Client case study by ERGO, demonstration of Comarch software for insurance business. How can the regulatory environment become a paradise for consultants?

1. ERGO Belgium
Regulatory compliance to kick-start digital/hybrid
Johan Camp
Head of Markets & Strategy
20/10/2016

2. 2
Company profile
ERGO is part of Munich Re
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
Munich Re stands for exceptional solution-based expertise,
consistent risk management, financial stability and client proximity
Munich Re
• One of the largest risk-carriers in the world
• More than a century of international experience
• Listed on the DAX 30 / EURO STOXX 50 indices
Reinsurance Health insurance Primary insurance Asset Management
• Income (2014): €48bn
• Profit (2014): €3,2bn
• 43.000 employees
ERGO is one of the major insurance groups in Germany and Europe. Worldwide, the
Group is represented in over 30 countries and concentrates on Europe and Asia.
ERGO offers a comprehensive spectrum of insurance, provision and services.
In 2015, ERGO recorded a premium income of € 18 billion and rendered benefits to
customers of € 17 billion.
ERGO Germany ERGO International ERGO Digital Ventures

3. 3
ERGO Insurance
Life insurer in Belgium and Luxembourg
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
Key figures (2014)
• Total Premium: €575 million
• Capital insured: €8,9 billion
• More than 800.000 customers
• 338 employees
• Market share in pension savings (3rd pillar) of 18%
• Strong growth track in mature market
Exclusive network (tied agents)
• +/- 700 independent advisors and +/- 300 agencies
• € 415 million
Brokers & partnerships
• 571 brokers & divers partnerships
• € 160 million

4. 4ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )

5. 5
Regulatory environment: a paradise for consultants
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
2016 20182014
30 April, 2014
Twin Peaks II
Enforced
10 October, 2014
Government agreement
In progress
29 Dec, 2014
PRIIPs2
In progress
Basic text: 2 Jul, 2014
MiFID II1 /MiFIR
In progress
Step wise implementation
Local states are required to implement EU regulations but
can in many cases (BE!) gold-plate or front-run it
Q2, 2016
31 Dec, 2016
Implementing: Dec, 2015
Adoption by companies: 3 Jan, 2017
Q2, 2017 Q4, 2017
1. Markets in Financial Instruments Directive/ Regulation 2. Packaged Retail and Insurance based Investment Products 3. Insurance Distribution Directive
Today
Q2, 2016
Data Protection regulation
In design
2016
IDD3 /IMD2
Finalised

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7. 7
More thorough analysis of the legislation
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
Transparency
and
information
sharing
• Creation of standard sheet of
information (KID1)
• Details to include: Type of product,
investment horizon risk, breakdown
of costs (direct indirect, including
distribution)
• KID must be visibly different from
other documents (i.e. recognizable
symbol)
Client profiling
Remuneration
and training
• Information regarding charges must
include the cost of advice (fee)
• If products are bundled, clients must be
informed if they can be bought separately
• Intermediaries and direct sellers must
identify conflicts and disclose the existence
of conflicts where required
• Firms must take the necessary steps to
classify clients
• Three risk profiles: retail, professional, or
eligible counterparty
• Professionals can be asked to be treated as
retail to increase their protection level
• When selling without advice, commissions
must be designed in clients best interest
• Commission ban on banking products when
providing advice
• Introducing an "insurance product
information document" (IPID) for NL
• Details to include: type, coverage, insured
sums and exclusions. The sheet will not
include information about the costs and
expenses
• Disclosure of the nature of incentives
• All insurance distributors should act
‘honestly, fairly and professionally'
• Compulsory customer fit analysis
• Depending on which risk group the client
falls under, they can only be sold certain
products
• Commission ban left to countries
• Increasing staff training requirement (15
hours of continuous training/year and
tougher admission requirements)
• In the KID, the type of customer this
product is geared to must be specified
i.e. ability to bear investment losses,
investment horizon
Product and
channel scope
• Investment products (products that
do not offer investment opportunities
and deposits solely exposed to
interest rates are excluded, including
B21)
• Applies to firms who provide "investment
services to third parties and/or the
performance of one or more investment
activities"3
• All insurance products (L+NL) and
channels
• The 2002 IMD only applied to brokers and
other intermediaries for all products
PRIIPs MiFID II/MiFIR IDD/IMD 2

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9. 9ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )

10. 10ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )

11. 11ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
1. conversation
3. Financial education
2. Needs analysis
1
4. MIFID questionnaire
2
8. Subscription form
3
5. Determine Risk Profile
6. Determine product & covers
7. Provide product docs
10. Scan ID (front & back)
+ address of residence
9. Medical questionnaire
4
11. Fill in Sepa Direct Debit
5
12. Mail forms to back office
15. Send contract to customer
14. Print contract & Gen. T&C
16. Scan & file documents
13. Type over into system
Starting point

12. 12ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
We want to strengthen our sales approach and
jump into the digital era
• More clients
• Increased retention
• More stability & control
• More solutions
• Less paper
• Future-proof platform
Objective

13. 13
Benefits to and contribution of multiple departments is
essential.
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )

14. 14
Paperless process
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
1. conversation
5. Mail all docs to customer
+ automated transfer to BO
3. Needs analysis
Financial education
MIFID questionnaire
Determine risk profile
Product & covers
Product docs
Subscribe
Medical questionnaire
SEPA Direct debit
2. Read eID
6. Mail final contract to customer
4. Electronic signature
iConsult

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16. 16
my
Future development: service (hybrid) customer in an omni-
channel setting
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
Sales agent
Customer Administration
New Business
Changes
Claims & Benefits
CORE – FRONT END
Customer
360°
view
Back office system(s)
Digital Customer
Records

17. 17
Increase customer centricity through big data (analytics)
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )
Business opportunity
Business value
B I G D A T A

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19. 19
Connectivity & omni-channel
Number of physical interactions will reduce, but this also means
the importance of a ‘good’ personal interaction increases!
ERGO Belgium | Operational Excellence Forum – Using changes in regulation to kick-start digitization (12/5/2016 )