Product Development Some Food For Thought

Transcription

1 Product Development Some Food For Thought Joint Regional Seminar 2007 Product Development Current Trends Shanghai: Hong Kong: Taipei: Singapore: June 20 June June June Mark Saunders, FIA, FASI, FSA Principal & Managing Director, Asia Tillinghast Financial Services Business Leader, Asia-Pacific Tillinghast, a business of Towers Perrin 2007 Towers Perrin

2 Mark V.T. Saunders, FIA, FASI, FSA Mark Saunders is a Principal of Towers Perrin and Managing Director of Tillinghast s business in Asia-Pacific. He is a member of the Global Leadership Council of Tillinghast. He has been working in the insurance industry since the 1980 s and in Asia since He moved to Hong Kong in Before joining Tillinghast he was Asian Regional CEO and Executive Board Member of international life insurance operations of a UK-parented insurer including their joint venture in Korea. He has been involved in more than 100 actuarial appraisal value assessments of Asian insurers and is widely regarded as a leading practitioner in value determination and Mergers & Acquisitions of insurers in Asia. High profile deals in the public domain include: He provided the Actuarial Expert Opinion in the Prospectuses for the ground-breaking IPO of China Life (dual listing in New York and Hong Kong as well as the recent A-share listing in Shanghai) and was also the lead actuarial consultant in the capital raising exercise for another leading state-owned insurer, Korea Life. He was also the Expert Actuary for the Actuarial Consulting Report in Great Eastern s Circular to Shareholders in relation to OCBC s voluntary unconditional offer. Mr Saunders has extensive experience in the operations of life insurance companies around the world. With his in-depth knowledge of Asian insurers and markets he has helped a number of domestic and international insurers in critical areas of acquisition, restructuring, capital raising, market entry, strategy, business operations, partnerships, product development, sales, distribution, bancassurance, financial and risk and capital management (including ALM), financial and regulatory reporting, actuarial development, training and improving business performance. Mr Saunders has been the Appointed Actuary for nine insurers in Hong Kong, Singapore and Vietnam. He is the Appointed Actuary for the state-owned insurer, Vietnam Life ( BaoViet Life ). He also carries out Peer Review of Appointed Actuaries duties for four insurers in India. He also has provided Independent Actuary opinions for High Court sanctioned insurance business transfers and successful Expert Witness testimonials in the Court of First Instance. Mr Saunders has undertaken memberships of various insurance-related, actuarial, regulatory and professional Committees. He is a regular facilitator of training sessions and speaker and chair at conferences and seminars as well as author of numerous articles and papers relating to the Asian insurance industry and has also made the occasional TV appearance! Mr Saunders is a Fellow of the Institute of Actuaries (UK), a Fellow of the Actuarial Society of India, a Fellow of the Society of Actuaries (US), a Fellow member of the Actuarial Society of Hong Kong and a Fellow member of the Singapore Actuarial Society. He has both a BSc (Honours) degree and Post Graduate Certificate of Education in Mathematics from Manchester University, UK Towers Perrin 2

3 Product Development Some Food for Thought Agenda Product Hotties in Asia Components of an Effective Product Development Process Product Success is a Function of Several Opinions Illustrations Role of Actuary What Value should a New Product Generate? Effective Communication Vital for Survival and Development 2007 Towers Perrin 3

4 1 of 6 Hot Products in Asia s Life Insurance Markets? Education provision Short term endowments Guarantees Participating / With Profits Variable / Unit Linked Variable Annuities Customer segmentation / niche Channel products Critical illness and income replacement Retirement Health Annuities think innovatively Underwriting differentials Preferred Lives Towers Perrin 4

5 An Efficient Product Development Process The Components Learning Loop 2 of 6 Identify Customer Needs Idea Generation and Management Feasibility/ Viability Assessment Product Design Marketing & Sales Process Commercialisatio n, Implementation and Launch Monitor, React and After-Sales Check-Points -- Ensure Viability -- Go/Adapt/No-Go Protecting and enhancing your position, documenting and disseminating Accountability: Product Development Committee Rewards/acknowledgements at key milestones In the end the products may look the same but it s how we get there that makes the difference! 2007 Towers Perrin 5

6 Particularly as you move to more sophisticated products, customer and distribution:- Product Success is a function of several opinions Sales Overall Opinion 3 of 6 Product Features Blah, blah, blah..!! Are they really different/ better?...? Price Product Opinion Fund Mix Mix and and Breadth Fund families Number of subaccounts Asset class/ investment objective coverage Performance Compensation Amounts, structure and flexibility Recognition Marketing allowances Sales and and Marketing Support Marketing materials Training Support Responsiveness Sales and and Service Opinion Brand Opinion Reputation/ consumer Operational franchise Excellence Financial strength Underwriting Transaction accuracy and speed Responsiveness Customer servicing Problem resolution Technology 2007 Towers Perrin 6

7 4 of 6 Illustrations Role of the Actuary Creates expectations extensive health warnings??? exhaustive detail??? IMPORTANT QUESTIONS What do I get? How much does it cost? DUTY Inform CLEARLY and SUCCINCTLY Don t mislead 2007 Towers Perrin 7

8 5 of 6 What Value should a New Product Generate? Hurdle rate of return of x%??? Reasonable profit margin Sustainable profitable growth Risk? Capital? Value Creation Value? Return on Risk Value Management Capital Costs Risk Capital Value framework Portfolio of Enterprise Risks Capital Adequacy Portfolio of Capital Resources Risk and Risk Capital Capital Structure Management Structure How much What type capital do I of capital do I need? need? Economic Capital 2007 Towers Perrin 8

9 Effective Communication Vital for Survival and Development 6 of 6 Respected as Professionals but respected as effective communicators?!? As actuaries we must improve our communication skills but what is effective communication? What response did you get? Whose fault is it? I told them everything they need to know it s in the small print It is up to you whether or not your communication succeeds Take responsibility If actuaries and the institutions they advise wish to keep and develop the Appointed Actuary system, they must make sure it s nature and advantages are more widely understood than is the case at present. Sir Edward Johnston, 1989 Do or die So, what does an actuary do? or What is an actuary? My answer: We help to improve insurance companies Other detail??? So.. How do you describe the role of actuaries in product development??? Think of a good answer that communicates your message effectively And, spend more time thinking about how to communicate effectively and promote the image of the actuary and of our great profession! IT S UP TO YOU!! 2007 Towers Perrin 9

10 Be Proactive Be an ambassador of the actuarial profession Mark Saunders, FIA, FASI FSA Principal & Managing Director, Asia Tillinghast Financial Services Business Leader, Asia-Pacific Telephone: Fax: Towers Perrin 10