solution

Case Study

NTUC Singapore

NTUC Income has set out its business strategy for the future, in a document called ‘Insurance Company of the Future’. It is now building the technology to support this strategy. This case study sets out the NTUC experience so far regarding the following areas that support the business strategy:

● Website

● Register the customer first

● Educate the customer

● Simple products

● Pull strategy.

NTUC Income’s website was voted the best website in the Asia Insurance Review Awards 2005. The website (www.income.coop) has 15 million hits each month. It is easy to use, provides information on NTUC products and practices, and is available in three languages.
The customer-centric strategy is to register a customer first and to sell products later. This was successfully implemented 10 years ago with a travel insurance product. NTUC registers customers first and obtains their particulars. When the customers travel, they call the hotline and activate their travel insurance. They enjoy a lower premium (15 per cent discount) and the convenience of immediate, hassle-free cover.
NTUC handles about 120 000 transactions each year, with a premium income of US$6 million from an active base of about 500 000 customers. It holds an estimated market share of 25 per cent. Lower distribution costs and expense ratios allow NTUC to offer a price advantage of 5.5 per cent. The success of this travel insurance product gave NTUC confidence that the ‘register the customer first’ strategy could work well for other products. The key elements of this strategy are:

● Register the potential customer first

● Obtain the contact information, e.g. name, date of birth, gender, contact number, e-mail address

● Send brief materials to educate the customer

● Introduce the customer to the website

● Invite the customer to attend educational talks on insurance products

● Leave the customer to contact the call-centre later.

NTUC places particular emphasis on educating the customer about the range of insurance products available in the market. Information is provided via the website, e-mail broadcasts, educational talks, and video and voice on digital media.
During the past year, NTUC has held an educational talk each week on products such as medical insurance and investment-linked funds. Typically, about 150 people have attended each talk. Potential customers who attend a talk and decide to purchase within 14 days of it are offered special incentives. About 30 per cent of the customers take up the incentive.
Although it is often said that ‘insurance has to be sold’, NTUC believes that people are willing to ‘buy insurance’ if they are offered simple products that they can understand, and enjoy a price advantage. Encouraging potential customers to approach NTUC to buy insurance increases the productivity of sales agents, and supports lower commission rates and thus lower prices for customers
In essence, ICT and particularly web-based technology, has enabled NTUC to build close relationships with customers without initially actively pushing products to them. By educating customers about financial needs and products, they are encouraged to approach NTUC as they identify a need. This helps to keep costs down, relieves sales pressure on consumers and ultimately results in more satisfied customers and enhanced business performance.