3. Background to the launch of Discovery Insure
1 2 3
Mainstream emergence of The relevance of Discovery’s Rising and volatile fuel price
telematics technology as a behavioural economics negatively impacting cost of
premium rating factor experience to short-term vehicle ownership
insurance
Fuel price Oil price
Causes of motor vehicle accidents
R 12 160
140
R 10
Road Inappropriate 120
Cornering conditions driving R8
100
8% R6 80
60
R4
Braking Acceleration 34% 49% 40
R2
20
R0 0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
9%
Pedestrian Vehicle Actual f uel price (Rands) Actual oil price (US dollars)
Cornering
related safety
Understand and reward good Ability to positively impact road Mechanism to incentivise
driver behaviour safety positive behavioral change
4. The Discovery Insure Product Platform
State-of-the-art vehicle
and passenger safety ImpactAlert™: Stolen vehicle Vehicle Protector™: Family Protector™:
Pro-active recovery at no Tools to improve Additional family
emergency additional cost vehicle safety safety features
response
Comprehensive motor insurance
Fuel rewards
Get 50% of fuel
spend back each
month,
Or
100% of fuel
spend to fund
Flexible
policy excess The better you drive,
options for
the higher your status,
the greater your household
Driver Quotient™
rewards measures driver
and No excess on HomeProtector™:
burglary, Security and
performance personal hijacking, emergency
cover storm or fire accommodation
4
5. Discovery Insure: The year in review
Press coverage Key metrics
311 100
fuel transactions
7.7m ℓitres
of fuel purchased at BP
20 100 drivers
tracked in real time with DQ-Track
R3.25 bn
vehicles comprehensively insured
132 million kilometres
of behavioural data
R7.93 bn
comprehensively
insured household and
personal cover
6. The Discovery Insure business cycle
Experience
review
Marketing
and client Product
support enhancements
7. The Discovery Insure business cycle
Experience
review
Marketing
and client Product
support enhancements
8. Vitalitydrive
is having a
1 tangible impact
on client behaviour
9. Behaviour change manifests in three key areas
High engagement in driver
Substantial shift in day-to-day Demonstrable changes in driver
awareness and vehicle safety
consumer choices behaviour
activities
Tiger Wheel and Tyre MultiPoint checks BP market share analysis Indexed Driver Performance Scores
(Month 1 = 100)
8000 118
7000 77% 116
114
6000
112
5000
110
4000
108
3000
106
2000
104
20%
1000 102
0 100
Jun-11
Oct-11
Aug-11
Feb-12
Apr-12
Dec-11
BP National market
BP national Proportion of petrol Month Month Month Month Month
share
market share spend at BP for 1 2 3 4 5
Vitalitydrive clients
VitalityDrive clients
Over 7 000 MultiPoint checks 17% improvement in
77% of fuel spend at BP outlets
completed Driver Performance Scores
10. Improvements
in driver behaviour are directly
correlated with
2
fewer motor vehicle accidents
and
lower insurance costs
11. Driver behaviour is directly correlated with accident risk
Indexed loss ratios by Vitalitydrive status
(Base = 100%)
100%
100%
90%
80%
70% 74%
60%
50% 54%
40%
30%
31%
20%
10%
0%
Base Neutral Engaged Advanced
12. DQ-Track
facilitates a robust
3 understanding
of the underlying causes of
motor vehicle accidents
13. South Africa’s roads are amongst the most dangerous
in the world
Road fatalities per capita
(per 100 000 inhabitants p.a.)
