union enablescross-border transfers

The UK banking group HSBC has sold its Marble andBeneficial credit card businesses to SAV Credit, a cardissuer owned by the Palamon Capital Partners investmentfund, in a deal worth £385 million (€549 million).Marbles, which was launched in 1999, was one of thefirst British online cards. Beneficial issues affinity cardswith more than a hundred partners such as charities,sporting clubs, commercial companies, unions andprofessional bodies. The two credit card businesses havea total portfolio of 338,000 customers. This sale reflectsHSBC’s intention of refocusing its credit card strategy.

Western Union, the international money transferspecialist, has concluded a partnership agreement withGSMA, a trade association representing mobile phoneoperators, in order to develop a system which enablescross-border transfers to be made via mobile phones.This new service which is due to be launched in thesecond quarter of 2008 will enable money to be sentand received via mobile phone, including to and fromthe Western Union network. Western Union has anetwork of 312,000 agencies in more than200 countries and handles approximately 17% of allinternational money transfers. GSMA is a tradeassociation representing 35 mobile phone operatorswhich have some 800 million customers in a hundredor so countries.

trendsNews

A new EuropeannetworkSix national debit cards have joined forces to set upa new European card payment network called EAPS(Euro Alliance of Payment Schemes). The foundingmembers of EAPS are Cogeban, which operatesPagoBancomat and Bancomat in Italy; EPCS(European Card Solutions) which manages ElectronicCash as well as the Deutsches GeldautomatensystemATM network in Germany; Eufiserv, which processescard and ATM transactions for European banks andsavings banks; Euro 6000 in Spain; Link InterchangeNetwork in the United Kingdom and Multibanco inPortugal. EAPS, which is headquartered in Brusselsrepresents more than 222 million cards issued inEurope and almost 190,000 ATMs, is due to beginoperations on 1st January 2008.

Halifax is testing Visa’spayWave technologyThe British bank Halifax is testing a contactless debit cardusing Visa’s payWave technology with 25,000 customersin London. For low value payments (less than £10 i.e.€14), users simply waive the card over a reader; forpayments in excess of ten pounds or to withdraw cashfrom an ATM, the card is used in the customary way. Thenew cards can be used in a thousand or so retail outletsin London, including service stations, cafés, bookshopsor restaurants such as McDonald’s, Coffee Republic,Threshers, YO!Sushi, etc. According to the APACS, thenumber of contactless cards issued is expected to exceedfive million by the end of 2008 and be accepted by atleast 100,000 retailers across the UK.

CARDS AND PAYMENT INSTRUMENTS



The European challenge

he European Commissionlaunched its Solvency IIdirective on 10 July 2007.The Commission’s primary

objective is to spur the internalinsurance market while ensuringpolicyholders are protected atEuropean level in case a companyfails. Solvency II is explicitly inspiredby the rules established by the Basel II directive for thebanking sector, and notably the authorisation given toinsurance firms to use internal models to calculateprudential capital requirements. Generally speaking,the Commission has wished to coherently integrate theinsurance sector within the framework of internalmarket regulations, and the internal market for financialservices in particular, by taking financial marketinnovations into greater consideration. The standardingredients found in Commission initiatives over thelast few years are all present: consumer protection, theobligation to ensure proper governance and to keeptrade professionals informed, along with a focus onmarket supervision.The European Commission’s credibility is at stake inthis text to a degree since it includes a number ofinnovations, such as the implementation of groupsupervision for companies that are active in severalMember States. The text has been the object ofconsiderable preparatory work, with input as much fromthe European Parliament as from the Council, and alsofrom trade professionals and consumers. Since 2005,the CEIOPS (Committee of European Insurance andOccupational Pensions Supervisors) has organised tenconsultations concerning the various points in thedirective and has published several series of in-depthquantitative impact studies that gradually establishedthe directive’s framework. Insurance professionals have

already had numerous occasions to expressthemselves, either during these investigations or duringconferences organised by the European institutions.For all that, it seems that the insurance sector isunevenly prepared for the directive. The majorEuropean groups (fourteen companies account for 80%of the European insurance market) became involvedearly on in preparing the text and they state that theyare 90% ready to implement the new prudential regimein 2010 (B&W Deloitte, CEA), while the small andmedium-sized insurance companies, as well as themutual insurance sector, declare that they are muchless prepared to withstand the shock of a new regime.Having doubtlessly participated in the debate muchlater, mutual insurers and small firms are now seekingto influence discussions and particularly at EuropeanParliamentary level, in order to draw attention to thedistinctiveness of their own activities.The Parliament and Council are working together toensure that an agreement is reached as rapidly aspossible from the very first reading, although thedirective’s adoption by European co-legislators mightcome up against several fundamental issues. LabouritePeter Skinner, European Parliamentary rapporteur forthe draft directive, took part in its deliberations veryearly on and the sensitive issues in the text quicklybecame apparent. Among them, the protection ofpolicyholders when an insurance company establishedin another Member State fails should receive specialattention from members of the European Parliament.Some MEPs indeed got their fingers burnt with thefailure of the British insurer, Equitable Life. The Councilhas also begun to work on the directive and it comesas no surprise that the most sensitive subject is thedirective’s institution of group supervision. The4 December ECOFIN Council of Ministers revealed thatseveral Member States, including Spain and some new

Regulation

“Solvency II”,issues at stake in EuropeHow far will the insurance sector reform instituted by the Solvency II directive go? The solvency

regime proposed by the European Commission is both ambitious and sophisticated. It now

remains to be seen whether this reform will successfully negotiate the hurdle of adoption by

Europe’s co-legislators and whether its realisation and implementation will subsequently meet

the European Commission’s ambitions.

By Marc Jamet Euralia

TMarc Jamet

>>>

211_09_10_Euralia_GB.qxd:Mise en page 1 7/01/08 15:50 Page 1


The European challenge

Member States, are worried about their nationalauthorities losing control over companies operating intheir territory but whose headquarters are establishedin another Member State. The European Commission will have to be verypersuasive to incite Member States to relinquish someof their national supervisors’ prerogatives in favour ofa group supervisor. It will be able to rely on the supportof the European Parliament and of its rapporteur. Ithopes that the directive may be adopted before theend of the French presidency in December 2008 andit is therefore remaining optimistic for an entry intoforce in 2010. Prior to that, the Commission and theCEIOPS will have to show that they did not neglect thefears of the Parliament and of the Council in preparingfor the directive’s implementation.

The CEIOPS is already working on level2 implementation measures. It is, in particular, studyingthe crucial issue of defining the standard formula to beused in calculating the solvency capital requirementand calibrating risk margins. During the parliamentarycommission debates on economic and monetaryaffairs, European MEPs, who now have a say aboutimplementation measures, warned that they would bevery attentive as to the balance among the varioussegments of the insurance market to be instated bythe CEIOPS. Another challenge will be to determine theposition of pension funds (currently excluded from thedirective). In their work programme for the year 2008,published on 21 November 2007, level 3 committeesannounced that they wanted to work towards bringingcontrol over financial instruments with similar riskindices, although not governed by the same rules,closer together. In the long term, pension funds couldsee themselves associated in this way with theprudential rules and market discipline imposed by

Solvency II. The CEIOPS will then have to ensure thedirective’s appropriate, coherent implementation in allMember States. This is no simple matter. TheParliamentary rapporteur, Peter Skinner, recalls thatthe initial 2002 Solvency directive failed to modernisethe European insurance market largely because itstransposition and its implementation were too disparatewithin the different Member States. For the directiveto be successful, it is essential that the EuropeanCommission and the CEIOPS manage to harmonise theway in which Solvency II is implemented.In order to ensure the success of its strategy, theEuropean Commission launched a reform of theLamfalussy process on 20 November 2007 thatforesees, in particular, reinforcing the committees ofEuropean supervisors. The Commission’s proposalseeks to increase the financial allocation to thecommittees and suggests that the committees ofEuropean supervisors concentrate on the convergenceof national supervision practices to a greater extent sothat a genuine European supervision culture canultimately emerge, which is the only way ofguaranteeing the success of Solvency II (as well as ofother legislation in the field of financial services). Inorder to promote the emergence of this culture, theCommission’s programme anticipates, in particular,exchanges of personnel among national authorities andthe institution of discussions about group supervisionthat are as frequent and transparent as possible. Wemay well wonder whether these measures will beenough to reassure those Member States least inclinedto relinquish some powers enjoyed by their supervisorsto others.The Solvency II directive is a very ambitious project. Wemust recognise that its elaboration has, to date, beenexemplary. Nevertheless, the hardest part lies aheadsince the new regime must now be implemented. TheCommission does not wish to stop there, however, andit could subsequently turn its attention to thedistribution of insurance products. For 2008, itforesees a possible review of the insurance broking fieldthat might integrate some of the conclusions arrivedat in the Directorate-General on Competition’ssectoral investigation about the retail bankingand insurance sector. �

>>>

The elaboration of theSolvency II directive has, to date, been exemplary.Nevertheless, the hardest

part lies ahead since the newregime must now be

implemented.

211_09_10_Euralia_GB.qxd:Mise en page 1 7/01/08 15:50 Page 2


Study

o time to rest for banks: for those thatmissed the previous versions, Novamétrie hasreinforced the message, by making it clearthat online sales of financial products could

triple by 2011. In any case, this is the firm belief of thebanking executives questioned for the survey. The mostpopular products with Internet users include car andhouse insurance policies, the opening of a currentaccount and, close behind, payment cards and savingsproducts. In addition to these conclusions, a singleobservation has emerged over the years, i.e. a cleardisparity between northern Europe (Sweden, the UnitedKingdom and Holland) and southern Europe (France,Spain and Italy). The survey reveals that online salesforecasts for the latter category are equivalent to thecurrent figures for the northern European countries,representing a gap of four years.The Internet’s impact on the purchasing behaviour ofInternet users: for 89% of those questioned, theInternet is today the “primary source of informationprior to acquiring a financial product”. This representsan increase of 12 percentage points compared withthe 2006 survey. The survey also reveals that thenumber of Internet users who expressed that they areboth autonomous in their decision to purchase financialproducts and keen to do as much as possible onlinehas significantly increased, rising from 39% in 2006to 55% in 2007. The “everything online” approach is nevertheless lesspopular with French Internet users (23%) than withBritish ones, who are in the lead with 64%, ahead ofthe Spanish (42%) and the Italians (41%). Developments in the distribution of financial productsand services: the Internet is now seen as a strategicpriority by the major European banks. These bankshave observed that their clients are becomingincreasingly numerous and knowledgeable in the useof the Internet. Indeed, more than two thirds of those

questioned have acquired a product online during thelast twelve months. The Internet is also contributing to a decrease in thenumber of clients visiting their local branches. 76% ofthe clients expressed that, thanks to the Web, they arenot obliged to see their advisor so often. Thesemeetings, which are becoming increasingly rare, arealso now held in a different spirit. The Internet isintensifying and turning the focus on the price war,notably as a result of the niche players in the market(online specialists and banks). 58% of Internet usersalso stressed that they use the Internet to find the bestpricing conditions. This represents an increase of 26percentage points, and is the statistic showing thebiggest growth since 2006. The development of sales on the Internet and networkreconfigurations are currently the major issuespreoccupying the main European banks. Theacquisition of financial products is experiencing a de-materialisation trend, and the spread of financialproducts by channel is seeing growth. Thus, in Europe,86.5% of sales are still carried out via the branchnetworks (13.5% through online sales). By 2011,however, the development of multi-channel sales andthe reconfiguration of these branches should lower theproportion of sales of financial services and productscarried out by the networks to 70%. In view of the changes in client behaviour, it is nowimportant to adapt sales practices and consultant skillsto the new requirements, and to invest in the remote-payment channels in relation to the expectedvolumes. �

Online consumer behaviour

Internet keeps the pressure up The 2007 version of the survey1 carried out by Novamétrie, in partnership with Capgemini,

Crédit Agricole, Microsoft, MSN and Efma2, has once again confirmed the development of the

Internet as a sales channel for financial products. Unsurprisingly, it has re-affirmed the immaturity

of southern Europe in relation to northern Europe, in terms of purchasing behaviour. It has also

announced the coming challenges facing financial institutions.

N

1. This study is based on in-depth interviews involving more than 50 European

senior bank executives and 5,000 online banking services customers in

France, Italy, United Kingdom, Sweden and the Netherlands.

2. To receive a free copy of this report reserved to Efma members:

[email protected]

211_11_E?tude Novame?trie_GB.qxd:Mise en page 1 7/01/08 15:49 Page 1

n the surface, customerbehavior and network usageseem to be well-establishedand stable in mature

insurance markets. However,emerging signs of change offerinsurers new opportunities for growth.Among the report’s key findings: 1. The insurance sector in mature

countries is slowly moving from a very static state, toa more fluid one. Insurance companies can findopportunity in this shift by understanding, capturing andeven creating volatile customer clusters in theirmarkets.

2. Behavioral profiling allows insurers to better identify andunderstand the distinct attributes of different customerclusters. Insurers can more accurately gauge the valueof each cluster by taking account of customer volatility,too.

3. Distribution-network2 usage varies greatly by country,and tends to be heavily specialized. Insurers can betteraddress volatile customer clusters, retain full market

access, and increase walletshare by adopting a structuredmulti-distribution strategy.

The WIR survey askedcustomers about their actualpurchasing habits, expectedfuture purchasing patterns,and their insurance-buyingattitudes, preferences andperceptions. The results revealthe tide in mature markets ischanging in a way insurerscannot ignore.

Study

Customer inertia has long beenan earmark of mature markets.The WIR notes that many matureinsurance markets have becomesaturated, and the basic, existinginsurance needs of most customershave largely been met. On average, itssurvey results show, a mature-marketcustomer holds 5.2 policies,1.5 life

policies, and 3.7 non-life. Customers from these marketsalso show clear signs of inertia. On average, they hold thesame policy for 9.2 years. Customers tend to hold lifecontracts longer than non-life products, but even highlycommoditized P&C products are usually held for severalyears. For example, customers hold the same motorinsurance for an average of 8.4 years. Longevity is also a manifestation of the underlying apathyon behalf of customers, most of whom (71%) evenconceded a bad claims experience was not enough toprompt them to switch insurers. Clearly, then, leadinginsurers cannot rely on additional market penetration toachieve significant growth. Nor can they expect theunderlying markets to expand dramatically.

New signs of volatility are emerging in thecustomer base. However, new signs of customervolatility are emerging, driven by increased competition,wider access to customers through a variety of distributors,growth in information resources, changes in regulation,and market innovation. Contract turnover is alreadyincreasing in some countries, such as Italy, Spain, and theUS. For instance, in the UK, customers are switchingproducts far more frequently than average, holdingautomotive insurance for only three years on average, andhousehold and property insurance for just five years.Insurers can expect trends like those seen in the UK tobecome the norm in other mature markets in the

WIR 2008

New opportunitiesemerge for insurers On the surface, mature markets offer insurers few opportunities for growth, but emerging shifts

in customer and distribution patterns and preferences could provide significant opportunity for

insurers, if they can recognize, embrace and exploit those shifts, says the 2008 World Insurance

Report1 (WIR) from Capgemini and Efma.

By Scott Mampre Vice-president, Insurance practice David Giblas Partner, Financial services Capgemini consulting

OScott Mampre David Giblas


211_12_13_14_15_WIR08_GB.qxd:Mise en page 1 8/01/08 17:05 Page 1


Study

medium-to-long term, potentially leaving insurers with asmaller stable stock of long-term customers, and no easyway to replenish that secure-income segment.

Targeting revenues from volatile segmentsbecome a real opportunity. While increased customervolatility is clearly a potential threat to some insurers, itcan be an opportunity for others if they can positionthemselves to capture and retain those high-value volatilesegments. However, this approach requires insurers to beable to identify and assess the risks of volatility, andevaluate the potential rewards from enticing newly volatilecustomers to defect from competitors. The WIR research reveals there are currently foursegments of customers in mature markets: Traditionalists,Opportunists, Indifferent and Average users. The segmentsdisplay important and often distinct customer perceptionsand attitudes toward insurance, its value, and potential,as well as actual buying patterns. They also have clearlydistinguishable patterns and preferences when it comesto usage of and preference for different types ofdistribution networks.

Each segment has a different value, butvolatility risk is a key dimension. Furthermore, eachof these segments rates differently on the value scale. Forexample, and perhaps not surprisingly, Traditionalistsrepresent the highest value. They are more highlyequipped, 20% above national averages for Switzerland,Germany and the US, and between 35% and 45% abovenational averages for the other countries surveyed.Proportionately, they also share their wallet with fewernetworks than other segments. Importantly, customersfrom this segment also recognize the value of insurance.Opportunists, by contrast, may actually derive more valuefrom insurance than they deliver, because they tend toseek the best value proposition, and try to optimize theirportfolios (and thus seek out lower premiums). The valuebreakdown by country shows that Spain, the UK and theNetherlands have the greatest share of low-valuecustomers, while Italy, the US and the Netherlands havethe biggest proportion of high-value customers. However,the WIR notes there is an additional, more dynamic factorin the value equation: The level of volatility in the customersegment. Researchers analyzed several facets of customervolatility, and looked at the preponderance of differentclusters on aggregate, and by country. Again, volatility

breakdowns differ by country, but it generally holds truethat countries with large Average and Opportunisticsegments, such as France and Switzerland, are likely tosee high volatility in a large share of their insurancepopulation.

Identifying what is at stake for eachvalue/volatility cluster. The value/volatility equationoffers insurers additional, important insights on customerstrategy. WIR researchers were able to identify fourvalue/volatility clusters of customers. The position andunderlying behavioral profile of each cluster reveals whatis at stake for insurers (see Figure). In short: • The dependable-income cluster comprises high-

value/average-volatility customers, i.e., Traditionalists.These customers form the mainstay of dependableincome and assets, as they are highly equipped, andtend to be more loyal than other segments. For insurers,the key is to preserve that level of loyalty, while usingcost-effective service and acquisition strategies.

