1. Introduction

I wish to develop the business strategy and technology for an insurance company to meet the challenges of competition and to grow our business in the future.

This strategy recognises that the market environment of today is very different from the past. I have identified many components of the strategy to deliver a better product at a lower cost to our customers, and give a competitive edge against other insurers that are adopting the legacy practices.

I plan to offer this solution to new and existing insurance companies operating outside of Singapore. This is expected to be ready by the second half of 2007.

 2. Market Environment 

The market environment of today is characterised by:

- consumers are more aware and demanding
- they shop around for insurance products by visiting internet website
- they demand lower price and quality service
- the market place is more competitive
- we face competition from providers of investment products, eg banks
- new channels of distribution are being developed, eg direct distribution and call centers
- the tied agency distribution of the past is expensive and inefficient

3. NTUC Income

I have worked in NTUC Income for nearly 30 years, from 1977 to 2007.
NTUC Income started in 1970 with a small capital of $1 million (US$600,000).

By 2005, it had:

- 1,800,000 customers
- premium of $2,150 million
- total assets of $16,000 million
- 1,500 employees and 2,500 agents

It is rated AA by Standard and Poor's. This is the highest rating among all insurance companies in Asia.

 4. Opportunity

Today's technology provides the following opportunity:

- to use mobilephone and SMS
- to provide information through internet website
- to communicate with customer through e-mail
- to provide easy access through the call center
- to provide better service through a customer centric approach

5. New Strategy

The new strategy comprise of the following seven components:

- website
- customer centric
- simple products
- multi-channels
- lightweight computer system
- simplified accounting
- mail server

This is described in more detail below.

6. Website

The website will be the place to contain all information that is needed to run the business. They include our insurance products, practices, educational materials, marketing materials, premium rates and media communications.

The website is accessible to our customers, agents and employees. All parties refer to the same source of information. This approach helps us to be consistent and transparent in our communication and builds up the trust of our customers.

It also reduces the cost of internal communication and training of our employees and agents.

7. Customer Centric

The new approach is to know the customer first, before trying to offer any of our product. We collect the essential details of our potential customers, eg name, contact telephone, e-mail address, bank account number, age, gender and occupation.

By enrolling earlier, the potential customer can enjoy a better price and greater convenience when they buy a product in the future. As they do not have to commit to buy any product now, it is easier to get people to enrol as a potential customer.

They customer can learn about the principles of insurance and the different types of products.  They will receive the educational materials by e-mail. They can also attend educational talks.

 8. Simple Products

The customer can buy simple products:

- for life insurance, the term insurance will be separate from investment
- the protection offered by each product will be defined and explained in simple terms
- they pay a lower premium, based on the cost of claims and expenses
- the charges for the investment product will be clearly disclosed
- the products will be easy to administer in our computer system
- the educational material on the product should be easily understood by the customer

 9. Multi-channels

The customer can approach us through the following channels:

- internet website
- call center
- agent
- branch

Regardless of channel, the same information will be provided to the customer as they are obtained from our website. All transactions will be entered into the website and processed in a consistent manner.

This common system to handle the enquiry and transaction will improve the consistency and speed of service, and reduce the operating cost.

The role of the agent is reduced, compared to the traditional approach. The agent acts like our employee in providing the same type of information to the customer. The only difference is that an agent will serve a defined group of customers and earn a larger part of the remuneration through commission.

10. Lightweight Computer System

The lightweight computer system will have the following characteristics:

- easy and fast to develop
- easy to introduce new products
- easy to maintain
- relatively inexpensive
- handles simple products
- adopts simple practices
- runs routines tasks, such as printing and accounting, in batch mode

11. Simplified Accounting

The accounting will be separated from the insurance administration. It will handle the accounting functions in a similar manner to any typical business.

The features that are peculiar to an insurance business, such as computation of premium and loss reserves, will be done by a separate program and provided to the accounting system.

There will be a daily reconciliation of the control totals in the insurance system with the totals of the accounting transactions for each day. If there is any error in the processing of the insurance or accounting system, it will be identified immediately by the daily reconciliation. This will allow the error to be isolated and traced.

The accounting will be carried out on a daily batch basis. This actual transactions, such as receipt and payment of money can be done on a real time basis.

 12. Mail server

All outgoing mail to the customer will be stored in a server. The customer has the following choices:

- access the server with the identification and password
- print the mail by visiting our branch or printing agent
- by ordinary mail, sent to the home

The customer can enjoy an incentive to choose the first or second method. This incentive can be the cost saving, compared to the cost of sending out the ordinary mail.

13. Conclusion

Insurance plays an important role to enhance the lives of people. The currently available technology allows an insurance cooperative to offer our product to our customers at a lower cost and a better quality of service. We aim to achieve this goal by adopting a new approach to develop our business for the future.

Tan Kin Lian