UK 3.59
India 11.1
USA 12.3
China 16.5
Russia 18.5
Brazil 19.9
South Africa 33.2
South Africa’s fatality rate is significantly higher than other BRIC countries, with
Broader societal costs associatedfatalities per year are substantial
14 000 road with road accidents
Source: List of OECD countries by traffic-related death rate
14. Unique insights into the causes of motor vehicle accidents
Drivers displaying risky driving behaviour 15 Type of risky behaviour displayed prior to an
minutes or less prior to a serious accident accident
No 53%
39%
37%
32%
16%
5%
Yes Late night Braking Speeding Accelerating Cornering
61% driving
Note: Drivers can have more than one type of risky event prior to an accident
15. Measureable behaviours are directly correlated with
accident risk
Relative accident risk, 2011 Insure data
9.7
9.7
1.3 1.4
1.4 0.8
0.8
Morning Lunch time Early evening Late night
There is a ten times higher likelihood of having a motor vehicle accident at night
16. Strong correlations
are emerging between
4 driving behaviour
and other drivers of insurance risk
17. Cross-company analytics provide unique insights into the drivers of
insurance risk
Case study 1: Wellness outcomes are directly Case study 2: Credit risk is directly
correlated with driving behaviour correlated with driving behaviour
Percentage of healthy* drivers by Vitalitydrive status Credit default rates by Vitalitydrive status
10%
10%
82%
8%
67%
48%
37%
4%
1%
Base Neutral Engaged Advanced Base Neutral Engaged Advanced
*Note: Healthy is defined as being on Gold or Diamond Vitality status P(Credit default) is the probability of being 3 months in arrears or worse at
least once during a year
20. The Discovery Insure business cycle
Young adults display high risk
driving behaviours Unique client data provides strong
Vitalitydrive engagement predictor of insurance risk
lowers accident risk 98% benefit coverage ratios
2 3 4
Rewards change
client behaviour
1 5
Experience
review
Marketing
and client Product
support enhancements
21. 2012 Strategic product objectives
1 Restructure Vitalitydrive to simplify and enhance the benefits
Create targeted incentives to drive a step change in
2 road safety for young adult drivers
3 Enhance coverage levels across the product
22. 2012 Strategic product objectives
1 Restructure Vitalitydrive to simplify and enhance the benefits
Create targeted incentives to drive a step change in
2 road safety for young adult drivers
3 Enhance coverage levels across the product
23. Increasing relevance of the fuel benefit construct
Fuel price progression since the launch of Discovery Insure
(Rand per litre) R11.67
Discovery Insure launch
R 12.60
R 12.20 R10.23
R 11.80
R 11.40
R 11.00
R 10.60 R8.45
R 10.20
R 9.80
R 9.40
R 9.00
R 8.60
R 8.20
R 7.80
R 7.40
R 7.00
Nov-10
Nov-11
Jan-10
Mar-10
Sep-10
Jan-11
Mar-11
Sep-11
Jan-12
Mar-12
May-11
Feb-10
May-10
Feb-11
Feb-12
May-12
Apr-11
Apr-10
Jun-10
Jun-11
Apr-12
Jun-12
Jul-10
Aug-10
Dec-10
Jul-11
Aug-11
Dec-11
Oct-10
Oct-11
Gauteng Prices (Pricing Zone 9C), 95-Octane unleaded
24. Analysing the different rewards structures available through
Vitalitydrive
Composition of Vitalitydrive rewards Composition of Vitalitydrive fuel rewards
Travel Rewards at
DiscoveryCard other stations
3% 4%
22%
Rewards at
Fuel BP stations
75% 96%
25. Factors informing the restructure of Vitalitydrive rewards
01
75%
75% of Vitalitydrive Boost BP fuel cash
rewards in fuel
back
96% 96% of all fuel
rewards earned at
BP
1 in 3 More than 1 in 3
Insure clients do not
have a DiscoveryCard
Excess Funder Account
R4m balances
20%
+
Experience on
supported policies
Risk- Registrar guidelines to
based remove ‘non-risk’
reward
travel and card rewards
26. Clients can now get up to 50% of their BP fuel spend back
INSURE YOUR CAR AND HOME AND ACTIVATE
You get
20%
50%
Cash back on
your BP fuel
spend every
month
You automatically get 20% Complete and pass the Tiger
cash back on your monthly BP Wheel & Tyre Annual MultiPoint Boost your Excess Funder
fuel spend check Account and double your fuel
rewards to
100%
Note: Your monthly fuel rewards are based on your number of DQ Points earned
27. Factors informing the restructure of Vitalitydrive rewards
01
75%
75% of Vitalitydrive Boost BP fuel cash
rewards in fuel
back
96% 96% of all fuel
rewards earned at
BP
1 in 3 More than 1 in 3
02