0

1

2

3

4

5

6

7

Num

ber

of p

olic

ies

Source: Capgemini analysis 2007

>>>

On average, they hold the same policy for 9.2 years. Customers tend tohold life contracts longer than non-life products, but even highlycommoditized P&C products are usually held for several years.

Average number of policies per customer (by country)



Study

• “At risk” customers are from average-value/high-volatilitysegments, i.e., Opportunists, and multi-network Averageusers. While clearly valuable, and of high potential,customers in this cluster may be tough to please, and willrequire insurers to remain innovative to retain them.Insurers may also be able to exploit the efficiency of theInternet as a distribution network to appealto this segment.

• Customers in the “Stagnant” cluster are from low-value/low-volatility segments, i.e., the Indifferentsegments. This cluster presents a dilemma, as customervalue is low, but so is volatility. Overall, a simple, clear,low-cost value proposition may be the most effectiveway to attract and serve low-profit customers, butinsurers will also need to optimize costs, and find theright balance between the push and pull approaches toservice this cluster effectively.

• The remaining “Other” customers are from average-value/average-volatility segments i.e., Average users using

physical networks. These customers are characterized byan average volatility level, but the experience of the U.K.and U.S. suggests this cluster is likely to become extinct.Insurers will have to decide whether to try and speed up theevolution of their market, and seek to transform thesecustomers into Opportunists they can capture, or preservethe status quo.

Distribution models are also evolving. The mix andusage of networks varies greatly by country, driven bycountry-specific customer needs, product usage,regulations, and competitive dynamics. Customers insome countries, such as the US or UK, have a greaterpropensity to use non-physical networks (e.g., Internet,phone). In other countries, such as France and Italy,customers rely heavily on traditional, physical networks(e.g., agents).Bancassurance has a strong foothold in Spain and France,and multi-tied agents/brokers/IFAs are a major network inthe Netherlands.

Internet is a clear winner going forward. Clearly,though, the WIR survey results suggest more changes lieahead for distribution, and the most startling shift is inInternet usage. Internet distribution is perceived as asuperior means of delivering the key factors that swaypurchasers: price/return, product quality, and brand/trust.In the mature markets studied, 28% of customers saidthey intended to buy their life-insurance policies online inthree years, and 34% said they would buy non-life policiesonline.

Multi-distribution is critical, but is not the onlyWay to multi-equip customers. The rise of theInternet clearly puts some existing distribution networksat risk. To evaluate the fallout, WIR researchers used dataon customer demographics, usage and attitudes toanalyze networks. They found many important differencesin network profiles, and identified clearly definablestrengths and weaknesses. Notably, they alsodemonstrated there is a clear trend toward specializationby networks, which realize they need to meet specificcustomers, products, or needs to thrive. Thisspecialization, in turn, is forcing insurers to multi-distributeto retain access to all major segments of the existing andpotential customer base, and to increase wallet share, theWIR reports.

>>>

The value/volatility equation offers insurers additional, important insightson customer strategy. WIR researchers were able to identify fourvalue/volatility clusters of customers.

Source: Capgemini analysis 2007

Value/Volatility clusters ofbehavioral-based customer segments



Study

managing their interactions with and among networksand customers, and work to differentiate their brandand reputation. Optimizing customer profitability willmean optimizing network use by segment, and properlymonitoring customer and network value.

3. Embracing IT as both a prerequisite and a lever forovercoming the challenges. Three main IT focus areascan help insurers to overcome these challenges.Enterprise data warehouses, analytics, and customerintelligence can enhance customer knowledge, andhone behavioral-driven customer segmentation.Technology integration and service-orientedarchitectures (SOAs) could allow insurers to adapt andchange their distribution capabilities according tomarket dynamics. Next-generation customerrelationship management (CRM) tools can help insurersand networks to manage customers under a global,enterprise-wide umbrella

Of these, the WIR argues, it is most critical for insurers toseek to optimize the complex interplay among the triad ofinsurers, customers and networks. This, the report says,is an area in which insurers are still struggling to plot astrategy that can maximize value—and it is the one areain which the only wrong action for insurers is to take noaction at all. The “2008 World Insurance Report” explores underlyingtrends in customer behavior and attitudes, the current andfuture use of distribution networks, and the implicationsfor insurers in eight mature markets. It also dedicates achapter to Bancassurance, which has become anestablished and successful distribution model, catering toa specific type of customer and a specific set of needs.The report ends with a detailed spotlight on emergingtrends in the key developing markets of China and India. �

The WIR researchers went on to analyze network-usagepatterns to study the link between multi-distribution3 andmulti-equipment4. They found that the number of networksthat customers use initially increases proportionally to thenumber of different policy types they hold. However, oncea customer has acquired a comprehensive set ofinsurance products, their next logical step is to buyadditional policies within an existing family of products. Inthe process, they become far more likely to return toexisting networks than to use additional ones. This finding raises some important questions for insurers,which often assume they can multi-equip their customersby using one distributor to sell a range of product types.In fact, our data suggest distributors face a major obstaclein that customers favor the use of multiple specialistdistributors, not the use of a single distributor as a multi-specialist.In short, insurers certainly need to optimize the multi-distribution strategy for a given customer segment, butthey also need to know when to switch their efforts topushing for multi-equipment by distributor, and that pushhas to begin when the customer reaches a certain, moremature, level of insurance usage.

Conclusion. The insurance landscape is clearly shifting,and three imperatives for insurers are emerging:1. Managing the business impact of the changing market

dynamics. In particular, insurers need to understandwhen to drive market evolution, and even encouragecertain volatile behaviors. Those insurers that properlygauge the value/volatility stakes can define strategymore clearly.

2.Taking a more assertive role in the interplay with andamong customers and networks. Insurers will need tobe more proactive than they have traditionally been in

Methodology

The 2008 WIR bases its findings on a survey ofmore than 11,000 insurance customers in tencountries, as well as interviews with industryexecutives in thirteen countries. The mature marketssurveyed are France, Germany, Italy, theNetherlands, Spain, Switzerland, the U.K. and U.S.(The 2008 WIR reports separately on the twodeveloping markets surveyed: China and India.)

1. The 2008 World Insurance Report (WIR) focuses on the retailinsurance market. It covers both life and non-life segments (Healthis included in non-life). 2. When we refer to “networks”, we mean the intermediaries thatdistribute insurance products, as opposed to “channels” which arethe means of interaction used by networks. For example, tied agentstogether form a distribution network that can use multiple channelsto reach customers (such as point-of-sale, telephone, Internet). TheInternet can be a distinct network, or a channel used by networks,but we primarily refer to the Internet as a network. 3. Use of multiple distribution networks. 4. Multiple policies held with a single distributor.



Study

n October 2, Tescoannounced interim profits of£53 million for TescoPersonal Finance (TPF), its

50/50 banking joint venture withRBS. Tesco’s share was£26.5 million. TPF’s profits are nowgrowing again, after two years ofmodest decline. But in the context ofGroup profits after tax of £938 million for first half2007/08, TPF’s contribution to Tesco’s earnings remainsmodest.Are there wider lessons here? It is now more than tenyears since Tesco sent shivers through UK banks bylaunching “Clubcard Plus”, a card-based savingsaccount. Sainsbury’s quickly responded, launchingSainsbury’s Bank in partnership with Bank of Scotland(now HBOS). The supermarkets followed Marks &Spencer (M&S), the own-brand clothing, food andhousehold goods retailer, which started offeringfinancial services in the late 1980s. Financially, two ofthe three retailer banks have proved successful. TPF isnow paying its shareholders substantial dividends. M&Ssold its financial services business to HSBC in 2004,at a substantial premium to net assets. In contrast,Sainsbury’s Bank has struggled, reporting an underlyingoperating loss of £10 million in 2005/06 and littlemore than break even in 2006/07. However, theretailers’ impact has hardly been transformational. Theirbanking arms remain small compared with both thecore retail businesses and major banks and insurancecompanies. Looking at their track record, twocharacteristics in particular stand out.First, the retailers have been highly selective in thefinancial services offered. Though it made a pioneeringmove into mass-market unit trusts (mutual funds),M&S largely focused on unsecured personal loans. This

was understandable; it had a low-risk customer base, and anadvanced lending platform from itslarge, in-house store card operation.TPF and Sainsbury's Bank havefocused on credit cards, unsecuredloans, savings and insurance.Neither supermarket has competedhead on with the banks by offering

a full suite of products based around cheque/currentaccounts. And both TPF and Sainsbury's Bank havewithdrawn from the mortgage market, with neitherbuilding a large portfolio (TPF currently offers amortgage broking service and mortgages from RBS’sFirst Active). (See tables below)Narrowly defined, a selective approach may make goodbusiness sense (the economics of cheque/currentaccounts in the UK work against new entrants forexample). But it limits these retailers to being no morethan niche players in financial services. And it sits alittle uncomfortably with the supermarkets’ “one stopshop” approach to core household shopping. Second, even in their chosen markets, the retailers'market shares remain small. Both TPF and Sainsbury’sBank have retail deposit portfolios of more than£2 billion. But these are marginal in the context of aUK deposit market of more than £600 billion.Collectively, the three retailers have unsecured lending(credit card and personal loan) portfolios probablyapproaching £10 billion. But the UK market is morethan £210 billion, implying a combined market sharewas probably no more than 5%. (See table below)Comparing the retailers against the total market maybe a little misleading given that they have grownorganically from a standing start. But comparisonssuggest that the supermarkets have grown more slowlythan other new entrants, for example the internet bank

European retailers

Banking atthe mall UK retailers have led the way in offering financial services. Given their strong brands and

customer service skills, retailers were seen as a real threat to retail banks, but a decade on,

their impact has been more limited than many first anticipated. Maybe financial services are a

poorer fit with mass-marketing retailing than many assumed?

By Peter Welch BankEcon Steve Worthington Professor Monash University, Melbourne

OPeter Welch Steve Worthington

211_16_17_18_Banking at the mall_GB.qxd:Mise en page 1 7/01/08 15:48 Page 1


Study

Egg in consumer loans and deposits, and ING Direct’sUK arm in retail deposits. All three retailers are alsoactive in the main personal insurance markets (motor,home, life, travel). TPF has built a substantial business,particularly in motor insurance where it is the third-largest issuer of car insurance policies in the UK.However, to the extent it can be estimated fromavailable data, the retailers’ overall share of the generalinsurance business appears comparatively small.

Given their strengths in marketing, innovation andcustomer service, why have the major retailers notmade more of an impact? First, retailers’ bankingoperations are not immune from the changingreputations of their parents. In the late 1990s, bothM&S and Sainsbury’s suffered declines in performance(though both subsequently recovered), weakening theirreputational advantage over the banks.Second, the retailer threat may have been blunted bycompetition from other new entrants, notably, Egg, INGDirect and the US credit card “monolines” MBNA andCapital One. More fundamentally, significant differencesremain between retailing goods and providing financialservices. TPF has innovated with products such astravel insurance that can be bought ‘off-the-shelf’ byits Clubcard holders. But most account-based financialservices remain hard to “retail” in a store environment.And large retailers’ core skills (for example, theirsourcing expertise and buying power) account for lessin financial services compared with diversification intoadjacent retail sectors. Ultimately, UK retailers haveended up partly competing but partly co-operating withthe banks. The sale of M&S Money to HSBC left allthree major UK retailer ventures at least partly-ownedby a major bank. The banks’ willingness to partner theretailers suggests they see only a limited threat to theirown core personal business. When we look at

Continental European retailers and their entry into themarket for financial services, two examples are worthyof note. Among the large French supermarket chains,Auchan has pushed furthest into banking and theservices provided by Auchan’s subsidiary, BanqueAccord, include consumer finance, insurance andsavings related products. By early 2007, BanqueAccord had almost 4.8 million customers (2.6 millionof which are in France) and operated in six otherEuropean markets plus Russia and China. The financialservices business has been consistently profitable forAuchan, earning a return on equity of above 20%during the period 2003-2006.Banque Accord divides its business into three mainactivities: payment cards, including private label,general use credit cards (it is both a MasterCard andVisa issuer) and gift cards. The general use credit cardsinclude co-branded cards and Banque Accord is likelyto be a major beneficiary of the removal of restrictionson co-branded credit cards that took place in Francein late 2007. Banque Accord also manages bankpayment transactions, authorisation systems and cashdispensers (ATM’s) and as its third arm it distributesother financial services, such as consumer credit,

Supermarkets have grownmore slowly than other new

entrants, such as the internetbank Egg in consumer loans

and deposits, and ING Direct’sUK arm in retail deposits.

>>>

Currentaccounts

• No presence

Savingsaccounts

• Both TPF and Sainsbury’s Bankwith portfolios of over £2 billion

• But UK market of over £600 billionat end 2006

Mortgages

• Marginal presence, no meaningfulmarket share

• TPF currently offering a “mortgagefinder” broking service and mort-gages from First Active, part of theRBS Group

Credit cards and consumer loans

• Both M&S Money and TPF haveunsecured loan portfolios of over£3 billion

• But UK market of over £210 billion

UK retailer banks: presence by market

Sources: Companies, Office for National Statistics, Bank of EnglandAuthors’ analysis



Study

insurance and savings products. By the end of 2006,its consumer credit book was €2.2 billion.Banque Accord differs from the UK retailers approachto financial services in that it is both an in-houseprovider for the Auchan Group and a provider offinancial services for other retailers. However in itsfundamental respects Banque Accord’s approach isvery similar to that of the UK retailer banks, both interms of the financial products offered and thechannels through which it communicates withcustomers. Though successful, it remains largely aniche player from a wider retail banking perspective,focused mainly on cards and consumer loans.ICA is one of the Nordic region’s leading retailcompanies, with around 2,300 outlets in Sweden,Norway and the Baltic countries. In 2001, ICAestablished ICA Banken as a fully owned subsidiary forits Swedish customers and it now offers a full bankingservice in direct competition with the main Swedishbanks. The number of customers using ICA Banken’sbanking services increased during 2006 to285,000 and there were also 213,000 bank cards

issued by ICA Banken. In addition to providing servicesto personal customers, ICA Banken has responsibilityfor the payments infrastructure within ICA, includingthe payment terminal technology in ICA’s Swedish andNorwegian stores. As with many retailers, ICA’scardbase has provided an entry to the wider provisionof financial services and in total ICA Bankenadministers 3.1 million card customers for ICA. Thesevary from loyalty cards, to payment cards, both debitand credit, co-branded with either Maestro orMasterCard.Unlike the UK supermarkets, ICA Banken’s productsinclude cheque/current accounts, enabling it to offer afull range of personal banking services, which alsoincludes savings, unsecured loans and mortgages. ThusICA Banken is different in two major ways to the UKretailer discussed above. Firstly, ICA Banken is a 100%owned subsidiary of the retailer rather than a jointventure with a bank and secondly, ICA Banken offersa full range of core banking services, includingcheque/current accounts and mortgages. However,despite its wider product range and 100% ownershipby the retail parent, ICA like the UK supermarketsremains a relatively small player in its domestic retailbanking market. In their own terms, Banque Accord and ICA Bankenmay be judged successful by their retail parents.Banque Accord has been consistently profitable duringrecent years and has developed into a leadingEuropean consumer finance provider. ICA Bankenmoved into profit in 2006 and ICA reports it has themost satisfied customers of any Swedish bank,according to a survey of the industry by the SwedishQuality Index. However, like the UK supermarkets’financial services arms, both Banque Accord and ICABanken remain small players in the context of theirwider domestic retail banking markets. Despite the sizeand strength of their parents, the fact that all theEuropean supermarket banks remain small shows thechallenge for retailers of moving beyond niche statusin financial services. �

>>>

This article is based on a new research report “Banking at the Checkout

2007/2008”. Visit www.bankecon.com for more information.

Banque Accord (€ million) 2003 2004 2005 2006Payments with Accordcards

4,354 5,131 6,179 6,802

Credit outstanding 1,182 1,596 1,910 2,219

Net profit 19 24 34 37

ICA Banken (SEM million) 2003 2004 2005 2006

Total assets 4,902 5,917 6,660 7,365

Deposits 4,451 5,220 5,930 6,394

Operating income -166 -123 -82 (1) 11(2)

1. ICA Banken operating income for 2005 is restated due to changes in

accounting principles for the accrual of card fees (previously reported

as SEK –75 million).

2. SEK / € rate averaged 9.2544 in 2006 and was 9.0404 at end 2006

(Source: ECB).

Banque Accord andICA Banken key figures

Sources: Banque Accord, ICA Group



Strategy

>>>

ince then, SEB has madeprogress with customeracquisition and productpenetration in the

Swedish SME segment. From anaverage of 200 new customers permonth in 2003, the numberjumped to an average of 1,000 permonth in 2006. In terms ofproduct penetration, 25% of SEB’s SME customers in2003 had more than four products; this doubled to50% last year. In addition, Cash Management gainedmore than 5,000 new SME customers in 2006, anincrease of more than 5% in SEB’s total client base.Although SEB is gradually gaining broader appeal, itremains largely perceived as a bank for the affluent.Roughly 40% of SEB’s income is derived from the2,500 large companies and financial institutions itserves with a wide range of products. Private individuals in retail banking comprise anotherstronghold, with five million private customers inSweden, the Baltic region and Germany generatingabout 35% of SEB’s annual income. The thirdcustomer segment, SME, accounts for some 25% ofthe bank’s income. So far, SEB has 400,000 smalland medium-size companies in its fold, and aims toincrease market share in this segment.

