Project Holyrood�Team FinTech Students

UK Home Insurance Business

Objective:

to give a data driven solutions on increasing the market share of the retail bank’s business in home insurance from 1% to 10%

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User Profiling

Leo, 48, own a flat in Shoreditch, London

Buy home insurance from the post office

Client’s SWOT Analysis

• 15% of market share in retail banking
• Big share in mortgage business
• Willing to make a significant investment

Strengths

• Haven’t got a dedicated home insurance portal
• Very limited automation in the internal process
• Insurance registration process in handled manually by staff
• Customer service is only done by call and cost a lot of money

Weaknesses

• Automation on the sales through form and the chatbot
• Digital marketing improvement
• Cost reduction through automation
• Unique selling preposition creation through mortgage business line
• Create sales funnel through its mobile banking customers

Opportunities

• Emerging competitors
• UK economic situation

Threats

Competitor Analysis – Share, App and Web

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Key findings:

• AA uses disruptive technology in insurance market (excellent app)
• All top 10 players have automated websites
• Mobile banking app are used as promotion media to their home insurance product
• 1% to 10% market share is an ambitious target which requires a combination of inorganic and organic growth

Competitor Analysis - Age

Key findings:

• AA user base is good for long-term growth acquisition

Competitor Analysis – Car Ownership

Key findings:

• AA customers are relatively unlikely to have a low income

The AA Acquisition, an inorganic growth opportunity

Home insurance is a highly competitive market and The AA is one of the emerging competitor

The AA will sell their insurance product under client’s bank name

Challenges:

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• Big acquisition cost
• Customer data merge
• People and talent
• App integration

Opportunities:

• Boost 4% of market share of home insurance
• Excellent insurer app in the market
• The AA has a higher share of 18 to 29 years old => good long-term growth prospect

Past Successful Story of Acquisition

• HSBC UK acquired Aviva on 2007

Aviva’s gross assets: £180 million

• Profitable relationship

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Market Analysis (Home Insurance)

(Based on Admiral Financials)

Total UK home insurance customers​

25.38 million

Client's Share (1%)​

0.26 million

Total UK retail customers​

215 million

Percent of customers needed to onboard from retail to reach 5% and 10% market share.​

Client's Share (15%)​

32.25 million

Organic Growth scenario analysis for 5% and 10% market share​

Franchise​

50%: 0.13million

Non-Franchise​

50%: 0.13million

5% Market Share​

10% Market Share​

4%

8%

% of Client's retail customer​

Investment & Pay-Back Period

Chatbot

Acquisition of AA Insurance

• Cost from $20,000 to $80,000​
• AI chatbots: cost savings of almost $1.3 billion by 2023.​
• Cost saving by chat bot, will recover the investment in three years by reducing the cost by at least 20%​
• Major component of cost presently is Contact Centre, which can be reduced significantly by use of chat bot.​

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• Cost of acquisition is 219 million ​
• AA home insurance revenue: 72.24 million​
• AA trading EBITDA is 26 million​
• AA operation cost is 46.24 million​
• Cost savings due to synergy is expected to be at least 30% (13.88 million)​
• EBITDA of AA after acquisition will be around 40 million.​
• Profit from AA and incremental cash flow due to cost savings can result in payback period of around 5 years.​
• Incorporating cost savings due to synergy for our client can result in a payback period of around three years.​

Organic-based Growth

• Onboard existing mortgage customers : providing bundle products at a discount.

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• New customer acquisition costlier than onboarding existing customers.

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• Organic based : improvements of marketing and technology

InsurTech: Insurance Industry Is Competing for Online and Innovative Ways to Grow Business

It is essential to open potential new customer signing up from the high traffic banking apps.

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Build strong online identity by maintaining positive reviews and advancing the targeted pricing scheme.

Build all-in-one monitoring solution app for home insurance customers

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Mobile Banking Interconnection

Smart Apps

Build Online 

Competitiveness

•Direct marketing to existing banking clients, show the potential cross-selling customers by obeying government direct marketing rules.

Put awareness potential customer via advertisement in the search engine and social media. 

Online 

Advertisement Media

Targeted 

Marketing

Cross-selling and up-selling product using the banking "rich" data that the client has. 

Building Better Cross Selling Marketing: Maximising Retail Bank Dominance: 15% of market share and Billions of mortgage.

Up-selling

• Reassuring the customer of the benefit of the combined insurance (home and belonging insurance).

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Cross-selling

- Home insurance product on mortgage product

- Buying home insurance from the client give more benefit than buying from the others for their mortgage product

- Pointing on the benefit home insurance product, it’s on single account with the retail banking

Automation on Sales Form

Dedicated website page with an optimized SEO

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Customers landed from various digital marketing funnels, including from the mobile banking app

Internal Processes Automation

60% Decrease in processing time which will improve customer experience.​

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We estimate that the internal automation will automate 460 tasks.

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Cutting cost on customer service

The use of conversational AI chatbots for insurance will lead to cost savings of almost $1.3 billion by 2023, across motor, life, property and health insurance, up from $300 million in 2019. 

Shift from a call center to a chatbot deployed on your website

https://www.artificial-solutions.com/blog/ai-chatbots-insurance

https://www.revechat.com › blog › chatbot-cost

Use Case Diagram

Customer service will only be dealing with customers that want to speak with CS. This will save time and money on the customer service human resources.

This will save cost on handling more customers. Chatbot freed up 30% of agent time, allowing increased focus on Customer Experience.

This automation capability is essential to anticipate more customers as the market share widen.

Data Quality Improvement

• Personalization of insurance offers
• Building Brand Awareness
• Analyzing Competitors’ Offers
• Calculating Marketing Budget And Forecasting Sales
• Increasing Customers’ Loyalty
• Analyzing Competitors’ Offers

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Using data for marketing purpose 

https://entrepreneurhandbook.co.uk/big-data-in-insurance-marketing/ 

• Information is currency
• Data driven solutions
• Investment in data driven technologies can provide better customer service and streamline insurance companies operations.

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Data Quality Improvement

https://dataladder.com/what-is-data-accuracy/ 

https://www.collibra.com/us/en/blog/the-7-most-common-data-quality-issues 

Migrate all the data to one centralized database.

• Focus only on fixing the dataset relevant to your modus operandi and leave the rest as it is.
• Assess the manpower needed to re-structure and migrate the data to a centralized database how much time is required. For example, if it takes a month to cross-check, clean and remove duplicates from a 1000-row database, look for a faster and automated solution.
• Include metadata in your data to describe and enhance it in the context of who, what, where, why, when, and how.
• Perform the following data quality checks (the effective and cost-efficient way would be through automation):

Identification of duplicates/overlaps for uniqueness

Examining required fields, null values, and missing values can help you find and fix data incompleteness issues.

Check data recency or freshness by looking at how recently it was updated or when.

Applying formatting checks for consistency.

Assessing the range of values for validity.

How to do it?

Conclusion