Insure clients do not Ensure maximum level
have a DiscoveryCard of fuel reward is
available to all clients
Excess Funder Account
R4m balances
20%
+
Experience on
supported policies
Risk- Registrar guidelines to
based remove ‘non-risk’
reward
travel and card rewards
28. The revised fuel rewards structure ensures that the maximum
level of fuel rewards are available to all clients
2011 BP fuel rewards structure 2012 BP fuel rewards structure
Payment MultiPoint MultiPoint
Automatic Policy type Automatic
mechanism check check
Other 10% 25% Car only 10% 25%
DiscoveryCard 15% 40% Car and home 20% 50%
29. Factors informing the restructure of Vitalitydrive rewards
01
75%
75% of Vitalitydrive Boost BP fuel cash
rewards in fuel
back
96% 96% of all fuel
rewards earned at
BP
1 in 3 More than 1 in 3
02
Insure clients do not Ensure maximum level
have a DiscoveryCard of fuel reward is
available to all clients
Excess Funder Account
R4m balances
20%
+
Experience on
supported policies 03
Embed an Excess
Risk- Registrar guidelines to Funder Account in all
based remove ‘non-risk’
reward Vitalitydrive policies
travel and card rewards
30. Vitalitydrive members automatically get up to 10% of their
premiums paid into their EFA each month
Percentage of car insurance premium paid into the Excess Funder Account every month
10%
Advanced
5%
Engaged
2.5%
Neutral
0%
Base
status
31. The Excess Funder Account Booster in action
Excess Funder Account balance for a client on Advanced status with a motor premium
of R750 per month and R400 monthly fuel rewards
R19,200 R28,800 R38,400 R48,000
R9,600
Excess Funder
Account
Booster
Plan
R 4 500
excess R 3 600 Embedded
Excess Funder
R 2 700 Account
R 1 800
R 900
End Year 1
1 End Year 2
2 End Year 3
3 End Year 4
4 End Year 5
5
Access 50% of the fund
after three years
Opportunity for clients to build real long term insurance equity
32. Factors informing the restructure of Vitalitydrive rewards
01
75%
75% of Vitalitydrive Boost BP fuel
rewards in fuel cash back
96% 96% of all fuel
rewards earned at
BP
1 in 3 More than 1 in 3
02
Insure clients do not Maximum fuel rewards
have a DiscoveryCard available to all clients with
supported policies
Excess Funder Account
R4m balances
20%
+
Experience on
supported policies 03 10%
Excess
Funder Embedded Excess
Risk- Registrar guidelines to Account
based remove ‘non-risk’
Funder Account
reward
travel and card rewards
33. 2012 Strategic product objectives
50%
Restructure Vitalitydrive to simplify and enhance Excess
1 the benefits
Funder
Account
Create targeted incentives to drive a step change
2 in road safety for young adult drivers
3 Enhance coverage levels across the product
34. Young adults account for a disproportionately high frequency of
motor vehicle accidents and accident related deaths
Motor vehicle accidents account for 75% of
Over 90% of young adults drive late at night
young adult deaths
Proportion of young adults driving late Proportion of young adult deaths by cause
at night, 2012 survey
Drive during the day
Natural
8%
25%
Motor vehicle accidents
Drive late at night 75%
92%
35. The Discovery Insure Young Adult plan
Up to 50% of
their BP fuel spend 25% of car
back in cash
premiums into the
Young Adult
Rewards Fund
MONTHLY
BOOSTER • Up to R200 per month
paid into Rewards Fund
based on Vitalitydrive status
NightDriver gives
discounted home drive
• Reduced by R10 per km services and preserves the
driven between 23:00 and Rewards Fund balance
04:30
36. The Young Adult plan in action
01 25% of car premiums into
Young Adult Rewards 02 Regular feedback to
Fund improve your driving
03 Boost your Fund by
driving well Drive Well
Base - R 200
Neutral R0
Engaged R 50
Advanced R 200
04 or NightDriver gives you
access to RoadTrip or
SmartGuyz at a
For every kilometre
substantial discount
you drive between
23:00 and 04:30, R10
is deducted from the
Fund 23:00
05 Every six months,
you can withdraw
the available
04:30 money in the Fund
Note: Extensive night driving will result in a premium increase after six months
37. Young adults can earn unprecedented rewards with Discovery Insure
Dan gains R1 200 from his fuel benefits
Dan gains R2 670 overall from the Young
Adult plan over 6 months Cumulative fuel rewards
R 1 200
R 1 000
Profile R 800
• Name: Dan R 600
• Age: 22 R 400
R 200
Driving experience over 6 month period