Fiercer market competition. Stagnating growth incorporate and private banking (high-net-worth-individuals) increased competition among establishedretail banks and led to an influx of niche players, whoare gaining a foothold selling occasional products withsubstantial margins. Other long-standing players suchas Nordea, Svenska Handelsbanken and Swedbank arealso paying more attention to SMEs, but the playingfield remains open as none of the banks has yet

become the main supplier. SEB is in a position to takeon this role. By applying its corporate-banking skills tothe retail market, it can be at the forefront of SMEbanking services.

The idea is not to shift focus from the large corporatesbut to broaden it to include smaller businesses.Besides the changing banking landscape, customerbehaviour is also evolving. There has been a generalincrease in internet banking and in the number ofclients using internet services. SEB has been a pioneerin internet banking and electronic FX since the mid-1990s. With its clients, the bank has spearheadeddevelopment in e-services.

Identifying SME. SEB is aware that 50% of itsprofits in Sweden come from the SME segment whilecosts for this business amount only to about 30%. Thetotal SME market in Sweden is valued at roughly€1.2 billion. More than 60% of SME earnings stem from very smallcustomers, of which two-thirds are micros. More than90% of the SMEs have turnover of less than onemillion euros. Compared with the private individualmarket, the SME segment makes up one-tenth ofSEB's customers but earnings per SME customeramount to 10/1.Given that the smallest enterprises are three timesmore profitable than private banking clients, SEB mustallocate resources to bolster one-on-one client

SEB

SME: a highpotential target Faced with the prospect of limited growth in the large corporate segment, SEB began in 2003

to craft a new strategy aimed at small-and medium-size enterprises, or SMEs. A key aspect is

the application of SEB's corporate banking expertise to the retail market in order to tap into the

SME segment.

By Stefan P. Andersson Head of Corporate SME, Marketing and Sales SEB

SSEB has been a pioneer

in internet banking and electronic FX

since the mid-1990s.Stefan P Andersson

211_19_20_21_SEB_GB.qxd:Mise en page 1 7/01/08 15:56 Page 1


Strategy

contacts. This also means all SEB staff must becompetent in both private and corporate business.

Segmentation. SEB segments its target market interms of turnover. But this is not set in stone. Thereare many reasons to change customer segmentation,of which one is the complexity of earnings. The bottomline is: always ask what the customer needs. SEB provides a clear, uniform offer for each segmentin terms of contact policy and services for dailytransactions. We say exactly what we offer. Forinstance, small clients (turnover of €500,000 or less)are offered a full review of their finances once a year.They can use our internet and customer service centreround-the-clock and receive electronic news andproactive contacts with business ideas generated bySEB’s CRM tool. For the medium (turnover of€500,000 to €5 million) and large (more than€5 million) SMEs, SEB provides extra one-on-onemarketing and more frequent business meetingseach year.

Tailored products. SEB has a wide range ofproducts for the SME segment, one of which is thesmall business loan, or “easy loan”, launched inSweden in 2006. This lets SMEs conveniently borrowup to €30,000 on easier terms. The “easy loan”concept has proven a success, with SEB tripling itssales in one year and boosting its share of loansgranted without increasing the bank’s exposure. Building on this success, SEB is launching in Octobera new small business package for SMEs. Here, SEBhas the opportunity to exploit its strong brand to tapthe potential of smaller businesses.

New market triggers new thinking. A new marketmakes us change our thinking in many ways. Marginpressure, particularly on SEB's income-generators,

demands new market volumes which, in turn, requirenew sales methods, which demand a broader offeringwith competitive prices.Increased customer inflows require a well-functioningCRM system to manage the rapidly growing customerbase, which has to be segmented more efficiently. SEBalso focuses on client life cycles, identifying events thatwarrant promotion of suitable offerings. Instead ofselling products individually, they are packaged inclusters to make buying and selling more effective. SEBalso customises offerings for selected business groups.

The right offering to the right customer. Like afisherman's net catching a lot of different fish, SEBoffers a wide range of products for different customersand markets them assertively. But proactive sales areexpensive, so to get optimal results, SEB prioritisesactivities for preferred clients. We cannot fish in everypond, so we find the best places to fish. SEB therefore has two complementary strategies: oneto attract new customers with competitive products,the other to use the CRM tool to nurture customerloyalty. This twin-strategy approach cuts customeracquisition costs because every marketing resource isused for selling profitable products. This also supportsour efforts to shift our local staff from merely sellingthe next product in the pipeline to holding top-qualitymeetings with clients.

>>>

SEB also focuses on clientlife cycles, identifying events

that warrant promotion of suitable offerings.

Quick facts on SEB Group

SEB is a North European financial group servingsome 400,000 corporate customers and institutionsand five million private customers. SEB has a localpresence in the Nordic and Baltic countries,Germany, Poland, the Ukraine and Russia, and aglobal presence through its international network inanother ten countries. On 30 June, SEB Group’s total assets amounted toSEK 2,188 bn while its assets under managementtotalled SEK 1,403 bn. The Group has about20,000 employees. Read more about SEB at www.sebgroup.com


Strategy

The CRM system last year provided business ideas for470 ongoing activities, resulting in a 70% increase inproactivity. We know what we want to sell and we findthe right customer to sell to. And results show a strictcorrelation between activity and earnings: clients thatreceived two activities each year were more than twiceas profitable as clients that had no activities.

Sales culture. SEB has to have a sales culture andcreate a sales organisation that is ready to meetmarket competition and changing customer behaviour.Everyone at a branch office, regardless of position, isresponsible for ensuring that the right person takescare of the customer. Harnessing staff competence isone thing; having the solid support of management to

ensure the success of the strategy is another. SEB israllying its central functions to support the SMEbusiness. It should allocate resources for this segmentand ensure that SME-related topics are discussed atevery internal meeting. With higher SME awareness,we can map out a long-term business plan for growthin this segment. It is crucial that we, at heart, want to be the bank forsmall enterprises. Management has to lead the way. �

Among the global leaders speaking at this exceptional anniversary event

Be the first to benchmark your strategy against Efma’s latest exclusive studies

� George Awad, CEO Global Consumer Group EMEA, Citigroup

� Rajiv Dutta, President, PayPal

� Achim Kassow, Member of the Board, Commerzbankand CEO, comdirekt

� Andrei Kazmin, Chairman of the Board and CEO, Sberbank

� Jan Lidén, President and CEO, Swedbank

� Xu Luode, President and CEO, China Unionpay

� Roberto Nicastro, Group Deputy CEO, Unicredit

� Ergun Özen, President and CEO, Garanti Bank

� Baudouin Prot, CEO, BNP Paribas

� V. Vaidyanathan, Executive Director, ICICI Bank

World Retail Banking Report 2008 by Efma and Capgemini, endorsed by INGRetail Banking Competitiveness by Efma and Roland Berger

Register

as soon

as possib

le


F O C U S


amir Iqbal works as Principal financial officer withthe Quantitative strategies, risk and analyticsdepartment in the Treasury of the World Bank inWashington, D.C. His research interests include

Islamic finance, financial engineering, structured financeand international banking.

Which are the main principles of the Islamic eco -no mic system?

What differentiates Islam from other systems of thoughtis its unitary perspective, which refuses to distinguishbetween the sacred and the profane and which insiststhat all of its elements must constitute an organic whole.The main principles of Islamic economics includepreservation of property rights, sanctity of contracts, risk-sharing among economic agents, and promotion ofsocial justice in the society through just exchange anddistribution. The model encourages a market-basedmodel and recognizes personal interest as long as itdoes not conflict with the greater interest of thecommunity and the society. It can be claimed that it isthe emphasis on justice that distinguishes the Islamicmodel from all other models. It is via the concept ofjustice that the raison d’être of the rules governing theeconomic behavior of the individual and economicinstitutions in Islam can be understood.

How come Islam’s unconditional prohibition of in-terest do not hamper its functioning?

Islam prohibits interest but does not deny any return oncapital. It is a misconception that prohibition of interestmeans no return on capital. An ex-ante pre-determinedand fixed rate of interest is replaced by the rate of returnon capital as a result of the actual outcome of whatcapital was used for. The Islamic economic system

recognizes time value of money. The only directimplication of this prohibition is removal of debt securityfrom the system. In theory, it does not hamper thefunctioning of the financial system and some researchhas shown that it offers better matching between assetsand liabilities and therefore may lead to a more stablesystem. A modern financial system can be designedwithout the need for an ex ante determined positivenominal fixed interest rate. In fact, it was shown byWestern researchers that there was no satisfactorytheory that could explain the existence of a positivenominal ex ante interest rate. Research has also shownthat not assuming a nominal fixed ex ante positiveinterest rate, i.e. no debt contract, did not necessarilymean that there would have to be zero return on capital.

How does Islamic banking deal with thisprohibition?

Islamic banks replace pure debt-based securities withalternative financing and investment activities such asasset-linked securities, trade-financing, leasing andequity partnerships. Many of these securities are wellknown in the conventional system and existed beforethe emergence of Islam. Some of these securities wereactually introduced to the West through Muslim societiesand have become an integral part of modern financialsystems. Unlike the depositors of conventional bankswho earn a pre-determined interest rate on deposits,the depositors in Islamic banks act as investors whoshare in the profits and loss of assets maintained byIslamic banks.

Could you describe the different evolution steps ofIslamic economics and finance through modern

Islamic banking gained attention in 1970s when many

Interview with Zamir Iqbal, World Bank

“Emphasisingthe concept of justice” Zamir Iqbal co-wrote An introduction to Islamic finance, theory and practice. This book explains

the fundamental principles and functions of “an economic, banking and financial system operating

under Shariah (Islamic law)”. It offers a comprehensive and practical guide for anyone interested

in Islamic finance and banking and emphasizes the amazing potential at stake (see p. 56).

By Charlotte Collonge Efma

Z

211_22_23_24_25_Itw Iqbal_GB.qxd:Mise en page 1 7/01/08 15:47 Page 1

F O C U S


Islamic countries were reviving an Islamic identity afterindependence but it was the boom in oil revenues whichgave momentum to the demand for Shariah compliantcommercial banking. Since then more than 150 Islamicbanks have been offering such services worldwide. Morerecently, the current oil boom is spurring the demandagain, and this time the demand is met by innovativeproducts in commercial and investment banking, capitalmarkets and insurance sector.

During the 1990s, equity funds became popular withIslamic investors. Equity funds apply special filters toselect stocks which comply with Shariah. For example,stock of a company involved in the production orconsumption of alcohol will not be qualified. Theintroduction of Sukuk (Islamic bond) has been anothersuccess story of financial engineering in Islamic finance.Today, Sukuk is equally popular with Islamic as well asconventional borrowers and investors. Sukuk has beenissued by corporates, supranationals, sovereigns andmultilaterals. Another innovation worth mentioning is theintroduction of Shariah compatible mortgages in theWest where there is significant demand by local Muslimcommunities. Such mortgages are being offered underdifferent models in the United Kingdom and the USA. Inthe case of the USA, Islamic mortgages are beingsecuritized as well.

How do Islamic banks deal with economic needsbecoming more and more sophisticated and withfinancial products like consumer credit a prioriprohibited by Shariah?

I am not aware that Shariah prohibits consumer credit.It depends on the kinds of consumer credit. If theconsumer is trying to acquire an asset, it can befinanced by Islamic banks through leasing or tradefinancing. However, there are some forms of consumercredit relating to intangible assets or services for which

Islamic banks have yet to design an instrument such asstudent loans. For those in times of difficulty, credit isavailable through short-term simple interest-free loansor Qard Hasan (interest-free loan where principal maynot be returned if one cannot afford it).

What are the peculiarities of Islamic financial ins-titutions’ risk management? What are the specificrisks to Islamic banks and financial institutions?

Risk management is an area which is critical for Islamicbanks for two reasons. First, the instruments used byIslamic banks are based on trade-financing andpartnerships which require additional monitoring.Second, the risk culture at enterprise level is notdeveloped yet. By design the Islamic banks aresupposed to be “pass-through” institutions where profitsand loss on the asset side of the balance sheet ispassed on to the depositors who are termed as“investors.” This eliminates typical assets-liability risk ofconventional banks. However, in practice, most Islamicbanks are not truly pass-through institutions and try tomaintain certain expected rate of return which iscomparable to prevailing market rates offered byconventional banks. In doing so, Islamic bankssometime maintain reserves and in extreme cases payout of equity capital. Operational risk is another criticalarea for Islamic banks as risk models, systems andcontrol procedures are not very well-developed for mostIslamic banks.Several regulatory and standards setting agencies havebeen established in the last decade to provide aframework for Islamic financial institutions. IslamicFinancial Services Board (IFSB) has been a leader inaddressing these issues. They have issued standards oncapital adequacy, risk management and corporategovernance. The Accounting and Auditing Organizationof Islamic Financial Institutions (AAOIFI) has focused onaddressing issues with accounting standards.Considering the peculiar risks of Islamic banks, I havebenefited from a colleague of mine, Dr. Hennie vanGreuning who is an expert in banking risks and we haveco-authored a forthcoming book titled, “Analyzing Riskfor Islamic Banks.” �

Islam prohibits interest but does not deny any return

on capital. It is amisconception that the

prohibition of interest meansno return on capital.

Zamir Iqbal: “Unlike the depositorsof conventional banks who earn a

pre-determined interest rate ondeposits, the depositors in Islamicbanks act as investors who share

in the profits and loss of assetsmaintained by Islamic bank.”



nitially, the attention from mostInvestment Banks has comedue to the emergence ofIslamic debt instrument,

Sukuks. The Sukuk market todayhas exceeded $8 billion and manybelieve this is still the beginning. TheSukuk market seems not only tohave participation from Musliminvestors or institutions, but more recently, Sukuk havehad significant participation from non-Muslim westerninstitutional investors who are looking at Alternativeinvestments. As further infrastructure developmentcontinues, the opportunity for the Sukuk marketremains very promising not just in the Middle East butthroughout the developing markets.Within the retail banking segment, the product offeringhas significantly grown to encompass most if not allthe retail financing solutions that can be attained froma conventional bank. As the product selection hasgrown, we have also seen an enormous growth in newIslamic banks as well as “Islamic windows” withinconventional global financial institutions such as:HSBC, ABN AMRO and Deutsche Bank. What has been absent until recently, has been the areaof Islamic Investment Management. Over the last twoor five years, this segment of Islamic finance hasgained significant momentum, particularly in the MiddleEast where there is a growing affluent Muslimcommunity exploring alternative solutions for theirexcess funds.Today, there are over 206 Islamic mutual funds globallyranging from global equity funds to regional and sectorbased funds with some of the top global fundmanagers participating in this arena. The Dow Jones

Islamic Index (DJII) has been very active at creating aSharia compliant stock selection criteria that allowsboth investors and fund managers to invest in Shariacompliant stocks without undertaking a rigorousprocess of vetting what equity falls within the Islamicguidelines. Alongside the Dow Jones Islamic Index therehas been the development of various otherstandardization mechanisms such as: the Accountingand Auditing Organization of Islamic FinancialInstitutions (AAOIFI) and Islamic International RatingAgency (IIRA) that further legitimize the practices ofIslamic finance globally.In comparing what is currently being offered on theconventional side of the investment platform to whatwe are now able to offer our Islamic investors, onecould argue that Islamic investment management nowhas the ability to provide an equal menu selection. Withthe creation of Sukuks and real estate funds (that canprovide a fixed income stream), to various Equity Fundportfolios to Sharia compliant Capital Protected Noteswith an exposure to different underlying assets, todaywe are truly seeing the emergence of Islamic WealthManagement. This emergence is often being driven bya unique partnership which involves Islamic Scholarsfrom the Middle East and Asia, Western MultinationalBanks and Regional and Local Islamic Banks withdistribution capabilities (see triangle model).

The future and its challenges. The future ofIslamic Investment Management is very bright. As moreawareness both from the consumer and the potentialdistributors is developed, we will see competitivemarket forces shape the Islamic investmentmanagement platform. More specifically, we are goingto see a wider selection of investment products with

Analysis

Islamic investmentmanagement, the wayforwardThe story of Islamic Finance is one that has clearly grabbed the attention of the global financial

markets. With the rise of petro-dollars from the Middle East, significant development within the

emerging economies and an overall renewed interest in the practical application of Islamic

values within the 1.3 billion Muslim population, Islamic finance now has a solid platform.

By Naveed I. Ahmad Head of Investments, Wealth Management Dubai Islamic Bank

INaveed I. Ahmad

F O C U S



improved pricing created at a much greater pace. Witha growing number of Islamic banks and Islamicwindows, we will see an enhancement of theinvestment sales force and improvement of theirknowledge and advisory capabilities. In ensuring thatIslamic investment management remains sustainable,we must sell products “beyond religious belief”. Morespecifically, the investor confidence in purchasinginvestment product must not simply come from theproduct being Islamic, but also must also be purchasedfor the overall positive performance of the product.Finally the future growth of Islamic investmentmanagement will come from constructive innovationand modification of what is currently being offered toconventional investors as long as they fall within theguidelines of Sharia. I believe that in the very nearfuture, we will more so-called alternative Islamicinvestment solutions that could include Islamic art,Islamic trusts and Islamic discretionary portfoliomanagement. Also, Islamic investment managementshould take a leadership role in developing sociallyresponsible and ethical investments that will not onlybe Islamic in nature, provide a positive return tothe customer but provide a positive footprint onthe environment.

