Contents

1
Contents

• Why E-Commerce has changed the way we live.
• Why E-Commerce hasnt changed (much) about the
  way we transact insurance
• What is likely to happen in the future?

2
There is no reason for any individual to have a
computer in their home. Ken Olsen
Chairman, D.E.C. 1962
3
This telephone has too many shortcomings to be
seriously considered as a means of
communication. The device is inherently of no
value to us. Western Union Internal Memo -
1876
4
Computers in the future may weigh no more than
1.5 tons. Popular Mechanics - 1949
5
People will soon get tired of staring at a
plywood box every night. Darryl F Zannuck
20th Century Fox - 1946
6
640k ought to be enough for anybody. Bill
Gates - 1981
7
Any sufficiently advanced technology is
indistinguishable from magic. Arthur C Clarke
- 1987
8
Online Homes in Western Europe
140 120 100 80 60 40 20 0
Growth Rate
Households (millions)
Source CSC
9
Online Penetration in Western Europe
Source Datamonitor
10
Total Internet Telephony Markets
Source RSL Com
11
Purchases on interactive television - Proportion
of adults (16) with access who have purchased
selected products on digital TV in the last 6
months

Source The Future Foundation Changing
Lives/nVision
12
Proportion of Adult 16 with access to
interactivity at home and anywhere
Source Charity Awareness Monitor The Future
Foundation/nVision
13
E-commerce Drivers

• Computer Processing Power
• Growth in Memory Storage
• Domestic Phone Tariffs
• Steep downward path
• deregulation and privatisation
• competition
• mobile tariffs
• Employment
• Social attitudes/customer expectations
• Very Compelling Cost Drivers...

14
Physical Versus Virtual Costs
Source CSC
15
Most shopping will eventually be in
cyberspace. Pearson, Winter -
Wheres IT Going?
16
I suggest we need to ask

• Is there such a thing as the New Economy?
• Does our notion of corporate value need to be
• wider?
• Can E-commerce deliver new solutions which
• radically improve the way business can be
• transacted?

17
Critical Success Factors are Changing
Source PWC Analysis Tomorrows Leading Life
Uinsurer, Dresdner Kleinworth Benson Research
18
Remote finance increases ease of customer
access for everyone - including your competitors
19
DigTV in the UK...
Cellular Media Devices
Analogue signal switched off
E-mail Standard set top box Digital
TVs Economics of emerging products ISA/Stakeholde
r
24m adults
Wider Adoption of adsl and isdn Smart
cards Branded, Lifestyle oriented Simple,
transaction oriented Tailored
34 million Adults - A way of Life
Financially Stretched Followers Transaction
Oriented Spare time Seduced by cost C1,C2,D
Wary Mass Market
Financially Active Simplicity Seekers Some Advice
Seekers Time Constrained B,C1,C2s
Dawning Realisation 4m Adults
Financial Management Micro Billing Face to Face
on screen Intelligent Agents
Financially Active
15m adults
Existing Techno bankers
Information Savings ISAs General Insurance Loans
Portfolio Management Term Assurance Stakeholder
Pensions Mortgages Fact finds, needs
analysis Lifestyle Products
Financially Active Advice and info driven Time
constrained Value Driven A,B,C1
Spare time, women and elderly A,B,C1s
Execution FS Products Financial Advice Event
Driven
Market
1999 2000 2001
2002
2003 2004
2005 2006
Source Ernst Young - Insurance Executive Issue
2 1999
20
Why E-Commerce has not transformed the industry

• The industry is slow to embrace innovation
• Most business models merely seek to web-enable
  existing processes
• Regulation has constrained lateral thinking
• There is uncertainty over the effectiveness of
  new technology
• Direct-marketing of most life product-lines has
  not been hugely successful
• Not enough thought has been given to the
  improvements in CRM and back-office processing

21
Spending on Customer Relations

John McKean, The Information Masters
22
The Return on Customer Relations
Customer Growth
Customer Retention
Customer Value
Customer Acquisition
Time the Meta Group/Sybase
23
CRM

• Culture matters more than the technology
• It is a business solution not a technological
  ideal
• Direct access to customers can be impaired by
  your distribution system
• High net worth customers are becoming more
  promiscuous - and they will already have multiple
  relationships in other areas.
• Customers are susceptible to brands
• We are in an era of personalised marketing
• The ideal is permission-marketing

24
To see a major benefit from E-Commerce we need to
see a break-up and reconstruction of the value
Chain. New business models must emerge.
25
The difference between products and services
blurs to the point that the distinction is a
trap. Winners provide an offer that is both
product and service simultaneously. Davis,
Meyer - BLUR
26
The Trade-off between Richness and Reach
Traditional trade-off
Source Philip B. Evans and Thomas S. Wurster
Strategy and the New Economics of Information,
Harvard Business Review, September-October 1997
27
On-line Brokers Blowing Up the Richness/Reach
Trade-off
28
Connectivity Everything is becoming
electronically connected to everything else -
products, people, companies, countries... eve
rything.
Davis, Meyer - BLUR
29
The difference between buyers and sellers blurs
to the point where both are in a web of
economic, information and emotional
exchange. Davis, Meyer - BLUR
30
Path of Internet Commerce
Source CSC
31
Elements of an E-Business Model
PROBLEM SOLVING - Solution Branding - Ask
Jeeves PACKAGING - Value Bundling -
AOI.com EXTENDING DISTRIBUTION - Affiliate
Networking - Amazon.com Associates SUPPLY
DEMAND - Dynamic Pricing - E.World Auction,
ELRIX INTEGRATION - Real World Integration -
IBM.com MASS-CUSTOMISATION - Network Production
- Dell INFORMATION WITH VALUE ADDED -
Cybermediation - Friends Reunited,
Eschwat.com
32
Lessons of E-Business

• Simplicity is key
• Connectivity matters
• The customer is king
• We have to be brave ? Destroy yourself.com
• Mass customisation is a great concept
• Permission and viral marketing have huge potential