scalable - esure/media/files/e/esure-v2/2017/1h-201… · first insurer to adopt sira; over 15...
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Quo
te
esure at a glance Underwriting expertise Claims excellence
Overview
How we make money
Why esure?
Focused underwriting and risk selection
QuoteEngine
100+ rating tables
Underwritingacceptance criteria
Point of quote “NoClaims Discount”
checking
Quote barring
Fronting scorecard
Acc
ept
PrePurchase
Devicepro�ling
Quotemanipulation
SIRA
CUE
Call validate
My licence
PostPurchase
In-f
orce
pol
icy
Ren
ewal
Direction of travel to moving controls to point of quote
All underpinned by detailed monitoring
Customerfirst
Colleagueexpertise
Effectivemanagement
UK based claims centres put customers at the heart of what we do
Panel of customer focused suppliers across Motor and Home
Market leading approaches to weather related claims
Over 600 claims specialists
Continuous investment in training and development
All handlers trained in fraud detection
100 approved repairers with PAS10125 accreditation; predominantly utilising annually capped rates
Triaged approach to minimise leakage; constantly evolving strategies; market leading indemnity control
Prudent approach to reserving recognised by reinsurance panel
1
Pioneers in new technologies and precedent setting legal and investigation approachesFirst insurer to adopt SIRA; over 15 years’ expertise in automated fraud detection“Trailblazing” and award winning use of device profiling
35 dedicated colleagues in Financial Crime Unit; hub and spur approach across Claims, Operations and UnderwritingOver £20m claims indemnity savings per annumBetter than 6:1 net return on investment
Single core customer system facilitates centralised data and fraud detectionMarket leading real time device recognition throughout customer lifecycleClaim validation processes leverage techniques such as voice stress analysis
Excellent reputation across the industry, with peers and business partnersActive member of key industry counter fraud bodiesRepeated development of new capabilities with business partners
Appetite forinnovation
Collaborative and
joined up
Leverage technology
Work effectively
c30%
c30%
c40%
-
Accidentaldamage
Thirdparty
damage
Personalinjury
Home
Own accredited network of 100repairers including solus arrangements
Effective capacity, cost control and customer journey management
Bi-lateral agreements
Direct claimant strategies
Know your opponent analytics
90% of repairs through own network
Qualified technical handlers (BDMA)
Market leading approach to wet peril and fire stabilisation management
Market leading recoveries using legal partners
Know your opponent analytics
Experienced & dedicated large loss team highly regarded
Direct claimant
Improving capture rates
Limited impact from a change to Ogden discount rate
Best in class PI costs
Best in class escape of water
Cla
im
% of motorclaims
ApproachType of claim PerformanceAverage cost (£)
compared to benchmark
Customer centric approach
Customer acquisition and retention Effective Handling
Growth opportunities in motor Fraud: market leading reputation
EXPENSESA lean structure and scalable IT platforms underpin an efficient expense base
Profits used by Group to:• Pay dividends to ourshareholders• Reinvest in our businesses• Maintain our capitalreserves, and create abu�er against unexpectedmarket movements
PROFIT
WAY INCustomers predominantly come to us through price comparison websites, 80% of our new business CLAIMS Effective
claims management processes deliver a good customer experience at their time of need while minimising claims costs
SERVICESCustomer centric contribution analysis helps to provide the right products and services to customers at the right time
PREMIUMSFocused and disciplined risk selection allows us to provide competitive prices to customers
Customer
Profits used by Group to: Pay dividends to shareholders Reinvest in the business Maintain strong capital position
2 3
Expand quote footprint1 Test & learn approach2 Grow market share3
c.12.0m
c.4.5m
c.6.0m
1.47m
0.25m
0.02m
Core
Footprint 1
Footprint 2
esuresegmentation
Vehicles insegmentation
esurein-force policies
44Net promoter score
(1H 2017)
£655m £393m