R0
• Fuel spend: R 800 per month 1 2 3 4 5 6
• Car premium: R 680 per month
(no home insurance) +
• Driver status: Month
Dan gains R1 470 from his Rewards Fund
• Engaged for 2 months
• Advanced for 4 months Rewards fund after 6 months
• Night driving: 45 kms R 2 000
R 1 500
R 1 000
R 500
R0
25% of Vitality status Night time Cumulative
premiums booster driving value
38. 2012 Strategic product objectives
50%
Restructure Vitalitydrive to simplify and enhance Excess
1 the benefits
Funder
Account
25%
Create targeted incentives to drive a step change in
2 road safety for young adult drivers
3 Enhance coverage levels across the product
39. Cover enhancements effective 1 August 2012
Enhancements to cover, Improved cover for accidental Broader range of cover for
removed restrictions on use of damage, goods in open and unspecified items
car and extended territorial cover for goods away from home
limits
Enhancements to liability cover Liability cover introduced for Caravan contents included in all
and offroad use sailboats and jet skis risk cover
41. 2012 Strategic product objectives
50% 10%
Restructure Vitalitydrive to simplify and enhance Excess
1 the benefits
Funder
Account
25%
Create targeted incentives to drive a step change in
2 road safety for young adult drivers
3 Enhance coverage levels across the product
42. The Discovery Insure business cycle
Young adults display high risk
driving behaviours Unique client data provides strong
Vitalitydrive engagement predictor of insurance risk
lowers accident risk 98% benefit coverage ratios
2 3 4
Rewards change
client behaviour
1 5
Experience
review
50%
Up to 50% of BP
fuel spend back
Marketing 10%
and client Product Excess
Funder
Up to 10% of
Account
support enhancements premium paid into
your Excess Funder
25% Account
Up to 25% of car
premium paid into Young
Adult Rewards Fund
Benefit enhancements in
each area of cover
43. 2012 Marketing and client support
Leverage our breadth of data and analytic
1 capabilities to improve premium efficiency for
Select clients
Focus on areas to enhance the service experience
2 for clients and advisers
3 Digitalise the advice and new business process
44. “Big data” can be used to generate significant financial value
Global personal
US health care
location data
• >$100 billion revenue for service
• $300 billion value per year providers
• ~0.7% annual productivity growth • Up to $700 billion value to end
users
US retail Manufacturing
• >60% increase in net margin • Up to 50% decrease in product
development, assembly costs
possible
• 0.5–1% annual productivity growth
• Up to 7% reduction in working
capital
Source: McKinsey Global Institute analysis
45. Discovery Insure is uniquely positioned to understand
insurance risk
VEHICLE
CHECK
46. Select client pricing model
Select clients
automatically qualify for
a 5% discount in
premium
Save
5%
on premiums
47. Select client qualifying criteria
Wellness engagement Socio-economic factors
1 2
Vitality status: Silver, Gold or Diamond DiscoveryCard: Gold Discovery Life plan of
or Platinum R3 million or more
OR
Silver AND
Gold
Diamond
100 000 clients automatically qualify for 5% premium discount
48. Select client pricing model
Select clients Dynamic behavioural
Select clients can save as
automatically qualify for algorithm assesses risk
much as 25% on their
a 5% discount in profiles across multiple
premiums
premium variables
Discovery Vitality Wellness choices
Save Save up to
Credit risk profile and
5% DiscoveryCard retail behaviour
25%
on premiums Benefit choices and on premiums
Discovery Life risk attitudes
Discovery Invest Risk attitudes
Automatically applied during quoting process
49. The impact of being a Discovery Insure Select client
Case study: Select client; R1 000 pm BP fuel spend; 1000 DQ Points; ADVANCED
Car insurance premium: R1500
R 2,500
R 2,000 Net
R 2,000
R2,000 R500
R 500
R1 150 saving
R 1,500
R 300
R500
R150
R 1,000 R 1,125
R850
R 500
R0
Discovery Insure premium Select discount Fuel rewards Excess Funder Effective premium
50. 2012 Marketing and client support
Leverage our breadth of data and analytic Save up to
1 capabilities to improve premium efficiency for 25%
on premiums
Select clients
Focus on areas to enhance the service experience
2 for clients and advisers
3 Digitalise the advice and new business process