Perhaps the two greatest challenges to IslamicInvestment Management remain the limited numberof Sharia advisers and scholars available and thediffering views on what is deemed Sharia-compliantand Sharia-repugnant. As practitioners in this industry we must work closelytogether to develop bridges and institutions within ourfinancial community to ensure proper continuity andsuccess of Islamic finance and more specifically,Islamic investment management. �

F O C U S

Islamic investment product distribution model

Product Innovation● MNC working with Islamic banks● Market timing of products● Pricing and volume

● Coordinating between various Sharia Boards● STANDARDISATION● Developing various platforms of information sharing (AAOIFI, DJII)● Having more Human Ressources● Timely approves required

● Developing the skill set of the advisers● Developing the skill set of the customer● Successful marketing & distribution● *Regulatory body required Code of Conduct/Ethics

Knowledge Enhancement Sharia Coordination



Products and markets

or many decades largewealthy families had theneed to establish their ownoffices in order to manage

their complex family wealthstructure. These offices were forcedto evolve into real wealthmanagement powerhouses(Guggenheim, Rockefeller, etc.) inorder to face the ever growing complexity of managinglarge fortunes (made by a great variety of asset classes,usually very innovative and risky), and to follow thenatural growth of the family size (which typicallyrequires dealing with complex legal and fiscal issues inseveral jurisdictions). In addition to these causes, thepolarization process of the wealth managementindustry is an opportunity for family offices to furtherdevelop and expand their own activities. In fact, in the last five years, the wealth management(WM) industry has started a consolidation process,which is continuing at a fast pace and it will mostprobably lead to clearer market segmentation:a. the very large (predominantly on-shore) private

banking players, which will serve in a more efficientway the HNWI (High Net Worth Individuals) with anet asset value of say less than $20 mn, and on theother hand,

b. the small niche boutique players deriving fromrefocused private banks, family offices orindependent investment offices mainly servingclients with more than $20 mn.

As a consequence of this consolidation process, smallprivate banks will gradually lose their market share asthey will merge with or will be taken over by largerbanks, or they will lose their traditional attractivenessvis-à-vis to the new clients unless they tailor theiroffering to specific client segments.

UHNWI’s segment key facts. Capgemini / MerrillLynch estimated for 2006 the world wealth of privateinvestors in excess of $1 mn of investable assets beingapproximately $33.6 trillion.An estimation of Scorpio Partnership, an internationalmanagement consultancy firm, reveals that clients withmore than $20 mn in liquid assets are globally around133,000 with about $11.5 trillion of assets (approx. 35%of the overall wealth).UBS, the leading WM player- manages/custodies lessthan 4% of the assets belonging to clients with more than$20 mn; Citibank a global medium-sized player in thewealth management space manages/custodies $150 bn,a bit more than 1%. FOX (Family Office Exchange) a USbased Family Office (FO) consultancy firm, estimates thatthere are three to four thousand family offices in the US,followed by Europe with more than three thousand FOsor similar structures and with some hundreds of FamilyOffices in Asia. From these figures it is clear that thismarket segment is extremely fragmented, and it seemshighly unlikely that it will have the big players increasingtheir market share, due to the relatively low margins ofthis segment (approx. 45-70 bps) compared to theUHNWIs segment margins (90-135 bps), and to the littleappreciation of UHNWIs of the continuing standardizationof the delivery process and the product pushing approachof these large institutions. On the other hand the lack of brand recognition, the lackof economic resources, the limited operationalcapabilities and the at times strategic aim of not servingthird party clients makes it difficult for family offices tohave an organic growth strategy. Nor is the merger activitymore foreseeable, since it is not obvious for a UHNWI(Ultra High Net Worth Individuals) owning a FO to sell itor to merge it with an unknown peer. So how can thisparadox, or business opportunity for FOs, of having largebanks undeserving UHNWIs and small niche players not

Wealth management

Serving the UHNWI(Ultra High Net Worth Individuals)

Given the growing importance of the family offices and the significant size of the market segment

“+$20M” (approximately 35% of the wealth management industry) these models are serving

or will be serving, this article will try to give an overview of such players and a more concrete

example of the structure and the challenges of Société Internationale de Finance (SIF), one of

the largest international family offices.

By Francesco D'Amico Member of the executive committee SIF, Zurich

FFrancesco D'Amico

211_26_27_28_UHNWI_GB.qxd:Mise en page 1 7/01/08 16:34 Page 1



being ready to target this segment, could be solved inthe near future?To attempt to answer this question, let’s have a closerlook at the existing FO models in place, and let’s try togive an answer at the end of this article after havingdescribed more in detail a real example of one multi familyoffice and the related growth options.

Today there are four different models focused on servingUHNWIs:A. Single family office: manages the wealth of one family

only; services could range from pure administrationactivities (accounting and legal issues) to morecomplex investment management capabilities. Typicallyit has very limited resources and it is not publiclyknown.

B. Independent investment office: usually founded bysenior wealth/investment management professionals;serving a pool of families with no allegiances to anyparticular family; the services are typically investmentadvise on selecting and monitoring third partyinvestment managers. Lean structure with no backoffice operations, entrepreneurial and marketingoriented structure.

C. Multi family office: founded by one family with otherfamilies joining progressively; usually offering the fullwealth management value chain (from wealth planningto investments, booking and accounting) with someproduct capability particularly on alternative assets.

D. Bank family office: specialized unit within or owned bya bank; leveraging the banks operations andinvestment advise.

An example of an international multi familyoffice: Société Internationale de Finance. SIF isthe family office of a German family, who, in 1888founded a brewery company in Latin America and becameone of the main beer and soft drinks producers and

distributors of Latin America. SIF is part of Quilvest, thefinancial group of the family listed on the LuxembourgStock Exchange (over $400 mn market capitalisation),which is focused on wealth management and privateequity investments, with more than $6 bn managed bytwo main subsidiaries: • Banque Privée Quilvest (established in Paris in 1917,

licensed by the French Central Bank) and SociétéInternationale de Finance (established in Zurich in1932, licensed by the Swiss Banking Commission). Theprivate equity arm (Quilvest Capital France), set up in1972, manages more than $1 bn globally in bothprivate equity funds and direct transactions.

SIF is a licensed security dealer regulated by the Swissbanking commission; it serves today more than400 individuals and approximately 20 families andemploys 70 professionals (12 in investments, 9 in wealthplanning, 9 in relationship management, 30 inoperations).Since its inception, SIF has worked and grown based onthe following principles:• Independence and Transparency. No in-house, off-the-

shelf products; SIF relies on completely openarchitecture. Any price advantages negotiated on thebasis of the scale of SIF transactions are passed on infull and equally to SIF clients.

• Superior long term performance. Since SIF’ inception >>>

The WM industry has starteda consolidation process,

which is continuing at a fastpace and it will most

probably lead to clearermarket segmentation

Area represents assets held by HNW segment

USD18.5 trillon

10.000.000

12.000.000

8.000.000

6.000.000

4.000.000

2.000.000

0

-2.000.000USD1 - 10mn

USD10 - 50mnUSD50 - 100mn

>USD100mn

USD6.3 trillon USD7.2 trillon

USD1.6 trillon

Net worth

Nu

mb

er o

f in

div

idu

als

55% of total assets

45% of total assets

Source: Capgemini and Merrill Lynch World Wealth Report 2006




absolute return is the guiding principle. This is achievedby blending traditional asset classes with an extensiveusage of alternative asset classes (hedge funds, privateequity investments, commodities,etc.). Since the early1970s the family has invested in private equity assetclass (by founding one of the first private equity funds)and in the early 1980’s invested heavily in the hedgefunds space. The overall asset allocation of SIF todayis: 30% long only, 30% hedge funds, 30% privateequity and other.• Equality. All investors share exclusive access - with the

same price - to recommended offerings – and no clientsare ever offered an opportunity that is not being takenup by SIF shareholders themselves.

• Service. To be achieved by continuous investments inenhancing service quality and by limiting access tothose families who share the same fiscal philosophy asthe founding shareholders.

These principles have always been a guideline formanagement, and today are very much appreciated alsoby other families who joined the structure.Having experienced this growing interest from third partyfamilies/individuals in SIF offering, in 2006 theshareholders strategically decided to consider expandingand becoming a larger player. The main strategic options

foreseeable for SIF and probably for most similar familyoffices to consider are listed as follows:1. Become a boutique asset manager (as David Blood,

Notz Stucki, Longview): focusing on discretionarymandates and proprietary products, serving HNWI ondomestic markets.

2. Become an alternative asset specialist (as Cerberus,Partner’s Group, RMF), creating an own sales force,and targeting UHNWI and institutionals.

3. Become a multi family office specialist (as Flemingsand Guggenheim) by targeting UHNWI on aninternational scale, increasing the capacity of theexisting offering.

4. Become an international platform for Family offices,by making Joint Ventures or alliances withcomplementary Family offices, enhancing reciprocallyinvestment and wealth management capabilities.

SIF is currently pursuing the last two strategic options.Like SIF, some of the thousands of family offices willconsider an expansion of their client base, by targetingmost of the unsatisfied clients of large banks. But giventhe limitations of resources and the complexity of the M&Alever, the combination of organic growth and allianceswith peers seems the fastest and most effective way. �

>>>

SFOs and IVs MFOs, FOP and PBFOPs

Less accessible Easier access

Economically autonomous More commercial

Unofficial gatekeepers Clearly defined gatekeepers

Better links with other FOs Acknowledged need for investment ideas

Limited resources Higher calibre employees

Lower staff turnover More benchmarking

Self-funded Need to demonstrate value to win clients

More nimble More bureaucratic

Comparison between business models

Source: SIF


Barcelona, 3 - 4 April 2008Mortgage credit

www.efma.com/mortgage

The following experts will take the floor

In the context of the US subprime mortgage market crisis and of newEU regulations to protect the consumer, financial institutions still seemortgage lending as a key enabler for acquiring and retaining customers,and this has led to strong competition in many countries, thus puttingfurther pressure on profitability and cutting margins.- How profitable is the mortgage activity?- What kind of mortgage products should be offered? - Which distribution strategies and distribution costs ?- How to organise multichannel distribution. What is the Internet’s role?

- Intermediaries: their role and how to manage them- Which products are the most suitable for cross-selling?- How can you innovate in this competitive market?- How to organise automated processes- Securitisation- The European Union regulatory contextDuring this event, the Best Mortgage Product in Europe will berewarded. Financial institutions willing to participate should registerbefore 10 March 2008 at: www.efma.com/mortgageaward

Product innovation, distribution strategies and operational excellence

� Paul C. Ellis, Ecology Building Society

� Richard Exton, Barclays Bank

� Otto Feierskov, Nordea BanK

� Géraldine Ferry, BNP Paribas

� Francesco Ghizzardi, Banca per la Casa - UniCredit

� Adrian Holland, Viva CostaInternational Morgages

� John Malone, Premier Mortgage Service

� Bas Millenaar, De HypothekersAssociatie B.V

� Dennis Pereira, SNS Reaal

� Sunil Rohokale, ICICI Bank

� Ana Rubio, BBVA

� Alla Tsytovich, Bank of Moscow

� Paul Wessels, De Hypothekers Associatie B.V.

211_29_Autopromo_Mortgage_GB.qxd:01 7/01/08 15:45


Trend

ising defaults on subprimeloans have sparked fearsabout the solvency ofinstitutions exposed to the

segment via investments inmortgage-backed securities.Indeed, mortgage loans have beenwidely sold on the market throughsecuritization and theirtransformation into debt instruments, thanks to the useof greater collateralisation and the division of credit riskinto equity (toxic), mezzanine and senior tranches. As aresult, these products benefit from higher ratings fromthe credit rating agencies, and from a broader investorbase. Although these techniques have helped pool risksbetter, they have also led to the dispersion of risks, andto growing uncertainty over the location of losses. Thesedoubts peaked in the first two weeks of August,undermining the interbank market, notably in theeurozone and the United States. Overnight rates soaredunder the widespread search for liquidity, and reachedmuch higher levels than the central banks’ target rates(4.7% vs 4%, respectively, in the eurozone, and 6% vs5.25% in the United States). In the United States, the spread widened to 2.5% from0.5%. The monetary authorities had no other choice butto inject massive amounts of liquidity into the market torestore normal operating conditions and prevent the sell-off from spreading to high-quality assets. The ECBinjected €95 billion in August and another €61 billionthe next day. The Fed injected $24 billion and $38 billion,respectively, bringing the Fed funds rate well below the5.25% target.

From money market to lending... By the way, theseliquidities injections have continued up to now. InSeptember the Fed injected $38 bn, surpassed only by

the $50.5 bn intervention in September 2001. For itspart, the ECB lent €50 bn for three months. Theoperation was conducted at an average rate of 4.50%,whereas three-month Euribor stood at 4.75%. Thepersistent difference between the three-month interbankrates and the key rates is one of the most tangible signsof the continuation of the crisis. As an exception among the major central banks, theBank of England was initially rather reluctant in providingextra liquidity to the money markets. It argued that suchsupport would increase moral hazard and may actuallysow the seeds for the next crisis. Thus, it continued torefuse to provide liquidity against a wider range collateral.However, the central bank changed its opinion on thelatter when solicited by Northern Rock. The Newcastle-based bank started as a relatively small building society,but has managed to become the UK’s fifth mortgagelender and has even been included in the FTSE 100index. The rapid expansion has been funded by borrowingheavily in the wholesale money markets. It depends for about three-quarters of its funding on these markets, ofwhich just over 40% from market securitisation. Thisbusiness strategy has been very cost effective as the bankdoes not need to maintain a large network of branches.However, the reliance on only one major form of fundinghas led to the current situation. As the market of asset-backed securities dried up, the company had to ask theBank of England to bail it out. The central bank hasallowed Northern Rock to borrow at a penalty rate byposting mortgage-backed securities as collateral. Thisbail-out package led to a panic reaction among itscustomers, despite assurance from the FSA concerningthe bank’s solvency. In order to restore confidence, thegovernment decided to guarantee all the savings ofNorthern Rock depositors. In September, the BoE relaxedits position even more by announcing that it wouldconduct an auction in which it would provide funds at

Financial crisis

From subprime to the real economy The correction in the US housing market and the outbreak of the subprime crisis, which has

carried over to the money and credit markets, will amplify and extend the US economic

slowdown. The real impact of this crisis has spread beyond America’s borders. To rule out the

risk of recession is to assume that the Fed will have no qualms about acting boldly.

By Philippe d’Arvisenet Chief economist, Economic research department BNP Paribas

RPhilippe d’Arvisenet

211_30_31_32_Subprime_GB.qxd:Mise en page 1 7/01/08 15:39 Page 1


Trend

three-month maturity against a wider range of collateral,including mortgage collateral.

... And to the real economy. What exactly is thesubprime market? In recent years, abundant liquidity, thecorrelative weakening of sensitivity to risk and financialinnovations have resulted in a strong increase inmortgage loan distribution in the United States,particularly in the subprime and Alt A segments. Thisfuelled a significant increase in the homeownership rate.Subprime loans are granted to borrowers with a debtservice-to-income (DTI) ratio of over 55% and/or amortgage loan-to-value (LTV) ratio of over 85%.Distribution of subprime loans climbed to over$600 billion in 2005 and 2006. They accounted for 13%of the $10,000 billion in mortgage loans outstanding lastyear. Alt A loans are granted to borrowers who do notexceed the above ratios, but who are not required toprovide full loan documentation. Jumbo loans exceed the$417,000 ceiling on loans eligible for Freddie Mac andFannie Mae, the government sponsored housingenterprises (GSE): they account for nearly 15% of totalmortgage loans outstanding. All these loan categories arefrequently accompanied by easy lending terms: at a timewhen rising house prices made homeownership lessaffordable, these “affordability products” spread rapidlywith the easing of lending conditions. Two thirds ofadjustable rate mortgages (ARM) are so-called 2/28instruments: they offer below-market fixed rates (teaserrates) during the first two years of the loan, that aretransformed into adjustable rate instruments at the endof the period. Resetting the rates naturally increases costof debt servicing for borrowers, with the risk of driving upthe default rate. Interest-only loans offer a deferredamortisation period, typically two to three years for ARMsand ten years for fixed rate instruments. Negativeamortisation loans allow borrowers to capitalise interestpayments up to a certain proportion of the loan (15% to25%), after which they are transformed into normal loans.Here, too, the cost of debt servicing rises sharply.Speculation also came into play, and loans werefrequently granted based on the anticipated increase inhouse prices rather than on the borrowers’ debt servicingcapacity: if the borrower defaults, the house could be soldto reimburse the principal, but this only works, of course,as long as house prices do not fall. Recent troubles haverisen with the upsurge in mortgage defaults. In the

subprime segment, the default rate on ARMs(foreclosures and delinquencies of over 60 days) rose to13% at the end of last year, from 2.6% in mid 2005. Inthe Alt A segment, the default rate rose to 2.5% from0.5%. This trend is even more pronounced for morerecent loan originations: after a year, the 60-daydelinquency rate for subprime ARMS was 6% for thoseoriginating in 2005, but over 10% for those originatingin 2006. Considering the terms of these loans, thedefault rate is bound to continue rising in the quartersahead. Even before the outbreak of the current financialcrisis, it seemed obvious to us that the correction in thehousing market was far from over, and that it was yet toexert its full impact on economic growth. Although thedecline in home construction has trimmed growth belowits long-term potential for several quarters, it has only hada minimal impact on sector employment. As a result, theUS economy has continued to benefit from fullemployment. Moreover, the slowdown in liquidityextraction from higher valued property assets (cash-outrefinancing, one of the benefits of the home equity wealtheffect) has been offset by a bullish stock market.Households continue to be net sellers of equities in amarket bolstered by corporate share buybacks. Thissituation, combined with a healthy job market and higherreal revenues, has fuelled household consumption. Yetit is hard to imagine how this pace could be sustained.The housing market crisis is not over yet. In addition tothe subprime crisis and its impact on the households

Homes for sale in the United States.