2.258mIn-force policies
(1H 2017)
£107mAdditional services revenues (FY 2016)
Size Service Performance
FINANCIAL POSITIONA prudent approach to claims reserving; a strong reinsurance programme; and an investment portfolio focused on liquidity and capital preservation, all help minimise the impact of adverse events on the Group’s financial performance
>15%Return on capital
1,557Colleagues
Mark
et
size
: 3
0m
veh
icle
s
Price optimisation
Life time value analysis
Retention
Prerenewal
7%
5%
2%
16%
153%Capital coverage
(1H 2017)
£257mDividends
ScalableFocused Controlled
Income - Expenses (inc PCW fee)
= ContributionIncome - Expenses (no PCW fee)
= Contribution
New Business RenewalsCustomer life cycle
Gross written premiums
FY 2016 1H 2017
20% 23%
Digital distribution; data-led
Underwriting expertise; risk mix, price elasticity, contribution focus
Claims excellence; customer first, inflation mitigation strategies
Operational leverage; market leading expense advantage
Growth opportunities; footprint expansion
Strong financial position; robust capital coverage
Ambition; 3m in-force policies by 2020
1
2
3
4
5
6
7
> 30 Data Experts
Risk Mix
Price elasticity
Machine codelearning
Pricing and analytics
ContributionFocus
Regular and detailed monitoring
Data-Led Decisions
Lifetime Value
m
onitoring
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30 Data Risk mix & price Pricing and Contribution
Re
gu
lar &
det
aile
d
Life
tim
e
experts elasticity
analytics focus
m
onito
ring
v
alue
Instalmentincome Acquisition
costs
Investmentincome
Renewal
Additionalinsurance products
Claimfrequency
Fault
Claimseverity
Risk mix
Operationalexpenses
Bad debt
Cancellation
Fraud Not at fault
Multicar
Premium
Contribution centric Operational leverage Strong financial position
Distribution
Additional services revenues
Contribution analysis... an evolution
Expense per policy efficiency Investments
Agile, flexible and scalable technology Robust capital
Customer service philosophy Dividends
4 5 6
5%
Targetallocations
Target grossreturns
Example assets
65%
30%
0.1%
1.0%
3.0%
Cash & Liquidity
Claims backed
Surplus
OperationalCash
Money marketfunds
Investment gradefixed incomeAvg. rating ‘A
Fixed incomeHigh yield
Equity
Deliver returns while minimising surplus volatility
Appropriate alignment of asset and liability duration
Maintain liquidity and capital preservation
Capital flexibility to fund further growth
153% coverage ratio (1H 2017)
Robust capital position; sensitivities demonstrate resilience
123
123
Build & enhance rather thanrip and replace
Single core system; single data warehouse
Code ownership &enhancements in-house
Agility & speed ofdevelopment
Application programminginterface (“API”) providesflexibility to connect toexternal services
APIs allow us to adapt to future technology changes
Scalable & adaptable platform allows for integration of
external services around the core policy admin system
85%
85%
70%
65.8
70.1
47.8
70%
70%
56.4
17.1
2013
2014
2015
2016
1H 20177
Payout £m
10 years experience in price comparison website distribution
PCWs Direct Phone
100%
75%
50%
25%
0
Coverage of SCR
Normal Operating Range
Margin for contingencies
Solvency Capital requirement100%
100-130%
130-150%Motor loss ratio +5ppts
Yield curve down 50bps
Equities down 25%
Credit spreads widen 50bps
1987 Hurricane
(9)ppts
(1)ppts
(2)ppts
(2)ppts
(3)ppts
Sensitivities 1H 2017
Sensitivities are stated after earnings, tax and dividend impact
Products
Services
ASR per IFP
Instalment incomeAdmin & Cancellation
Claims income
Instalment incomeAdmin & Cancellation
£64 £19
£74cost per policy
API
Core
Externalservices
ExternalservicesExternal
services
Externalservices
API
API
API
API
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Service
Retention
Customer
Value
Efficiency44Net promoter score
76%
Diversification of products and services
ScalableFocused Controlled
Market leading expense ratio
Market leading cost per policy
Efficient philosophy set from the top123
Acquistion costs flex with growth through fixed cost PCW distribution4
Source: Deloitte Motor and Home Insurance Webinar 2017
31% 23%
Market esure
Motor expense ratio
Life time customer value Committed to returning excess capital
Returned just under £260m since IPO