51. SmartService is providing Insure clients with a unique
service experience
New business
• Over 16 000 plans already activated
• 84% of new business applications are finalised within 4 hours
• 96% of underwriting is completed within 4 hours
DQ-Track installations
• Over 20 000 installations completed by our experienced technicians
• Focus on client experience: currently rated at 9 out of 10
• Continue to see a positive trend
Rewards
• Over R8 million paid out in Vitalitydrive rewards
• Over R4 million held in Excess Funder Account balances
Benefits and services
• Over R60 million paid out in claims
• 76% of stolen vehicles recovered by DQ-Track
52. FastTrack service from SmartClaims
FastTrack approved items will be replaced within 24 hours in Gauteng or
48 hours in other large metropolitan areas
Laptops GPS devices E-readers Tablets
Smartphones Cameras MP3 player FastTrack Claims
Promise
If we fail to deliver on
our promise, we will
waive the excess on
your claim
53. NightDriver from Discovery Insure
NightDriver– providing Vitalitydrive members access to a
network of accredited home drive services
Use SmartGuyz services without a
Subscribe to RoadTrip or SmartGuyz
subscription
• Subscribe and receive a • Contact SmartGuyz and pay a flat
discounted monthly fee based on fee of R100 – first 10km included
Vitalitydrive status
• Normal tariffs apply thereafter
• Allocated number of kilometres
per month - charged thereafter OR
• No registration necessary –
SmartGuyz will verify Vitalitydrive
• Discounts up to 25% based on membership
Vitalitydrive status
NightDriver is available in the larger metropolitan areas
54. 2012 Marketing and client support
Leverage our breadth of data and analytic Save up to
1 capabilities to improve premium efficiency for 25%
on premiums
Select clients
Focus on areas to enhance the service experience
2 for clients and advisers
3 Digitalise the advice and new business process
55. The Discovery Insure product platform generates
unprecedented value for clients
The case study of Dave, his wife Linda, and his son Dan illustrates the key benefits
Home insurance
Dave’s car R530 premium
R1 300 premium
R1 000 Fuel spend
800 DQ Points for
six months
Dan’s car
Linda’s car R680 premium;
R750 premium Young Adult plan;
R1 000 Fuel spend R1 000 Fuel spend;
1000 DQ Points for 800 DQ Points two months;
six months 1000 DQ Points four months;
45km of nighttime driving
Dave’s total insurance premium: R 3 407 per month
56. The Discovery Insure and Vitalitydrive product platform generates
unprecedented value for Dave and his family
Premium compared to cumulative rewards in 6 months
of Dave’s premiums paid
47% out in cash rewards
R 20 442 10%
25%
R 16 400 Excess
Funder
Account
R 8 200
R 840
R 1 470
Premium Cash rewards Excess Funder Account
Young Adult Cash fuel Embedded Excess
Rewards Fund rewards Funder Account
57. The Discovery Insure and Vitalitydrive product platform generates
unprecedented value for Dave and his family
Premium compared to cumulative rewards in 6 months
of Dave’s premiums
84% paid into his Excess
Funder Account
100%
BOOSTER
R 20 442
R 16 400
R 8 200
R 1 470
Premium Cash rewards Excess Funder Account
Young Adult Cash fuel Embedded Excess Excess Funder
Rewards Fund rewards Funder Account Account Booster
59. 2012 Marketing and client support
Save up to
Leverage our breadth of data and analytic
1 capabilities to improve premium efficiency for
25%
on premiums
Select clients
Focus on areas to enhance the service experience
2 for clients and advisers
3 Digitalise the advice and new business process
60. The Discovery Insure business cycle
Young adults display high risk
driving behaviours Unique client data provides strong
Vitalitydrive engagement predictor of insurance risk
lowers accident risk 98% benefit coverage ratios
2 3 4
Rewards change
client behaviour
1 5
Experience
review
50%
Up to 50% of BP
Digital advice SMART
QUOTE fuel spend back
process for Insure
advisers Marketing 10%
and client Product Excess
Funder
Up to 10% of
Account
support enhancements premium paid into
FAST
FastTrack replaces TRACK your Excess Funder
portable possessions 25% Account
within 48hours
Up to 25% of car
Save up to
premium paid into Young
Select clients get up to 25%
on premiums
Adult Rewards Fund
25% off their
premiums Benefit enhancements in
each area of cover