New housing to selfOld housing to self

250

Index 1983-100

200

150

100

5083 85 87 89 91 93 9795 99 01 03 05 07

Source: Bureau of Census

>>>

The home equity wealth



Trend

concerned, the housing market correction clearly seemspoised to continue for several quarters, much longer thangenerally expected. First, inventory of houses for sale arevery high. The repricing of risk sparked by the recentfinancial crisis is straining financing for sectorprofessionals as well as for potential borrowers. The Fed’s banking survey shows that demand formortgage loans declined and lending conditions tightenedas of last spring. The housing market continues to sufferfrom a supply/demand imbalance. Weak sales continueto hamper the adjustment of unsold housing stocks,which have reached their highest level in sixteen years.Yet growth lacks quality. First, the positive contribution offoreign trade is largely due to domestic demand and itsmoderating impact on imports, and we can no longercount on exports to accelerate given the negative impactof the financial crisis on the world economy. Second, theboom in construction spending cannot be extrapolatedeither. The Fed’s Senior Loan Officer Opinion Survey forJuly (before the outbreak of the crisis) already alludes totighter lending conditions and easing demand forindustrial and commercial loans. With favourablemomentum early in the third quarter, growth is expectedto exceed 2%. Yet tighter financing terms and uncertaintyover demand in the quarters ahead suggest a netslowdown, not only in household consumption but alsoin investment, despite the high level of corporate profits,and in stock rebuilding (which is partially involuntary).Already the crisis has eroded household confidence. Although the decline in fuel prices has lifted realdisposable income by about 0.5%, the job market isbound to deteriorate due to job cutbacks in housing-related sectors. Job creation figures for August and thedownward revision for the previous months confirmed thatthe situation of the labour market had already changed.40,000 jobs have been created on a monthly averageover the last three months, that is a quarter of the levelthat was recordered during the previous quarters.Moreover, tighter lending conditions should weakendemand for consumer durables, including such big-ticketitems as cars and home furnishings. We can hope,however, that the Fed’s rapid reaction will holdoff recession.

What about monetary policy? In August, the FOMCdecided to maintain the Fed funds target rate at 5.25%.While acknowledging higher market volatility, tighter

lending conditions and progress on the inflation front, theFed expressed its confidence in ongoing moderategrowth, albeit with some downside risks. The dominantpoint of view was that the crisis in the housing marketwould not spread to other sectors. Earlier this summer,the monetary policy debate focused on the risk ofinflation. Did a core PCE deflator of less than 2% in itselfjustify easing monetary policy? Some, including theFOMC, wanted this progress to be confirmed, and for coreinflation to be trimmed to about 1.5%. Yet even thisreference to core inflation was called into question, sinceheadline inflation was holding above core inflation overthe long term. Core inflation could no longer be putforward to cut short rumblings about measuring inflation.If this situation were to continue, it risked eroding theunderpinnings of expectations. Of course, the subprimecrisis brought this debate to a close by changing theranking of risks. It was necessary to assess the impactof financial turmoil on the real economy, at a time whenthe housing market correction, and its negative impacton spending at the household and corporate levels,showed no signs of abating. Admittedly, Q2 growth andthe strong rise in unit wage costs do not simplify matters,but nonetheless, the economy seems poised for anextended period of growth below potential, which in itselfshould help ease pressures. In fact, without surprise, theFOMC decided to cut the Fed Funds rates, together witha downward adjustment of the discount rate. The USmonetary authorities stressed that the tightening in creditmarket conditions is to worsen the housing correctionand to slow down the economic activity. The Fedunderlined that it would continue to assess the impactof the markets developments on growth and that it wouldact as needed to ensure price stability and sustainablegrowth. The economy is growing below its long term potential withno signs of improvement in the quarters ahead. Moreover,households have been hard hit this time by the housingmarket crisis. Eventually, to forego a key rate cut wouldhurt pension funds and others that invested in securitieswhose risks were difficult to evaluate, and not those whoactually initiated the risk. �

>>>

This article was published in Conjoncture, BNP Paribas’ review, October 2007.


COVER STORYCOVER STORY

N°211 -January / February /2008 | 33Efma(g)

� Interview with Bernard De Gryse“From industrialisation to financialisation”. . . . . . . . . . . . . p. 34

� United Kingdom“Pay as you drive” insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..p. 36

� JapanAn urgent need to encounter customers . . . . . . . . . . . . . . . . . p. 39

� MMA in UKOutsourced claims handling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 42

� SpainRepairing instead of financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 44

� GenworthStaying ahead of customer expectations . . . . . . . . . . . . . . . . p. 46

� FranceService offerings improve claimants’ satisfaction . . . . . . . . . p. 48

� United StatesRedefining the claims process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 50

� BancassuranceReinforcing customers’ loyalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p. 53

C O N T E N T S

Next cover story Consumer credit Efma(g) N° 212. March / April 2008

InsuranceInsuranceClaims managementClaims management

211_33_Sommaire dossier-GB.qxd:000 7/01/08 15:39 Page 1


Cover story Claims management

Since 1998, Bernard De Gryse is honorary directorof BBL, ING Group. He is also a member of theeditorial staff of the Revue bancaire et financière

and of Le Monde de l'Assu rance. Lastly he is aprofessor at the ICHEC and EHSAL for a post-graduatecourse in business management in insurance companies.

What main changes have occurred lately ininsurance?During the 30 years I have been working in insurance, Ihave experienced two groundswells which haverevolutionised insurance for private individuals. First of all,an industrialisation which is still going on today. We havegone from a situation where policies were assembled andmanaged as with a manufacturing activity, to industrialprocesses implemented in factories where standardpolicies come off the production line bound for diversifieddistribution networks. The main stimulus bringing on thistransformation is, of course, the development ofelectronics. But the unbridled pursuit of money hascontributed just as much, to the extent that the period hasalso been marked, and this is the second revolution, bythe banks bursting into the insurers' preserve, even morespecifically by the sector becoming financialised. Fromsugar-daddy-type insurers, we have moved on to theformation of big financial groups with a tendency to beoligopolistic, transnationally oriented, listed on the StockExchange, obsessed by profitability. So, essentially,“industrialisation” and “financialisation”. Of course, nextto a great many other induced or relatively secondaryphenomena.

What are the consequences of mergers andacquisitions?To the extent that mergers & acquisitions proceed from aconcern for wild profitability, we must obviously expectrationalisations, cost savings, attempts to get a foothold

in largely unsaturated markets as well as in ancillaryactivities likely to increase the mass, and defeasance too.This road to the formation of huge groups generates bothstrengths and weaknesses; the stronger one is, the morespace one conquers, but also the more difficult it is to getorganised and remain quick on one's feet. The big playersare especially vulnerable, as can currently be observedacross the Atlantic.

How do you consider the treasures of inventivenessthat insurers display to attract new customers?In life insurance, the Trophy for Inventiveness goes to thoseinvestment-fund-backed policies which succeed intransferring the risk to the customer. In damage insurance,the great trick consists in segmenting populations so muchthat the risk is skimmed. In both cases, we take advantageof the insurance context to circumvent our grounds forexistence: to provide mutual insurance for what isuncertain.It remains difficult, even impossible, to compare Europeanmarkets, with their distinctive characteristics being sogreat. For example, it is still almost impossible to export aproduct, even if it is clever and very efficient. And the firstthing that is plainly obvious when you try to analyse andcompare is the fragmentation between a more or lesslarge number of companies (in Germany, both bank andinsurance players are very dispersed), and the dominanceof the intermediation types leading to almost unassailablepositions (countries of brokers or countries of agents).Creativity aimed at a mass market finds its sources in largecompanies which are able to reach these markets.

What about the American market? Our knowledge of it is poor because we see it from afar,because it is so vast and at the same time so splintered.After an exciting study trip organised by Efma in 2006,focused on life insurance, the main souvenir my book

� Interview with Bernard De Gryse

“From industrialisationto financialisation” Bernard De Gryse has written several books dealing with insurance issues. In his latest book,

Le Monde changeant des assurances, he looks upon the changes that the financial sector has

gone through in the past twenty years, as well as in the insurance and retail banking sector

(see p. 56-57).

By Charlotte Collonge Efma

211_34_35_De Gryse_GB.qxd:Mise en page 1 7/01/08 15:38 Page 1


Claims management Cover story

platforms which assemble various parts so that they canissue a very large number of relatively standard policies,adorned with such and such an option, fitted with a powerful or average motor drive, and intended to be supplied under appropriate brands and names to diffe-rent distribution networks. The banking insurers have caught on that it is vain towant to do everything by themselves; indeed, why doeseach person have to build his own claims "processingplant", whereas it is conceivable to build one together.

What future do you foresee for banking insurance?I concluded my first book dedicated to banking insu-rance, published in 2000, by stressing the perfect stagethis economic phenomenon had reached, and the phaseof obsolescence it was about to enter. At the top of thecurve, and we are just dealing with Belgium here, we canobserve that the five biggest deposit banks are at thesame time the five biggest insurers, counting for morethan 65% of market share (Fortis, KBC, Dexia, ING andAXA are the five in question, and I mentally skip overEthias, a "mutualist" insurer with no significant involve-ment in banking). It is therefore obvious in Belgium as elsewhere that the phenomenon is percolating. But themajor groups now prefer to represent themselves as financiers, mixing banking activities with insurance, assetmanagement and a host of other activities of a financialnature. To do this, they rely on all the distribution networks within their reach: bank branches, insuranceagents and brokers, personal assets consultants, directand online selling, in their countries of origin and crossing borders. However, the arrival of the Internetcombined with the trend towards industrialisation and financialisation already mentioned, is in the process ofupsetting the order. The direct is seizing the opportunityand in the medium term will structure the whole organisation. �

brings out is that things are done fundamentally differentlyover there, where there is an evident liking for policiesgenerating annuities owing to the local consumer's lowlevel of savings. Concomitantly, the Americans also haveto face problems similar to ours: trouble recruitingsalespeople, a staggering multiplicity of products whichdefy all comparison, different prudential inspections fromstate to state, etc.

What is the impact of claims management on thebanks' image?When the subject is damage insurance claims, adistinction needs to be made between the phase whenthe claim is declared and that when the claim is managed.In the case of phase 1, I consider that the banking insurershave transformed a handicap into an asset. Bearing inmind the limited opening times of bank branches and theeconomic impossibility of training a branch employee toaccept and keep track of a claim declaration whoseoccurrences are far too few (processing one, two or threeclaims per month does not confer any qualification), I formy part and in my company took on assisters as early as1995, who were able to receive customer phone calls atany time and capacitated to empower within the followinghour a professional to undertake small repairs under acomprehensive home insurance policy. Suchsubcontracting broadens the customer service range,focuses the agency on its sales activity and reduces thecost of claims. What more can you ask for? Obviously, thisneeds to be done correctly; obviously, the conditions setout in policies need to be adjusted; obviously, you have topay out without arguing endlessly; and very obviously too,the company's image will suffer if it does not do that. Thisbeing said, did the banking insurers need to get involvedin distributing property and casualty insurance products?Obviously not, because these products offer littleprofitability and leverage, whereas bankers aim exactly atan excess of profitability when they launch into insurance,profitability multiplied several times over by marginal costoperations.

Banking insurers share call centres for complaintsregarding damage claims. How do you see thatevolving? This phenomenon fits into the tendency to build factoriesand whose working can be compared to that of automo-bile assembly lines. To compress costs, insurers create

Bernard De Gryse: “From sugar-daddy-type insurers, we have moved on to the

formation of big financial groupswithatendency to be oligopolistic,

transnationally oriented, listed on theStock Exchange, obsessed

by profitability.”

211_34_35_De Gryse_GB.qxd:Mise en page 1 7/01/08 15:38 Page 2



quite an ordinary life and which to others may be boringso why would he want to watch what I do…” Other thanthe immediate relief I reflected on this and thought –me too who would be interested in my journeys … askyourself. Norwich Union launched their first two “Pay as youdrive” TM insurance products:The first is designed for the mass market of low mileagecars. Almost 50% of people in the UK own a second car.Of those with one car two thirds do not use it tocommute to work. These subsidise those that driveregularly during the higher risk times of day on the urbanroads, until now with “Pay as you drive” TM insurance.Since launching one year ago we have seen clearsavings in our claims with the benefit passed tocustomers with lower premiums:• Norwich Union have seen 30% fewer claims for

customers aged 24 and over on “Pay as you drive” TM

insurance compared to a conventional policy.• The average saving for Pay as you drive insurance

motorists aged 24 and over is 27%.Stephen Sharpe (a “Pay as you drive” TM insurance)customer said: “Norwich Unions’ Pay as you driveinsurance has helped me save around 50% on mypremiums and I now pay on average £17-£18 permonth. I think the policy is a great way of helping tocontrol mileage too. I pay as you go on petrol and tolls,so it is great that I can pay as I go with insurance as well.It allows me to make significant savingsevery month and fits in perfectly with my lowmileage lifestyle.”

every journey and enhancing the trust our customershave in our ability and integrity with their information.This monthly contact itself is a new and unusual stepaway from the normal insurance interaction withcustomers. As well as giving a clear insight into howpremiums are calculated, it proves our capability andfurther enhances trust. Over 90% of our customerscontinue to ask to see their itemised bills each month.

But what about the question of privacy? Are ourcustomers worried about that we know about each oftheir journeys? First of all we are not forcing this producton all our customers now or in the future, therefore ifsome motorists are concerned they can takeconventional products but will not get all those benefits.Our extensive research proved that the vast majority ofpeople are not concerned, and when we point out to ourcustomers that not only can we help save them moneybut if their car breaks down or is involved in an accident,we can get our recovery and emergency vehicles to themfaster knowing exactly where they are. This registeredstrongly with motorists that the data we collect not onlysaves them money, it greatly reassured them that in theevent of an incident the technology would help us takea great deal of stress out of the situation. A furtheradvantage of this system is that it enables those vehiclesequipped with a black box to be located. So weighingup all the benefits sharing journey data with NorwichUnion is not seen as a negative but a positive by ourcustomers. On a personal note I was interviewed by Danish TV2 whohad one of our customers on camera with us. Havinginterviewed me about our product the interviewer turnedto our customer who they had sourced and said: “SoMrs xxxxx are you not worried that this man is watchingevery move you make?” For a brief moment I wished Ihad not agreed to the interview, but without promptingfrom me our customer just said: “Well actually I lead

“Pay as you drive” TMinsurance breaks the mould

not only of the core riskmodel, but a radical new

customer product.

>>>

211_36_37_38_Pay as you drive_GB.qxd:Mise en page 1 8/01/08 15:42 Page 2



The branch is the dominantdistribution channel ofJapanese general insurance.All major general insurers

distributes through branch channel.However, the number of brancheshas declined significantly in thisdecade. There were266,753 branches as of March2006, compared to 286,576 a year before and623,741 ten years before. In contrast, the number ofsales staff in branches was 1,873,485 compared to1,797,510 a year before and 1,181,865 ten yearsbefore. These figures show that branch selection andconsolidation have taken place. By their size, a typicalbranch used to have two to three people includingprincipal, producer and CSR. But nowadays, the numberof branches with five to ten people is growing. The most important driver behind this trend is the reformof the premium rating system. Insurers suffered gradualreduction in their profitability margin due to relaxation offiling and rating regulation in the wake of Japan-USInsurance Talks in the late 1990s. In addition, the generalinsurance branch system was also amended at thebeginning of 2000s. The administrative guidelinesconcerning personal qualifications and branchclassifications, as well as the level of branch commissionswhich depend on branch classifications, were abolished.Insurers took several measures to improve the efficiencyof branch distribution channels including introduction ofthe minimum requirement of volume of business andprofitability, differentiated branch commission rates basedon volume, profitability, growth rate and capabilitiesregarding IT, risk management and other value addedservices. Several insurers, mostly new entrants like Sonyand AXA, are successfully selling auto insurance via directresponse channels (call centres and the Internet).

Characteristics of the Japanese branch system.There are three ways to classify Japanese advisors thatincidentally shed light on the characteristics of theJapanese branch system. One is full-time (called “pro”advisor) and part-time, the second is corporate andindividual, and the last is exclusive and multi-representative.

a) Full-time and part-timeFull-time advisors have a 16.3% share compared with83.7% held by part-time advisors. Nonetheless, the coreof the distribution channel is believed to be full-time or“pro” (a short form of “professional”) advisors. Majorinsurers have “special trainee system” (Kenshu-sei) forrecruitment and education of prospective “pro” advisor,which started in the late 1960s after the advisor trainingsystem of State Farm and other captive advisorcompanies in the U.S. The part-time advisor (Sub-specialty advisor) is theadvisor whose main business is not insurance. The autodealer is prominent among them and there are manyother businesses that can take advantage of theopportunity to sell insurance in the course of their mainbusiness, including real-estate advisors and utilitiescompanies. Due to the lesser importance of risk selection(field underwriting) in personal lines insurance comparedto that of the US, the auto dealer is considered to be areliable channel with further growth potential for insurers.b) Corporate and individualThe corporate advisor is the advisor owned by acorporation whose aim is to take part in managing the

� Japan

An urgent need toencounter customersThis article aims to provide up-to-date information about general insurance distribution channels

in Japan. We analyze changing business environments and show the challenges for the branch

distribution system, which is by far the dominant channel, in the face of emerging channels

including direct response and bancassurance. the advisor’s role in the claims process is also

discussed as a core issue .

By Yasuo Okazaki Senior research officer Sompo Japan Research Institute

All major general insurersdistribute through branch channels.

