ING Direct 2013 Annual Report Download - page 53

In the pensions market, the persistently low-interest rate
environment and longevity risk have increased employers’ funding
costs for pension schemes. Through Netherlands Life’s Pensions
division, Netherlands Life provides pension solutions to businesses
of all sizes. It offers insured and non-insured pension solutions,
bundled and unbundled options, and works in close collaboration
with pension administrator AZL and ING Investment Management.
Netherlands Life Pensions is able to help existing and new
customers move from Defined Benefit to Defined Contribution
pension schemes, giving employers greater certainty over the
funding cost of their pension schemes and at the same time
reducing risk and capital requirements for Netherlands Life.
The individual life insurance market is going through major change,
driven in part by the economic downturn which is affecting
consumer confidence and spending patterns, and by new
regulations related to commissions on how individual life insurance
products are sold. Amajor shift towards bank annuity products is
taking place. In response to these developments, Netherlands Life is
lowering costs by streamlining its processes and systems, and
improving the customer experience. Netherlands Life is focused on
providing excellent service to clients who have purchased individual
contracts in previous years. It will continue to provide simple
solutions by offering term life and direct annuities to prospective
retail customers.
In 2012, Netherlands Life stepped up its efforts in compensating
customers with individual unit-linked policies based on the
compensation scheme with two consumer protection organisations
and also based on additional measures (‘’flankerend beleid”) that
comply with the “Best in Class” criteria as formulated by the Dutch
Minister of Finance. By early 2013, all policyholders of an individual
unit-linked policy were informed about their compensation. The
agreements with the two consumer protection organisations
arenot binding on policyholders. For more information, please
refer to ‘Legal proceedings’ in the Accounts section of this
AnnualReport.
CUSTOMER EXPERIENCE
Netherlands Life measures and analyses its Net Promoter Score
(NPS) results and complaints. It adjusts processes in line with
customers’ feedback and expectations.
In pensions, its objective is to help customers make informed
decisions about their financial future throughout their lives. In 2013,
Netherlands Life improved the quality of its communication
withcustomers. For example, it introduced a new website
www.thuisinpensioen.nl where customers can find answers to
questions about pensions.
PRODUCTS
Netherlands Life launched a Defined Contribution (DC) pension
product (Essentie Pensioen) in 2012 which bundles insurance from
Nationale-Nederlanden, pension administration by AZL and
investment management services from Investment Management. It
launched another DC product (Bewust Pensioen) in 2013, which is
based on a straight-through-processing framework and offers
guarantees and investment opportunities. With these two
products, Netherlands Life is well positioned to capture more
opportunities in the growing DC market.
DISTRIBUTION
As a result of the legislative ban in 2013 on commissions for complex
financial products and stricter requirements for certification, there
has been a reduction in the number of intermediaries in the Dutch
market. At the same time new distributors have appeared, who are
expanding their services, and distributing pension products together
with financial advice to their clients.
In group life, Netherlands Life is increasingly offering DC
propositions, both insured and non-insured, alongside its full
service Defined Benefit (DB) pension solutions. Furthermore, due to
the greater useof digital tools, processes are becoming more
efficient forcustomers.
CONCLUSIONS AND AMBITIONS
Netherlands Life’s ambition is to help its customers make the right
decisions about their financial future and it will achieve this by
guiding them through effective and easy-to-understand products.
NETHERLANDS NON-LIFE
> The profitability of income protection
productsimproves
> Run rate expenses are decreasing due to
product and processinnovation
> Customer service is improving
Netherlands Non-life’s aim is to lower expenses, create innovate
products and to further improve customer and intermediary service
levels. It continues to sell its products through multiple distribution
channels. Intermediaries continue to play an important role, but
bancassurance and direct channels are also an integral part of
Netherlands Non-life’s distribution strategy.
FINANCIAL DEVELOPMENTS
The operating result for Netherlands Non-life was EUR 79 million in
2013, a 23.3% decline compared with EUR 103 million in 2012,
mainly due to a lower operating result in the Property & Casualty
(P&C) segment partly offset by a higher operating result in the
Disability & Accident (D&A) segment.
Operating income was EUR 1,729 million in 2013, a 6.2% decrease
compared with EUR 1,844 million in 2012. This decrease was
largely driven by lower earned premiums in the SME P&C and D&A
segments due to the challenging economic conditions and an
underwriting focus on value and return over volume. Other income
comprising commission income earned by NN Group’s wholly-
owned insurance brokers, Mandema and Zicht, showed a decrease
as a result of the new legislation prohibiting insurance companies
to pay commissions to brokers, which became effective in 2013.
Expenditure improved to EUR 1,651 million in 2013 compared with
EUR 1,741 million in 2012. This improvement was driven by a
significant reduction in claims frequency for disability and accident
insurance products following the implementation of a recovery
programme in 2011 and 2012. The recovery was also strengthened
by a significant improvement in the claims experience for short-
term disability products. The restored profitability of the Income
business was partly offset by a relatively high volume of significant
claims in the fire product line and several large storms in the fourth
51ING Group Annual Report 2013
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information