Embracing the Future

Staying ahead of the game in the digital age requires constant innovation and a flexible mindset when it comes to business opportunities, says Imre Sztanó, Chief Executive Officer of NN Insurance Co. Ltd. in Hungary. The country’s largest life insurance provider relies on cutting-edge technologies and innovative organizational changes to hold on to its leading position in the market.

NN Insurance, initially called NationaleNederlanden, was one of the first foreign-owned insurance companies to enter the Hungarian market. Set up in 1991, the Hungarian office was the first foray of the Dutch company into the central and eastern European region, and it went on to become market leader in the life insurance segment within six years. Boasting a market share of about 17%, NN Insurance has retained its leading position every year since, exhibiting a spirit of “true entrepreneurship,” Sztanó says. Following a record year for the local insurance sector in 2018, when premium income surpassed HUF 1 trillion, the macroeconomic backdrop continues to be supportive. “Unless there is a significant change in international markets, Hungary will continue to do well, and the insurance sector will also do well. We generated double-digit sales growth last year. Growth is driven by the market environment, but customer behavior is also changing; people are becoming more conscious about their financial future and self-care,” according to Sztanó. While the insurance sector in the CEE region is still behind Western Europe in terms of penetration rates, customer expectations regarding ease of use, access and understandability as well as relevance are similar to those in more developed markets, the executive says. Clients tend to differentiate less and less between sectors, they expect the same smooth service and customer experience from banks, telecom and insurance companies, and online shops. “In this regard, there’s definitely a convergence between the CEE and western Europe.”

Innovation in the forefront

In a fragmented market like Hungary, where more than 20 insurance companies are vying for a slice of the cake, innovative products and digitalization are the key prerequisites for successfully retaining customers and engaging new ones. National Bank of Hungary data published in the first quarter of 2019 show that there are less than 2.5 million life insurance contracts in Hungary, which is a fairly low number in a country with a population of nearly 10 million. “There is tremendous potential in the market, and this is the reason we are looking for new ways of engaging customers,” Sztanó says. NN Insurance’s strategy focuses on digitalizing the sales and operations processes, novel ways of engaging customers, and long-term innovations. Despite new technologies coming onboard with astonishing speed, NN Insurance is a firm believer that human interaction will remain critically important when making long-term financial decisions that affect a significant amount of money on the customer’s side. However, the format will be changing going forward as these interactions will become increasingly digitally equipped. The company decided to digitalize the tied agent, or the so-called face channel, experience and made the paper-based sales process fully digital. In addition, it automatized the underwriting process and now one-third of all incoming proposals go through automatized underwriting, slashing the processing time in certain cases to 10 minutes instead of the previous 13 days. As technology radically reshapes product and service delivery across sectors, NN Insurance has also committed itself to revamping customers’
online experience. ”We are looking at engaging customers who have not considered going to an agent or purchasing insurance. We came up with value propositions that are online by nature, have the engagement element and create very different customer interactions. The conversation doesn’t necessarily start with the product, but rather a life situation or a circumstance that will eventually lead to the insurance itself,” Sztanó says. A prime example is NN Insurance’s mobile application for runners called runaddict that offers Hungaryspecific benefits for leading a healthy lifestyle. Runners can collect points, which can be used for discounts at retailers or to choose an insurance. The app, downloaded by some 25,000 people, provides a small, sum-assured insurance that allows policy holders to get a first-hand experience with additional assistance services, like a 24/7 medical call center and a trainer line that can offer advice. The company’s on-demand insurance, called protect.me, is another means of engaging customers who are not looking for a traditional insurance policy. protect.me provides insurance on an hourly basis, if so requested, and offers coverage for more than 140 activities, including action sports like kitesurfing. “These
innovations have been developed in Hungary, for the domestic market, and the NN Group is considering using some of these solutions in other markets,” Sztanó says. Staying ahead of the game also calls for looking at a wider time horizon. SparkLab, NN Insurance’s innovation hub does exactly that. It is an open-platform innovation hub set up to identify initiatives that are related to insurance but come under the umbrella of improving quality of life. “With the emergence of new technologies, ecosystems are being developed around certain initiatives and I believe that insurance companies can play a role in many of these ecosystems. For example, a tremendous amount of data is being generated with IoT devices, and while data protection is very important, customers will want to benefit from this data generation. If they play smartly, insurance companies can play a critical part in this arena,” Sztanó says.

Going agile

Sztanó believes that technology in itself is not an answer to the challenges posed by today’s digitally-driven age, an organization needs to be able to create value by using a specific technology. He notes that a large proportion of digitalization projects fail in large companies because they don’t start with clarifying their concrete objectives, and they don’t set up an organization that can implement the digital transformation. NN Insurance chose the agile at scale framework as the key method of transformation. The journey started 3 years ago with a small pilot project, then bigger ones followed. The company already sees some great results: the first important agile milestone was the automation of the underwriting process. “The idea met with a lot of skepticism on the part of colleagues. I personally believed that we could automate 6070% of all the underwriting processes but I only asked for 1%. We started an agile project and the team came back two months later and delivered the 1%. Now we are at 35% and I definitely think the original target is attainable,” Sztanó says. As regards reaching the finish line of the journey, Sztanó is in no rush. “You can’t design an agile framework and stick to it no matter what; you need to adjust on the go, and we do that as we learn. It's a continuous development and a neverending journey.”