Yasuo Okazaki

>>>

211_39_40_41_Japanese insurance_GB.qxd:Mise en page 1 7/01/08 15:36 Page 1



insurance program of the parent company and also sellsto its employees. It also has an important meaning, i.e.job opportunities for the retired managers and executivesof its parent company. Regardless of the fact that mostone-person or papa-mama advisors take a corporateform for the purpose of tax, they are individual advisorsin this classification. c) Exclusive and Multi-representativeMany full-time advisors, special training course alumniremain exclusive to an insurance company, though thereis neither a legal nor contractual barrier for them to bemulti-representative advisors. Some advisors devotethemselves to the company which offers them a long-standing relationship and support, and others may besatisfied with the quality of support and the strength ofthe insurer’s brand. Additionally, a few insurers have in-house (employed) advisors.

The changing environment surrounding thebranch channel and its challenges. According toMr. Akio Nakazaki, a veteran journalist and consultantspecialized in the insurance field, a seismic shift in thebranch distribution system is going on. Insurancecompanies traditionally put emphasis on their exclusivebranches as the core of their distribution channels.However, as competition among insurers and branchesintensifies, inevitably manufacturing and distribution willbe more separate, increasing the share of independentbranches. a) Direct responseDirect response, the combination of large-scale massmedia advertisement with call centres and the Internetsite, started selling voluntary automobile insurance in1996. The channel said it had market share ofapproximately 4% of the general insurance market. Thevalue proposition of direct insurers, including Sony andAXA, used to concern the savings made on the premium.But these days, they are putting more emphasis onsuperiority of service quality of claims processing in theiradvertisements.b) BancassuranceIn 2001, banks were allowed to sell limited types ofinsurance including housing loan–related products andoverseas travel insurance. The types of insurance bankscan sell has expanded since then. The most popularinsurance product sold by banks is variable life insurance,which bank clerks can sell as an alternative to savings

products. Banks should be allowed to sell a full range ofinsurance products in the coming years despite strongopposition especially from the life insurance sector. Banksare preparing to take advantage of cross-selling to theexisting customer base, by training their clerks, as wellas hiring former advisors and insurance companyemployees.

Japan Post has a large network of sales officesnationwide. For insurance branches, their sales ofinsurance products also would be a significant threat.Kampo Life and Yucho Bank took over the life insuranceand postal savings operations, respectively, when Japan'spostal services were privatized in October 2007. JapanPost is reported to be planning to expand its range ofproducts offering nursing care and cancer insurancealong with life insurance as part of the companyprivatization plan. c) Insurance shopsAs mentioned above, insurance advisors were principallymobile. In contrast, “Insurance shops”, a store on thehigh street or in the shopping mall where customers candrop by not only for insurance transactions but also forprotection or investment consulting, seminars or evenjust chatting while drinking tea. The main business ofthose shops is life insurance and asset management,but they also deal with general insurance. Operators ofsuch shops are larger corporate agencies including LifePlaza and Hoken-Ichiba (insurance marketplace, inJapanese). In contrast, brandassurance, in which retailerswho have the powerful brands sell insurance productsunder their brand, which is prevalent in UK, has not beentried in Japan, except for that for credit card holders.

Advisors’ role in claims handling. As the value ofadvisors is relationship and service, advisors are ideallyto respond to the first notice of loss, visit the siteimmediately, and continue to help the policyholder in theclaims process. However, the non-payment of claimsissue, which triggered massive media coverage after2005, cast a shadow on such a trust. In the general

>>>

Direct insurers generallyscore better than

branch companies.




insurance context, it was found that in a large numberof cases, insurers paid only the amount of maincoverage, but failed to pay the amount of riders, whichwere added during the competition to enhance coverageafter liberalization in 1998. The policy has become socomplex that not only advisors but also insurer claimspersonnel cannot fully understand every rider, whichresulted in such non-payment. As for customer satisfaction with claims handling,according to a J.D. Power survey, direct insurers generallyscore better than branch companies. One hypothesis isthat their claims call centres handle claims better thanadvisors or branch company’s local claims offices. If so,the challenge for branch companies would be to enhancequality by improving claims processes, training claimspersonnel and advisors, or finding an optimal balance ofbranch and insurer roles, including increased usage ofinsurer call centres to assist advisors.

Insurers’ strategy. Amidst the seismic shift from theintegrated model to separation of manufacturing andsales, what strategy an insurer can take? For traditionalinsurers, investing in emerging channels would be anoption, depending on their view on the speed and timingof the growth and profit potential of such channels. Whatthe market would look like in the future and how insurersare coping with the change remains to be seen. �

As competition among insurers and branches intensifies,inevitably manufacturing and distribution will be moreseparate, increasing the share of independent branches.

Seismic shift in branch distribution system

In-house advisorsExclusive branches

InsuranceCompanies

InsuranceCompanies

Independent agenciesIndependent agencies

Emphasis onexclusiveness

manufacturersSeparation ofmanufacturingand distribution

In-house advisorsExclusive branches

Seismic Shiftin insurancedistribution

Competition byExcellence in

Products& Services

Source: Akio Nakazaki, “Insurance agency system in Japan”, 2007.




At MMA UK we outsource thebulk of claims handling,retaining in housemanagement of claims

above a financial limit. In practicalterms this means:• All motor claims• All property damage claims• All minor injury claimsRecruiting people with the right level of insuranceexperience is difficult in and around where MMA is based,so we look to other parts of the UK where staff costs arelower and recruitment is easier. Outsourcing bringsadditional benefits such as shifting costs from a fixedbasis to variable. This brings more certainty into planningand the headache of resourcing how to deal with staffturnover, sickness and the effect of a major weatherevent falls to the outsourcer. MMA uses three specialistoutsourcing companies, all based in the UK. Onecompany manages motor claims from first notification ofloss through to conclusion of a customer’s claim fordamage to their car and for third party damage claims.Another one manages our property/casualty damageclaims on a similar basis. A third company managesinjury claims arising from our motor and property/casualtyaccounts. Each of the outsource companies are experts in their ownfield and are able to provide a 24 hour/365 day claimnotification/emergency service more cost effectively thanMMA would be able to. We calculate that the outsourcepeople costs are 80% of what it wouldcost MMA.

Service delivery and best practice. Customersexpect their claim to be managed in a professionalmanner and the outsourcers are often able to bringbenefits the insurer is not able to achieve. For example,

our property/casualty outsourcer works for manyinsurance clients and is able to bring the best of eachinto its operations. Similarly, in managing such mattersas financial crime, the outsourcer will have experienceacross other lines of business that will be beneficial.

Measuring Performance. We have service levelagreements with the outsourcers. At MMA we believe ourcustomers are at the heart of how we manage ourbusiness and therefore target the two outsourcers thatdeal with claim notification to achieve percentages ofinbound telephone calls to be answered in a certain time,with calls abandoned within agreed limits.Usual measures like how much work there is outstandingand how old it is are also used. However, key tosuccessful customer delivery are the numbers ofcomplaints we receive, and MMA takes part inindependent customer experience surveys that seekcustomer feedback on service delivery and benchmarkthat against how other insurers perform. The resultshighlight any areas that customers tell us are importantto them, such as keeping them informed of the progressof their claim and how MMA performed. With motor claims, our repairers leave a “mirror hanger”in their car for customers to complete. This providesvaluable feedback on the performance of our repairersand the process as a whole. For instance, if a repairerreceives consistently good customer feedback it usuallymeans all our quality and cost measures are being metand we will give that repairer more authority to authorisework. Doing this means they will spend less time on MMAjobs so they will “earn” more per job. However, repairerswho receive consistently poor feedback will see a dropin what is paid for their labour and ultimately they willreceive no new jobs. We also regularly audit our outsourcers where we sampleindividual cases and as ascertain they have been

� MMA in UK

Outsourcedclaims handlingMMA chose to outsource its claims handling mainly due to the flexibility doing so brings to

managing its business as a whole. It means that we are not tied to a particular way of conducting

business and lets us look for the best service providers in the market.

By Bob Still Claims manager MMA Insurance

Bob Still

211_42_43_MMA en GB_GB.qxd:Mise en page 1 7/01/08 15:36 Page 1



into agreed best practice. However, we also give feedbackthat lets the outsourcer know if any quality improvementis required.

Is outsourcing an option for all companies? Itdepends on what you are looking to achieve. MMA UK’sexperience in looking at the UK market is that there arenot many companies who would be able to offeroutsourcing capabilities beyond dealing with firstnotification of a claim incident. Handling a claim afterfirst notification generally requires specialist skills notfreely available in the market place outside of insurancecompanies. Larger companies may not, at first, seeoutsourcing as a serious alternative to their currentprocess simply because potential outsourcers do nothave sufficient scale. However, MMA UK firmly believesthe advantages of outsourcing, particularly resourcingand variable costing, outweigh any disadvantages. Theremay be opportunities to ramp up scale of an operationover time, indeed there are good reasons for doing so.A slow build-up gives each party an opportunity to testprocesses and procedure and fix any as required; mucheasier to do when the volume is low.

An actual example. In June and July 2007, parts ofthe United Kingdom were severely affected by floods. Thesheer scale of these events coming so close togetherpresented us with problems we had never experiencedbefore. It was a real test for our outsourcing partner whomanages our property claims. With all flood-affectedhomes not suitable to be lived in until repaired, arrangingalternative accommodation for our customers has beendifficult. Many customers want to be near their home andwe have purchased caravans for the family to live in untilrepairs are complete.Our loss adjusters have put in place accelerated repairprogrammes but even so, the minimum repair times areestimated to be six months. Most of the flood claimsinvolve a total strip out of the ground floor of ourcustomers’ homes. With around 3,600 storm and floodclaims arising from these two events, the overall cost ofthe claims is running into many millions of euros and isstill rising. Our outsourcer has had to put huge amountsof additional resources into managing these events byway of staff working additional hours and temporaryworkers. It is calculated that staff costs alone exceed600% of what would normally be paid. �

managed against agreed criteria such as the quality ofcommunication with our customers and how long it takesto agree a claim.

Cost management. As well as service to customers,cost is, of course, key to managing claims. The samecost control methods are used with our outsourcers aswould be used if we were managing the claims ourselves.Skilled and experienced claim handlers combined withappropriate technical people who have the knowledge toinvestigate individual claims and examine trends in claimsdevelopment are key to keeping claims leakage costs toa minimum.

With financial crime a feature of claims managementMMA passes details of all new and amended claims toa company that matches the claims information againstseveral databases that may indicate that the claim is notgenuine. For instance, does the database that recordspeoples’ addresses match the name address for ourcustomer? Does the customer have bad creditreferences? Has the theft of their car been logged on tothe police national database?We also match new injury claims, looking for previousclaims which may indicate a serial claimant and whenmatched with details of lawyers and doctors can showthat a motor claim may be “staged” or false.

Retaining control. When considering the outsourceoption, we recommend examining the risks involved. Forexample, what if the outsourcer is taken over by acompetitor? How do you ensure your service standardsare met and how is quality managed? Does theoutsourcer provide fair and ethical treatment of its staff?Is there a culture of quality management in theoutsourcer? With a shared focus on quality we are ableto work closely with our outsourcer as we share the sameobjectives in making our customers’ lives easier whenthey have a claim. There is daily contact with ouroutsourcers and we are careful to give them sufficientroom and freedom to make decisions on claims that fall

We calculate that theoutsource people costs

are 80% of what it would cost MMA.

211_42_43_MMA en GB_GB.qxd:Mise en page 1 7/01/08 15:36 Page 2



In order to develop its services,Mapfre Seguros Generales hasfour customer-service callcentres located in Madrid,

Valencia, Teruel and Las Palmas deGran Canaria that are dedicated tothis activity (Services Department).In 2006, these call centresgenerated a volume ofapproximately seven million calls.According to the latest survey by ICEA (Association forresearch cooperation among insurance companies)entitled “In-depth survey of customers in the homeinsurance branch, 2006”, the availability and speed ofservices were seen in a very positive light by ourcustomers. 94.7% of our customers show a highdegree of satisfaction with the services provided.Mapfre Seguros Generales’ commitment to quality isreflected at every stage in the life-cycle of customer-company relations and from the very moment thecustomer comes into contact with “the voice of MapfreSeguros Generales.” The ISO 9001 certification of thecall centre guarantees that all customer-relationsmanagement processes are overseen by a Qualitymanagement system.

From the Claims department to the servicesdepartment: a change in philosophy. Generallyspeaking, the department that handles an insurancecompany’s services is the Claims department. As ofDecember 2003 at Mapfre Seguros Generales, it is theServices department that has been in charge of thisarea. This change in name results from an internalevolution: the need to graduate to a more positive formof management, i.e. one that is no longer associatedwith a loss, an unfavourable element, but with a servicethat reflects customer expectations. It is in this way

that we can focus on the customer by setting aside thenotion of “loss,” which bears negative connotations.

Dealing with “technical” variables is notenough. As a “standard” claims management service,we can achieve a high level of control over so-called“technical” management variables, but most of thelatter are neither visible nor necessarily fullyappreciated by our customers. Are we very wellpositioned where premium collecting is concerned?Can we assert that we control claim provisionsdiscrepancies very well? Have we implemented aneffective cost control policy? Is our fight to combatfraud efficient? We fear that these issues are notamong top priority topics for our customers who expectus, above all, to make judicious decisions and meettheir expectations.

Indemnification versus repair. In order tofacilitate the resolution of claims, Mapfre has favouredhaving recourse to outsourcing since the end of the1980s because such external suppliers can provide aconcrete service versus a simple indemnity. To this end,the company has put together a network of tradeprofessionals and partner businesses in varioustheatres of operation, which has led to theestablishment of a vast network of repair services,health services, legal services, etc. As a result andbased on the coverage selected, we offer concertedservices for our members. In case of damage, we offerthe possibility of sending policyholders a repairer. Incase of personal injury, we offer the assistance of ourconcerted network of clinics and health services. Whenour customers need legal assistance, our network ofpartner solicitors is at their disposal. We are graduallyintegrating services, and trade professionals are helpingus to provide new services. That’s why Mapfre Seguros

� Spain

Repairing insteadof financingMapfre Seguros Generales, one of the operational units in the Mapfre system, is a member of

the Mapfre Caja MAdrid Holding de Entidades Aseguradoras company and is specialised in

insurance policy sales to private individuals, having substantial activities in the Home insurance

branch with over 2,200,000 policies written, and thereby allowing it to hold a leadership position

in the Spanish insurance market. By Juan Francisco Ortega Martinez Claims director Mapfre Seguros Generales

Juan FranciscoOrtega Martinez

211_44_45_Mapfre_GB.qxd:Mise en page 1 7/01/08 15:35 Page 1



to improve quality without paying attention to processplanning.� All personnel in charge of handling service must feelstrongly involved in this commitment. Their personalobjectives must include certain general or specificquality indicators, depending on their tasks and levelof responsibility.

� It is appropriate to draw up a list of standards andcriteria that improve the perception our customershave about the quality of our services. Our internalstaff, as well as personnel in our outsourcingnetworks, know what these are and must apply them.In the case of an urgent repair, for instance, we mustcontact the customer within the hour and withintwenty four hours. if the repair is not urgent.

� It is necessary for the members of our permanentstaff to be responsible for the control and supervisionof the outsourced networks. The networks must berecognised as networks dedicated to after-salesservice, in the same capacity as sales networks.Endeavouring to ensure customer loyalty is essential.

� Although each agent is responsible for his or her owndecisions and complies with the customer serviceprinciples they are expected to heed, we haveestablished Quality Manager positions at departmentallevel. These employees are in charge of preventingand dealing with all incidents likely to lead to agrievance or complaint, not only by resolving suchsituations but also by converting them intoimprovement opportunities by suggesting correctivemeasures.

� It is appropriate to assess the opinion of customersthrough objective satisfaction surveys, followed byresult analyses and the implementation ofimprovement plans.

Finally, the Mapfre system has a centraliseddepartment to handle the grievances and complaintsof end-users of its financial services as a whole. It alsohas a Policyholder’s Defence Commission, establishedin 1984, that gratuitously and entirely independentlyresolves complaints from, among others, insurancebuyers, policyholders and beneficiaries (individuals) ofinsurance policies taken out with insurance companiesthat are members of the Mapfre System. �

Generales has developed a network of 6,500 partnersuppliers, trade professionals and businesses indifferent theatres of operation: repair services, healthservices, legal services, etc. Among these, we shouldemphasize its excellent network of repairers, composedof over 3,100 trade professionals and companies thatare headed by 140 technical managers who, eachyear, conduct over 2,000,000 interventions. In oneyear, we have replaced 86,000 metres of piping,painted a surface area equivalent to 377 footballstadiums, changed a lock every twelve minutes andreplaced a window every four minutes.

Improving the customer’s perception of costand quality. Thanks to this system, we are managingto improve our control over the cost of claims byhandling volumes that, on one hand, allow us tonegotiate prices on a more advantageous basis and,on the other hand, to increase our customers’ degreeof satisfaction since they can perceive the serviceprovided by their insurance company more clearly. Thesolution in hand is both more complete and morecustomised. It is the service as opposed to the price that becomesthe differentiating factor.

An overall quality strategy. The principles we applyin developing an overall quality management systemin this sector are based on the following commitments:� We are not simply content with being an insurance

firm. We are a service company. When one of ourcustomers considers a service, he or she must thinkMapfre.

� Our Services department provides suggestions aboutthe assistance and services that can be marketed.We are involved in the development of these products.

� It is not enough to implement good technicalmanagement. Developing a quality managementsystem that can be assessed by the customer isfundamental.

� In all our processes, we much seek internal indicatorsthat reflect quality. We must subsequently measurethem, inspect them, and comply with improvementobjectives.

