Measuring the Life Agency Channel Presentation to SAS Life Insurance Conference 2016 Simon Drimer, Managing Director, Pi Financial Services Intelligence 25 August 2016 1 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. $$ Presentation Outline Agency Channel Share in Asian Markets Agency Channel Value Levers Measurement Proxies Measurement Constraints Examples Wrap up 2 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Agency Channel Share Agency in decline but probably reaching its asymptote. Agency vs Bancassurance NB 2011-2015 90% Agency Bancassurance 2011 80% 2012 70% 2013 2014 60% Channel Share % 2015 50% 40% 30% 20% 10% 0% HK agency Thailand Singapore India* HK banc Thailand Singapore India* banc agency agency agency banc banc Channel Share (NB APE) 3 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Agency Channel Value Levers Let’s look at some of the life insurance economic value drivers, and inter -relationships between them. Future sales Premiums capacity NB premiums No. agents Inforce premiums Agent productivity Policy Profit persistency margin 4 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Agency Channel Value Levers Let’s look at some of the life insurance economic value drivers, and inter -relationships between them. Future sales Premiums capacity NB premiums Rookie No. agents recruitment rate Inforce premiums Agent Agent retention productivity rate Policy Profit persistency margin 5 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Agency Channel Value Levers Let’s look at some of the life insurance economic value drivers, and inter -relationships between them. Future sales Premiums capacity NB premiums Rookie No. agents recruitment rate Inforce premiums Agent Agent Other retention productivity factors rate Cost efficiency Product mix Policy Profit persistency margin Other Pricing factors 6 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Agency Channel Value Levers Let’s look at some of the life insurance economic value drivers, and inter -relationships between them. Future sales Premiums capacity NB premiums Rookie No. agents recruitment rate Inforce premiums Agent Agent Other retention productivity factors rate Other factors Agent licence renewal MDRT rate Cost penetration Agent efficiency rate experience levels Product mix Policy Profit persistency margin Other factors 7 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Agency Channel Value Levers We tend to focus on measuring these ... Future sales Premiums capacity NB premiums Rookie No. agents recruitment rate Inforce premiums Agent Agent Other retention productivity factors rate Other factors Agent licence renewal MDRT rate Cost penetration Agent efficiency rate experience levels Product mix Policy Profit persistency margin Other factors 8 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Agency Channel Value Levers ...but this cluster is particularly interesting. Future sales Premiums capacity NB premiums Rookie No. agents recruitment rate Inforce premiums Agent Agent Other retention productivity factors rate Other factors Agent licence renewal MDRT rate Cost penetration Agent efficiency rate experience levels Product mix Policy Profit persistency margin Other factors 9 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies Proxies for agent productivity ? The evidence ... But first, what data are available for analysis at company level ? Agent productivity MDRT penetration rate Renewal/retention/exp Agent no.s Channel APE China, HK, Indo, HK, India, Thai All mkts incl China, HK, China, HK, Indo, Mal, Mal, Thai Most other mkts Indo, Mal, Thai Thai All other mkts Agent Agent retention productivity rate Agent licence renewal MDRT rate penetration Agent rate experience levels 10 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies Proxies for agent productivity ? The evidence ... But first, what data are available for analysis at company level ? Agent productivity MDRT penetration rate Renewal/retention/exp Agent no.s Channel APE China, HK , Indo, HK, India, Thai All mkts incl China, HK , China, HK , Indo, Mal, Mal, Thai Most other mkts Indo, Mal, Thai Thai All other mkts Agent Agent retention productivity rate Agent licence renewal MDRT rate penetration Agent rate experience levels 11 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies So let’s consider HK and Thailand. First HK: Agent Productivity vs MDRT Penetration . Agent Productivity vs MDRT Penetration 12 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies And here’s the equivalent chart for 2013. Agent Productivity vs MDRT Penetration 13 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies Here’s Thailand. Agent Productivity vs MDRT Penetration 14 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies Proxies for agent productivity ? The evidence ... But first, what data are available for analysis at company level ? Agent productivity MDRT penetration rate Renewal/retention/exp Agent no.s Channel APE China, HK , Indo, HK, India, Thai All mkts incl China, HK , China, HK , Indo, Mal, Mal, Thai Most other mkts Indo, Mal, Thai Thai All other mkts Agent Agent retention productivity rate Agent licence renewal MDRT rate penetration Agent rate experience levels 15 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies Here’s the correlation with agent experience. Agent Productivity vs Agent Experience Level 16 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies Proxies for agent productivity ? The evidence ... But first, what data are available for analysis at company level ? Agent productivity MDRT penetration rate Renewal/retention/exp Agent no.s Channel APE China, HK , Indo, HK, India, Thai All mkts incl China, HK , China, HK , Indo, Mal, Mal, Thai Most other mkts Indo, Mal, Thai Thai All other mkts Agent Agent retention productivity rate Agent licence renewal MDRT rate penetration Agent rate experience levels 17 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies Here’s the correlation with agent retention. Agent Productivity vs Retention of 6yr+ Agents 18 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Measurement Proxies Proxies for agent productivity ? The evidence ... But first, what data are available for analysis at company level ? Agent productivity MDRT penetration rate Renewal/retention/exp Agent no.s Channel APE China, HK , Indo, HK, India, Thai All mkts incl China, HK , China, HK , Indo, Mal, Mal, Thai Most other mkts Indo, Mal, Thai Thai All other mkts Agent Agent retention productivity rate Agent licence renewal MDRT rate penetration Agent rate experience levels 19 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. $$ Measurement Constraints There are some problems in a few of the less developed Asian markets. First: No. cases per agent Total Agency X NB revenue Average premium size Average agent ÷ productivity No. active agents + No. inactive No. agents agents + No. dummy agents Then: To us: Registered agent = include in headcount To insurers: Agent under contract = include in headcount -> Not always the same thing ! Big problem for retention calculations 20 www.pifsi.com.sg
CONFIDENTIAL – Property of Pi FSI, not for further distribution. Agency Channel Value Levers Future sales Premiums capacity NB premiums Rookie No. agents recruitment rate Inforce premiums Agent Agent Other retention productivity factors rate Other factors Agent licence renewal MDRT rate Cost penetration Agent efficiency rate experience levels Product mix Policy Profit persistency margin Other factors 21 www.pifsi.com.sg
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