Distribution Technology…Oxymoron or True Competitive Advantage?

Steve WeberProgram Director

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Agenda

Current Perceptions

What we see in 2006

What has worked

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2006 CIO Survey – Banks and Insurance

Top business priority- Attract, retain, grow customer relationships!!

Top CIO priority- Deliver projects the enable business growth!

Top 3 CIO technologies- Business intelligence, customer sales and service,

security enhancement tools

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Financial Services - CEO Responses

Forbes and Gartner, published Jan 2006- Attract new customers

Bank (2), Insurance (1), Investment (1)

- Retain existing customers

Bank(1), Insurance (2), Investment (4)

- Use information as competitive weapon

Banks (7), Insurance (6), Investment (2)

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Current Perception

You are doing important, highly visible stuff!!

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In US $BExternal

IT Services

Hardware, Software and

Teleom.

Internal Services

TotalsInternal Services

% of Total

2004 13.45 18.46 10.24 42.15 24.29%

2005 14.29 19.06 9.97 43.31 23.02%

2006 15.12 19.36 9.88 44.36 22.27%

2007 15.92 19.71 9.91 45.54 21.76%

2008 16.93 20.44 9.96 47.33 21.05%

2009 18.03 20.88 10.05 48.96 20.52%

04-09 CAGR

6.0% 2.5% -0.4% 3.0% -3.3%

$0

$4

$8

$12

$16

$20

10%

15%

20%

25%

Source: Gartner Dataquest (August 2005)

04

05

06

07

08

09

04

05

06

07

08

09

In US $BExternal

IT Services

Hardware, Software and

Teleom.

Internal Services

TotalsInternal Services

% of Total

2004 13.45 18.46 10.24 42.15 24.29%

2005 14.29 19.06 9.97 43.31 23.02%

2006 15.12 19.36 9.88 44.36 22.27%

2007 15.92 19.71 9.91 45.54 21.76%

2008 16.93 20.44 9.96 47.33 21.05%

2009 18.03 20.88 10.05 48.96 20.52%

04-09 CAGR

6.0% 2.5% -0.4% 3.0% -3.3%

$0

$4

$8

$12

$16

$20

10%

15%

20%

25%

Source: Gartner Dataquest (August 2005)

04

05

06

07

08

09

04

05

06

07

08

09

Source: Gartner Dataquest (August 2005)

04

05

06

07

08

09

04

05

06

07

08

09

North American Insurance IT Spending Expected to Grow 3% Annually Through 2009

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79%

43%

50%

25%

57%

39%

Security andAuthentication

Standards and DataConformity

Business PromotesDistributors Relationship

& Loyalty

Integration of DistributorTechology with Internal

Systems

Financial Constraints andHow it Will be Funded

Real-Time AccurateInformation

Q: What are your top 3 concerns regarding distributor technology?

What Are The Challenges of Supporting a Distribution System for Life Insurers?

Source: Gartner study of 64 US insurers, December 2004

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2006 Priorities

Distribution technology budgets growing slowly

- Shift from “build” to “buy”

Increased customer facing investments- Both for consumers and producers

- Portals to push out account information to drive cross selling

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2006 Priorities

Connected/disconnected access to key applications for producers to maximize productivity

Better producer measurement and management- Align comp systems/incentives

Increasing efforts to make the process for selling bank and life insurance products more transactional

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Life Insurance Example

Most competitors – start with home office- Use proprietary forms- Trying to automate the existing process – not re-engineer- Use too many systems, particularly for BPM/workflow or

underwriting, causing higher cost of integration- Don’t integrate illustrations in the process

Leaders – start with the field- Use standard forms- Totally paperless process- Includes automated underwriting- Single IT platform- Illustrations integrated

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Areas of Innovation for 2006 - Annuities

CRM, illustration systems allowing wholesalers to more effectively monitor, manage and market to brokers, producers.

Linking illustrations into the new business process

- Better comparisons to each other and other products

Focus on making the appointments process transactional

Focus on making commission payments faster/more accurate

Electronic signatures and 1035 exchanges

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Do These Actions Equal Success?

NO!

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What Actually Works

Solve six problems at once – not just one or two

Act/behave in a true partnership

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Key to Success – Distribution Technology

People Process Tools

What

How

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You Know You Have a Partnership When:

You solve the same problems

You leverage each others’ strengths

You have the same information

You operate as if the glass is half full

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Partnership (cont)

You use the other party’s language

You provide a safe environment

Your commitment to the partnership overrides all else

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Conclusion

What you are doing is very important

The opportunities to use customer and other information are endless

The technologies exist….don’t wait

But, success doesn’t equal the latest technologies

True partnerships do work – if done well

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Questions?