� The Quality and Process Planning Departments areinterdependent. The processes cannot be improvedwithout taking quality into account and it is impossible

211_44_45_Mapfre_GB.qxd:Mise en page 1 7/01/08 15:35 Page 2



Consumers may buyinsurance for a number ofreasons: some for peaceof mind, others wishing to

protect themselves and theirfamilies against the unexpected.Yet they only really get toexperience and use the productthey have purchased if they makea claim. That is why claims management is soimportant to the consumer, and equally why insurancecompanies should be judged above all else on howthey treat their customers who, in unfortunatecircumstances, need to make a claim.We have extensive experience of claims management,and dealing with customers who unfortunatelybecome ill or have an accident, lose their job throughno fault of their own, or even die with debts that areleft to their family and next of kin to resolve. In 2006alone, our experienced claims administration teamsin 15 centres across Europe answered 1.3 millionphone calls, and paid out in excess of $300 millionin benefits to customers in these circumstances.

A core competency. At Genworth Financial, claimsmanagement revolves around a customer serviceethos where a claim is viewed as a unique opportunityfor Genworth staff to demonstrate that we can be fairto the customer, as well as protecting the interest ofthe underwriting company against fraudulent or invalidclaims. We consider the management of claims andthe associated customer servicing that surrounds itto be a core competency for our business. We alsobelieve that it is important to have local knowledgeand expertise, and therefore we manage this entireprocess within the business in most cases.Developing customer satisfaction for insurance

products is a difficult task, and investment in the skillsand knowledge of our people as well as good processmanagement and technology is required to be ableto stay ahead of customer expectations. There are anumber of different facets to managing claims whileat the same time improving the customer experience:• We make sure our contact centres are well

equipped with staff, who have the right data andtechnology to respond to the customer very quickly.We are able to deliver a consistent customerexperience to all our policyholders across Europe,even though we manage the claims from15 different centres and in 22 languages. This isachieved by managing the teams to well definedservice targets in terms of call answering standards,and deploying enterprise technology to help thestaff achieve their goals.

• Even though the customer has received a specificpolicy document, and should have discussed theproduct with a sales person when they purchasedthe policy, in reality most customers like theadditional re assurance of checking theirentitlement and cover during the initial claims call,and our processes are equipped to deal with thisrequirement quickly and efficiently. They also needadvice and guidance on how they can progress theirclaim with Genworth, and what is expected fromthem.

• We have set specific targets by product for theamount of claims we expect to be able to completeeven in the first run through the process. Thisphilosophy and approach not only drives a mindsetof continuous improvement in claims management,but also encourages teams to call the customer orthe external party if some piece of information ismissing, and deal with it immediately, rather thanfor example writing another letter. We have

� Genworth

Staying ahead ofcustomer expectationsGenworth Financial helps 11 million customers across Europe who have purchased one of their

insurance products. We provide policies that cover personal accident, payment protection and

a variety of other covers including the ability to protect the value of your car should it be written

off in an accident. By Mike O’Sullivan Service Director Genworth Financial

Mike O’Sullivan

211_46_47_Genworth.GB.qxd:Mise en page 1 7/01/08 15:35 Page 1



“Heart”. Through this value we never forget thehuman dimension. We help people throughout theirlives, especially when they need us the most.Effective businesses rely on robust processmanagement, however, the successful ones, thosethat are preferred by consumers, understand how apersonal touch gives purpose to every product andservice that they offer. �

discovered that we can make a final decision on asizeable percentage of some claims on the phone,without any paper or claim form requirement. A diaryand document management system tracks all of thisactivity, and will prompt the employee to follow upwith the customer or related third parties at a futuredate if the claim is not finalised.

• We try and keep the customer informed as muchas possible about the status of their claim. Moderntechnology has really helped in this regard. We areno longer just reliant on a phone call and letters tohelp us in this challenge. The proliferation of themobile phone enables SMS messaging for exampleas an effective communication tool, and we are alsodeveloping web applications to give the internet-savvy user more access and information in thefuture. Transaction web sites allowing the customerto complete their claim on line is also on thehorizon, although for our products, the pilot studiesshow a reluctance to use the Web as the first andonly point of contact for a sensitive issue like anunemployment or sickness claim. In most cases,people want to deal with a real company and realstaff rather than an entirely virtual process, whendealing with traumatic events like accidents,sickness or unemployment.

Key drivers. We also survey our customers on howthey rate the claims service experience with Genworth.Typically these surveys indicate that the speed andefficiency of claims handling coupled with being keptinformed and ease of access are key drivers ofcustomer satisfaction for our products. We know thatwe can only sustain customer satisfaction during thissensitive claims process by developing our people,processes and technology to make the consumerexperience as simple, fast and reliable as possible. One of our corporate values at Genworth Financial is

Consumers only really get toexperience and use the

product they have purchasedif they make a claim.

Genworth Financial Inc. is a leading financialsecurity company meeting the retirement, lifestyleprotection, investment and mortgage insuranceneeds of more than 15 million customers across25 countries. Genworth (NYSE: GNW) reported2006 net income of $1,328 billion and is amember of the S&P 500.

Genworth Financial

211_46_47_Genworth.GB.qxd:Mise en page 1 7/01/08 15:35 Page 2



o confront these challenges,AXA France has launchedOPTCICSE*, an ambitiousproject to remodel general

insurance claims management, theaim of which is to transform theservice we render to our claimantsand have greater control over ourprocesses and technical expenses:- OP as in “OPtimization”: our processes, working

practices and tools need to be improved for greaterefficiency and quality of service.

- T as in “Transformation”: because our customers areevolving, because technologies are being transformedand because we ourselves are changing too, we needto invent tomorrow's working practices to modernisethe ways we exchange with our policyholders,distributors and outside partners. On this account, theOPTCICSE programme covers the longer-term surveysand projects in order to transform the compensationbusiness line.

- CICSE as in “Compensation for an Improved CustomerService Enhancement”. For our policyholder torecommend AXA after a disaster, we must innovate: thecompensation process is the time when we have tolend our ears, accept to handle and honour the claimand when we commit to providing the customer withthe services that will knock him over with surprise!

The filing of a claim is a moment of truth in ourrelationship with the customer. We must remain serenewhen faced with anguish due to what has happened. Ourrole as the insurer is to provide our policyholder/claimantwith the best-quality service when he most needs it. Thatis why we have wished to expand the service offerings,so as to be in a position to suggest a solution to hisproblem, rather than financial compensation. As far asmotor vehicles are concerned, we offer our customer the

possibility of having his car repaired in a service garage.There are certain advantages here for him, the foremostbeing a courtesy car lent for the whole repair durationand a shorter vehicle immobilisation time owing to theexpert carrying out his assessment remotely. Regarding a vehicle which is damaged but still able torun, we offer a service to the claimant's home: theautomobile repairman will come and pick the vehicle upfrom the customer's chosen location (e.g. his home orworkplace). He will leave a replacement vehicle and takethe damaged one away for repairs. Once the work isdone, the repairman will bring the repaired vehicle backto the customer's chosen location, and this time pick upthe courtesy car. This new service guarantees that ourpolicyholder/claimant remains mobile right through to theend of repairs, and the process is optimised so as tominimise the trouble and bother that always follows anaccident. Should any glass parts of his vehicle be broken,our policyholder/claimant will be authorised to have hiswindscreen changed or repaired by one of our networkpartners. The information given to the service providerreplaces the notice of damage and the dossier isprocessed entirely by computer. As part of our home insurance offer, we have developeda network of 1,200 service companies. These providegeneral services, painting, electrical work, glazing or anyother task involved in rehabilitating housing. The companyis called to the site of the damage to carry out repairs.Our policyholder/claimant does not have to worry aboutfinding a company, asking for an estimate and obtainingour agreement for the work to go ahead. We directlyassign the company which will carry out the workaccording to the specifications defined by us. Thus, bythe end of 2007, we will have been involved in over70,000 worksites. The customer for whom emergencyservice has been provided (on the assister's initiative), orwho has been offered reparation in kind by the insurer,

� France

Service offerings improveclaimants’ satisfaction Each year, AXA France handles 1.6 million claims, representing a considerable commercial and

financial commitment. The major challenges regarding claims management are to improve the

quality of service as seen by our customers and sales networks and to bring technical expenses

as well as handling costs under control. By Pierre-Yves Thiriez Claims technical manager AXA France

Pierre-Yves Thiriez

T

211_48_49_Axa_GB.qxd:Mise en page 1 7/01/08 15:34 Page 1



essentially financial. In no country have service to victimsof bodily injury or reparation in kind for significant damagecaused to buildings been made systematic.This profound change in our role as an insurer isoccurring at the same time as other changes in ourenvironment and which have a strong and immediateimpact on our activity (expansion of the Internet, thedematerialisation of exchanges, globalisation of theeconomy, etc.), and requires us to quickly adapt ourtools, our organisation and our mentalities. It faces us with numerous questions about our positioningin the value chain as well as how our role is perceived bythe customer or the society. How can multiple andcomplex services be integrated? How can a constant andimpeccable quality of service be universally guaranteed?How can the value of our role be enhanced whenconfronted with a customer who sees us as nothing morethan a service provider? Should we extend our businessline to the service itself? Several answers are possiblefor each of these questions, but the consistency andeffectiveness of the procedure must be guaranteed alongwith its economic equilibrium. �

feels reassured. His problem is handled and there is nolonger any question of the insurance benefit amount. Noadvance payment of expenses, no discussionabout values.

Of course, these services were first of all introduced forsimple material claims on policyholders' cars or homes.These are the areas in which we can develop effectivepartnerships with service provider networks covering thewhole country. The approvals have been around for a longtime for vehicles, but they are now moving towards apartnership between a service provider who commitshimself with regard to the service and price on the onehand, and a contractor who commits himself as to thevolume. For home insurance, the partnership between apainter and AXA provides the former with regular work onsmall sites for which he does not need to draw up anestimate, because he works on the basis of a standardrate and he can be sure that his invoices will be paid –and paid within the agreed time period. Do these services apply only to our customers and smallmaterial claims? Not at all! Our ambition is to win ourcustomers' preference. For that, we must be able toprovide them with assistance in all life's difficult situations,however serious the disaster, and even when there is noneed for a claim. And third party risks? We can offerthem repair solutions, as we do for our customers. Andthe victim of an accident causing bodily injury? We haveto make available the services he/she truly requires:home help or transportation and, for a victim who is moreseriously injured, adjustments to his/her home or vehicleas well as accompaniment for everyday activities and atthe workplace. We are using this same approach to service developmentin all the countries of Europe, which enables us to shareour best practices. But the levels of market maturity andcustomer expectations vary greatly from country tocountry. In Great Britain, the use of service providernetworks is almost systematic for vehicle, as for home,related claims. In Spain, this is the case for the home,but not for vehicles. In Germany, compensation remains

The filing of a claim is amoment of truth

in our relationship with the customer.

* Translation of the french acronym OPTIMVS for “Optimisation Transformation

et Indemnisation pour une Meilleure Valorisation du Service au client”.

As far as motor vehicles are concerned, we offer our customer thepossibility of having his car repaired in a service garage. There arecertain advantages here for him, the foremost being a courtesy car lentfor the whole repair duration and a shorter vehicle immobilisation timeowing to the expert carrying out his assessment remotely.

AXA services garage visitation

55%

50%

45%

40%

35%

30%

34%

43%47%

50% 52%

dec-03 dec-04 dec-05 dec-06 sep-07

Source : AXA France

211_48_49_Axa_GB.qxd:Mise en page 1 7/01/08 15:34 Page 2



In 1988, in California, Proposition103, a law designed byconsumers to punish auto-insurance companies, passed.

Proponents of it, led by Ralph Nader,spent $2 million, and they wonhandily. Peter Lewis, CEO ofProgressive, met with Ralph Naderand realized that claim service wasinadequate. He decided to change Progressive’sdelivery. Progressive invented the 24/7 immediateresponse claims and customer service. Peter Lewis sawa competitive opportunity: If Progressive does it first andbetter, Progressive will get all the business. SoProgressive got a fleet of emergency response vehicles,hooked them up to global positioning satellites andequipped them with laptops and printers and cellphones and Net connections. All of that helpsProgressive get claim representatives to the scene fast,makes a quick estimation, settlement checks writtenon-site and all sorts of other advantages. The first onedebuted in 1994. Giving good service in the insuranceindustry creates a customer who is satisfied and whotlks to others about it. Customers say: “Progressive getsthere before the police, before the tow truck. It'samazing!”

Concierge Level of Claims Service (seecharts). “It used to be that when we'd write a checkfor a claim, our work would end and the customer'swork would begin”, said Brian Passell, claims grouppresident for the Progressive group of insurancecompanies. “Then we asked ourselves why? andchanged it all. What used to be the customer'sproblems are now our problems, and that's the way itshould be.”In 2000, it started as an idea for a new level of service

that could help save drivers lots of time managing theclaims/repair process following a crash. At that time,Progressive put a construction trailer on a car lot, calledit a service center, and began a test of its new conciergelevel of claims service. The concept was simple: testwhether drivers wanted their car insurance company tomanage the claims/repair process for them, eliminatingthe need for them to have to get estimates, find a shop,arrange for alternate transportation, and manage therepairs themselves. It worked: Today, by using theconcierge level of service, drivers can spend about15 minutes instead of the four days it can generallytake dealing with the aftermath of crashes.

Six more test sites would open between February 2000and December 2002 before the decision was made toexpand this level of service and offer it to all Progressivecustomers, and those with whom they are involved incrashes, throughout the country. Today, the “Conciergelevel of claims services”is available through more than50 state-of-the-art facilities throughout the U.S.CEO and President Glenn Renwick comments “Itsignifies how far we have come with a simple idea: savepeople time and make the claims process easier. And,it reflects drivers' widespread acceptance of that idea.”How the service center works: • The customer calls 1-800-PROGRESSIVE to report

� United States

Redefining the claimsprocesssThe Progressive Group of Insurance Companies has been called a visionary, a maverick leading

a wave of change within the insurance industry. In business since 1937, Progressive is now the

nation's third largest auto insurance group with more than twelve million customers.

By Sylvie Marc Freelance journalist Transatlantic Ventures, United States

“We got into the business ofreducing human trauma andthe economic cost of auto

accidents in a cost-effectiveand profitable way.” PeterLewis, CEO of Progressive

Sylvie Marc

211_50_51_52_USA_GB.qxd:Mise en page 1 7/01/08 15:34 Page 1



vehicle. Once Progressive knows what you're looking for,they contact a carefully chosen network of dealers andlenders with proven track records for great service andgood values. Network dealers and lenders will workdirectly with you, but your concierge specialist willalways be available to answer questions or provideadditional information. In most cases, Progressive hasfound cars that meet customers' needs within six days.“The process is getting rave reviews, and we believe thisis the future of auto insurance,” said Passell. Theservice is not just for Progressive policyholders, it is alsoavailable to anyone involved in a claim with aProgressive policyholder. In addition to the new claimscenters providing one-stop handling of vehicle repairclaims, Progressive operates more than 350 claimsoffices in all 50 states and employs more than13,200 claims people. More than 28,000 Progressivepeople work in more than 460 offices throughout theUnited States.Progressive has redefined the claims process but alsothe auto insurance industry. Peter Lewis concludes “Wegot out of the car-insurance business, and we got intothe business of reducing human trauma and the

the claim any time of the day or night, and brings thevehicle to the new center. The centers are convenientlylocated for most customers in markets whereProgressive has a center. • At the claims center, in about 15 minutes, the

customer can be on his or her way in a rental car withthe assurance that Progressive will keep him or herinformed of the status of the claim throughout therepair process.

• A Progressive claims representative prepares a repairestimate and contacts an auto body shop based onits track record of providing superior service and doingquality repairs, as well as its ability to begin andcomplete work promptly. Both Progressive and theshop reach agreement on the cost of the repairs; theshop then transports the vehicle from the ServiceCenter to its facility and the repair work begins.

• When the work is finished, the vehicle is returned tothe Service Center where representatives from bothProgressive and the body shop inspect the quality ofrepairs.

• Once satisfied with the repair quality, Progressive callsthe customer and asks him or her to return to theService Center where, together with the claimsrepresentative, the customer inspects the repairs.

• The customer then leaves with a written guaranteeon the repairs that both Progressive and the bodyshop stand behind as long as the customer owns thevehicle.

Total loss concierge service. In 2006, Progressiveexpanded its concierge level of service to address thespecial needs of drivers whose vehicles are unrepairableas the result of an accident. Progressive's new total lossconcierge service helps customers find a replacementvehicle at a competitive price, and helps them findfinancing, too. Most insurance companies hand you a check when yourcar is totaled. Progressive understands that, while youneed the check, you also need another car. Progressivehas designed a total loss concierge service to help getyou into a replacement car quickly.If you choose to use the total loss concierge service, aconcierge specialist will be assigned to you to find outexactly what type of vehicle you are looking for, includingmake, model, color, year and price range. Your specialistwill even ask you how you would like to finance the

>>>

US insurance industry 2006 IT spending budgetby business operation. IT spending by the US insurance industry isfocused first on making improvements to coreoperations that directly affect the customerexperience.

Core operations comes first

11%Operations

support

59%Core

operations

27%Distribution

3%Supportservices

Source: TowerGroup 2006




economic cost of auto accidents in a cost-effective andprofitable way.”On the spot: claims processing from the field.Claims accounts for the largest single portion of aninsurer's financial results: around 60% to 70% of totalpremium revenue. A 5% reduction in claims costs rollsthrough the income statement as about a 3%improvement in the bottom line. Although relative newcomers to mobile computing, USinsurers are investing heavily in enterprise-widestrategies that will make quick, efficient claimsresolution a reality (see chart, “Steady growth ininsurance IT spending”). Speedy processing hasimmediate applications in auto insurance, where claimsare typically smaller in value and have fewer variables.Equipping agents with mobile technology can pay bigdividends in terms of increased productivity andotherwise reduced costs. The industry’s embrace of mobile technology is recentbut enthusiastic. “In terms of claims managementsystems, there has been a transformational effort overthe last couple of years,” says Karen Pauli, senioranalyst for the TowerGroup. Automated claimsadministration systems, for example, now allow multiple

>>> people to simultaneously review a file. That meansmembers of the special investigation unit as well as theclaims manager and the adjuster can all look at anddiscuss a case file at the same time. Claims adjustersare now routinely equipped with cell phones and digitalcameras. Many companies are now adding globalpositioning system (GPS) devices to help adjusterspinpoint locations more efficiently. The change underscores the evolving role of superiorclaims processing as a competitive weapon. “It turnsout that the quality of the customer experience duringthe claims process, such as when that pipe breaks orwhen a car accident occurs, largely determines whetherthat customer will stay with his or her insurancecompany,” says Tony Jacob, Microsoft industrymarketing director for worldwide financial services. “Sothe insurance carriers are trying to figure out how toimprove the quality of the claims process, and of coursespeed the settlement process as a way ofretaining customers.” Chad Hersh, Celent analyst, estimates only 10% ofinsurers employ wireless networking to process claimsfrom the field. Fewer still remotely approve claims whilethe adjusters are on site, he says. Only a handfulsupport systems that give adjusters the ability to printchecks from their cars. But Hersh predicts that theinsurance industry’s increasing investments in coreoperational changes will produce a surge in technologyadoption between 2008 and 2010 (see chart, “Coreoperations comes first”). Improvements will appear ascombinations of expanded wireless coverage, advancesin upload speeds and security, and the slimming ofclaims applications to more Web-friendly size. In addition, recent catastrophes have highlightedtechnology challenges that are now being addressedand will benefit claims processing. “Hurricane Katrinashowed the value and the limitations of mobiletechnologies,” says Microsoft's Jacob. “Claims adjustersworking in decimated areas had the mobile technologyto fill out forms, take digital photos, and then sync upto the corporate database. The challenge was that celltowers were destroyed and power sources were limitedin many areas, so it pointed out the need for betterbattery life and sync technology.” �

IT spending (in$ billions)The US insurancei n d u s t r y ’ sgrowing attentionto field claimsprocessing is acontributor togrowth in ITspending.

Steady growth in insurance IT spending

$38.2

*projected

$39.4*

$40.5*

$41.7*

2007200620092008

Source: TowerGroup 2006




>>>

When Pacifica waslaunched 17 years ago,almost all the banksalready offered life

insurance, which they hadincorporated by creating their owninsurance company. In the propertyand casualty banking insurancesector, only two banks opted for totalintegration, the Crédit Mutuel and the Crédit Agricole.When these two institutions joined the market, they bothadopted an identical strategy, which would prove to bethe most profitable in the long term, i.e. the completeintegration of the property and casualty insurance branch,with regard to both upstream (product design andmarketing) and downstream activities (claim distributionand management). Other banks entered the market byjoining forces with an insurance partner, and some havesimply stayed away. The Crédit Agricole has developedan innovative concept, i.e. integrated banking insurancerather than an alliance with a conventional insurer. Thisstrategy has enabled the bank to control the entire valuechain, with fluid management procedures, uncomplicatedproducts that are easy to sell, fine-tuned managementof the technical results, assistance for the sales forceand a totally innovative approach to claims management.

A claims management approach basedaround quality of service. Curiously, conventionalinsurers have never really considered claimsmanagement to be a fundamental avenue fordevelopment. Yet this is the moment when the quality ofthe relationship between the insurer and its client canbest be assessed. Insurers have always taken a morefinancial than marketing approach to the business. Theyreceive premiums and subscriptions to financial products,and then pay out for claims when necessary. Insurance

company executives are obsessed by a simple equation:optimisation of earnings = maximisation of premiumsand reduction of total claims. Unfortunately, there is astumbling block for both sides of this equation, in theform of the client! The real essence of the insuranceprofession is also (and perhaps above all) workingalongside the client and providing him with a genuinequality service when a claim occurs. From thisperspective, it is entirely reasonable to expect a fair returnfor the service provided. Ultimately, claims managementis the finished product for a property and casualtyinsurance company.

Pacifica offers the client a direct telephone relationshipand this service (which promotes a positive image)represents its core business and the focus of itsorganisation. Capacity for reaction, innovation,customisation, close physical presence, quality of service,and control over technical and management costs arethe key aspects to its strategy. In addition to its headoffice, Pacifica has 15 decentralised claims managementunits, which are close to the distributors of our products(i.e. the regional branches of the Crédit Agricole and soonthe LCL) and close to the clients, assessors, repairersand victims. Pacifica currently employs a staff ofapproximately 300 at the head office, and 700 outside,who have handled 3.5 million claims since the creationof Pacifica. A survey is carried out every year on a sample of1,000 claimants. This survey reveals a satisfaction rate

� Bancassurance

Reinforcing customers’ loyaltyEver since the company was founded in 1990, Pacifica has innovated through the management

of claims by telephone. As a result, the property and casualty insurance branch of the Crédit

Agricole has enjoyed increasing success, reporting 15% growth over the last two years, whereas

the property and casualty insurance market in general has shown growth of 2% over the

same period.By Patrick Duplan General manager Pacifica

France is probably the most advanced country

in terms of property andcasualty banking insurance.

Patrick Duplan

211_53_54_Pacifica _GB.qxd:Mise en page 1 7/01/08 15:33 Page 1



>>> notably Italy and Greece. The teams operating within theInternational Insurance Department, reporting to BernardDelas, are particularly mobilised with regard to duplicatingthe two Pacifica and Predica models.Pacifica’s challenge over the next five years is to doubleits revenue. The implementing of a complete multi-channel approach, developed with its partners, shouldcontribute to this ambitious objective being attained.Indeed, in 2007, out of 1.3 million new businesstransactions, 10% were generated via the telephoneplatforms. Today, the regional branches of Crédit Agricoleoffer an on-line quote simulator, in addition to atelephone connection. In 2008, it will be possible to gothrough the entire subscription process on the Internet.Pacifica’s other asset is the integration of a seconddistribution network. Since September 2007, it is the fullowner of the Assurances Fédérales Iard. By the end of2007, an acquisition-merger will be completed, and LCLwill possess, with Pacifica, a powerful integrated bankinginsurance mechanism. �

of between 93 and 97% (depending on the year).Moreover, 50% of these clients consider that theirconfidence in the Crédit Agricole has been increasedsince they have received payment for their claim. This isclearly not a direct and immediate financial result, but itclearly contributes to reinforcing the loyalty of clients, andenhances the likelihood of them recommending thisservice to their family and friends.

Innovative products. Pacifica was the first insurancecompany to introduce the concept of the “new”replacement of possessions in the housing insurancesector in France. This involves, firstly, abandoning theconcept of dilapidation, which tends to createmisunderstandings with clients, and secondly, replacingthe client’s possessions in his home. This service isprovided by a network of partners that directly replacesthe client’s possessions in his home, within an extremelyshort timeframe. This type of innovative product,combined with a genuine service, is particularlyappreciated by our clients.The General accident guarantee is another example ofinnovation. Its success shows that a real clientrequirement already existed. The Crédit Agricole, with amore polished offer than that of its competitors, hasseized an opportunity to conquer an untapped market,where it is now by far the leading player, with annualrevenue of nearly €118 million in 2006, representing amarket share of 32%. Finally, the concept of bankinginsurance introduced by the Crédit Agricole five years ago,together with its strategic approach, consists in becominga universal banker/insurer in all the proximity markets(private individuals, farmers, small shopkeepers,professional people etc). Pacifica now offers a completepackage that targets both the agricultural and non-agricultural professions, and has set very ambitioustargets in both these markets.

Roll-out abroad. France is probably the mostadvanced country in terms of property and casualtybanking insurance. In Europe, there have been no trialsas integrated and thorough as those implemented by theCrédit Agricole and the Crédit Mutuel, which, together,represent 80% of the volume of business carried out inthe property and casualty banking insurance sector. ThePacifica model has recently been rolled-out in Portugal,with the objective of extending it to cover other countries,

New business (all products) 1,272,000 contracts

Stock of portfolio contracts 5,333,000

Number of open claims 492,160

Turnover €1,206 million

Commissions paid to thedistribution networks €312 million

Earnings(after corporate tax) €45.4 million

Pacifica key figures in 2006

Source: Pacifica

211_53_54_Pacifica _GB.qxd:Mise en page 1 7/01/08 15:33 Page 2


People

Efma reasserted its ambition to promote innovation in retail finance by fostering debate and discussion among peersthrough two conferences. In Athens first, during its 35th Congress (25 and 26 October 2007), the Efma Grand Prixrewarded the best advertising in retail banking. And then in Barcelona (from 27 to 30 November 2007), the “Best onlineor mobile banking service or product in Europe” have been presented. Each time, the audience has voted for the winner.

The four nominated entrants tothe 2nd “Best online or mobilebanking service or product inEurope” (from left to right):Pedro de Sousa Cardoso (Head ofmarketing division, Banco Best),Constantinos Stivaros (Businessdevelopment manager, PiraeusBank), Audrius Kurcevicius(Electronic bankingsubdepartment, Hansabankas)and Dennis Pereira (Head ofeCommerce, SNS Reaal).

From left to right: Aleksey Marey (Member of the executive board, Head of retailbusiness, Alfa Bank), V. Vaidyanathan (Executive director, head of retail banking, ICICIBank), Richard Lowrie (Director of banking strategy, SAP) and Michael Mischker(Director of banking solution marketing, SAP). All of them took the floor during Efma35th Congress dedicated to Multidistribution which took place in Athens.

Deborah Davis (Relationship manager, Department CommercialTelephony, Lloyds TSB) and Thomas Ericson (Executive Vice President,Head of Contact Centre, Nordea) took the floor during the “Customercontact centres” conference to the cheers of the audience.

Eventually Constantinos Stivaros won the award (here next toPhilippe Van Fraechem and Jean-Guillaume Desprès from theEfma staff) during the “Online financial services” conferencewhich took place in Barcelona.

More than 400 advertisements(spots and posters) forwardedby 100 institutions from morethan 30 different countries havebeen presented during the32th Efma Grand Prix. SotirisAnastasiadis (Advertisingand communication manager,Eurobank Cards) won the spotaward he received from PatrickDesmarès, Executive director,Efma.

Daan Josephus Jitta(Director of directchannels andinnovation forcommercial banking,ABN AMRO Bank)during itspresentation at the“Online financialservices” conference.

Two of our latest conferences

Athens and Barcelona

211_55_People_GB.qxd:Mise en page 1 8/01/08 15:50 Page 1


The future ofinvesting inEurope’s marketsafter MiFID CHRIS SKINNER

The MiFID (Markets in FinancialInstruments Directive) reformestablishes a new regulatoryframework for markets inderivative instruments. The aim ofthis directive is to promote cross-border investment services while increasing consumerprotection. In order to understand these changes, ChrisSkinner has collected in this book the views of severalspecialists in this field. The contributions are classifiedaccording to four major themes: the principles of thedirective; will this system work?; MiFID: the end ofexchanges?; technology and MiFID.John Wiley and Sons, 06/2007, 261 p.www.wiley.com

An introduction to Islamic finance: theory and practice ZAMIR IQBAL, ABBAS MIRAKHOR

The global demand for ethical investments has driven the rapid development of Islamicfinance. Several leading banking groups such as HSBC and Citigroup have announcedtheir intention to become major players on this market. This book explains the fundamentalprinciples of an economic and financial system governed by Sharia Islamic law. NumerousIslamic principles are examined (social justice, the sacred nature of contracts, the prohibitionof interest) and examined in relation to the economic behaviour of individuals and society. See our focus page 22 to 23.John Wiley and Sons, 12/2006, 332 p.www.wiley.com

Comportementsdu consommateur DENIS DARPY, PIERRE VOLLE

This book is based on theprinciple of studyingconsumers in order to improvemarketing decisions. Theauthors rely on severaldisciplines (economics,psychology, etc.) to illustratethe three parts of theirdemonstration: the conceptualfoundations (needs and motivation, attitudes andpreferences, persuasion); the consumer’s decisions(choice process, buying and consumption behaviour);individuals and their social environment (socio-economic characteristics, psycho-cultural characteristics). Dunod, 10/2007, 370 p.www.dunod.com

Businessknowledge for ITin retail banking This book is intended to be aguide to IT and newtechnologies in the retailbanking sector. In a dozen

chapters, it describes first of all how retail bankingworks (principles, players, products) before looking atthe latest innovations in the sector: SEPA, processautomation, Islamic banks, SWIFT, banks in the virtualworld, etc.Essvale Corporation Limited, 08/2007, 228 p.www.essvale.com

Banken-HandbuchFirmenkundenmarketing BERNHARD BERGMANS

Corporate customers are particularlyimportant for banks. To succeed on thismarket banks need precise marketingknowledge and a practical customeroriented approach. That is why this bookpresents a consistent customer marketing

approach, from the design phase to its implementation,in which the target customer, namely corporate accounts,and the objectives to be achieved are systematically takeninto consideration.Erich Schmidt Verlag, 2007, 385 p.www.esv.info

BooksBooks211_56-57_Livres_GB:Mise en page 1 7/01/08 15:32 Page 1


Integration der Vertriebswege Herausforderungen im Dynamischen retail bankingMARKUS KECK, MARCO HAHN

This book entitled “The integration of distribution channels” looks at the strategicpositioning of distribution channels, which is a challenge facing the retail banking marketin Germany. The themes addressed include in particular multichannel distribution in theframework of bank marketing, the theory of complexity as a guiding line for strategyprocesses and changes in sales strategies. Finally, the book looks at the major aspects ofmultichannel management and its efficiency.Gable

Le marketingadulescent CORINNE MAILLET

“Kidults” are young adults who,because they feel nostalgic fortheir childhood, try to relive it bybuying products that arepredominantly aimed at childrenand brands with which they arefamiliar from their childhood.Considered initially as a passingfashion, this phenomenon has lasted and its economicdimension has attracted the interest of advertisers andmarketing experts. Village Mondial, 09/2007, 271 p.www.pearsoneducation.fr

Deposit insurance ANDREW CAMPBELL, JOHN RAYMOND LABROSSE, DAVID G.MAYES, DALVINDER SINGH

This book is a collection of publications by variousauthors who assess the benefits of deposit insurancesystems. In addition to protectingdepositors, these systems are anessential aspect of a country’sfinancial stability. The authorscover several subjects: thepromotion of financial stabilityby protecting depositors; settingup a deposit insurance system:why? how?; general advice onresolving bank bankruptcies;encouraging internationalcooperation to deal with bankbankruptcies.Palgrave, 06/2007, 350 p.www.palgrave.co.uk

Monde changeantdes assurances BERNARD DE GRYSE

The last twenty years have beena period of almost non-stopchange for the financial sector.This book reviews the insurancemarket and retail banking sectorin Belgium while placing themin an international context. A special chapter is devotedto the new competitors and mutual insurers. It is to benoted that the last chapter is devoted to the place ofwomen in insurance. See interview page 34 to 35.Larcier, 02/2007, 215 p.www.larcier.be

Banking sectordevelopment intransition countries RALPH DE HAAS

Since the fall of the Berlin Wall, theformer socialist countries of EasternEurope have initiated far-reachingeconomic reforms. The creation of adynamic banking sector has been animportant part of this process. Thisbook examines the impact ofmultinational banks on the development of the bankingsectors in several of these countries. VDM Verlag Dr. Müller, 09/2007, 231 p.www.vdm-verlag.de

211_56-57_Livres_GB:Mise en page 1 7/01/08 15:32 Page 2


211_58_calendar_GB.qxd:58-Efmag204-fr 7/01/08 15:31 Page 58

Efma 30th ConventionParis, 13 - 14 March 2008

Among the global leaders speakingat this exceptional anniversary event

� George Awad, CEO, Global Consumer Group EMEA, Citigroup� Karel de Boeck, Vice Chairman, ABN AMRO� Rajiv Dutta, President, PayPal� Achim Kassow, CEO, comdirect and Member of the Board, Commerzbank� Andrei Kazmin, Director General, Russian Post� Jan Lidén, President and CEO, Swedbank� Xu Luode, President and CEO, China UnionPay� Lars G Nordström, Chairman, Efma and former CEO, Nordea Bank� Roberto Nicastro, Group deputy CEO, Unicredit� Ergun Özen, President and CEO, Garanti Bank� Baudouin Prot, CEO, BNP Paribas � V. Vaidyanathan, Executive Director, ICICI Bank

After several years of record profits, more turbulentmarkets are challenging finance firms to redefine howthey create sustainable value for all stakeholders:shareholders, customers and society at large.

The Convention is Efma's most strategic event and theforemost international gathering of decision makers inEuropean financial services - the place where executivesdraw lessons from the past, project a vision of the futureand devise the strategies that will make it happen.

Some of the most influential leaders in retail finance willshare their insights and vision about how they intend tocreate value in mature and emerging markets.

Exclusive Efma reports will be discussed and distributedto participants:

World Retail Banking Report 2008 Retail Banking Competitiveness Report

Leadership in retail financeDriving value creation strategies

211_59_Autopromo_Convention08_GB.qxd:01 7/01/08 15:31 Page 29

FOR FACING NEW TRENDSIN THE WORLD OF BANKING AND FINANCE

Banque & InformatiqueThe leading french magazine to focus

on solutions and services targeted specificallyto the banking and finance IT industries

For a free issue please contact us

+33 (0)1 53 58 14 [email protected]

BANQUE&INFO english:Mise en page 1 26/07/07 16:54 Page 1

maquette de magazine

Documents

insurance sales

multichannel management

rue daguesseau75008

direct sales

new channels

floorinsurance companies

page 29n211

banking networks orwith