Volvo Ocean Race is reducing the costs for those taking part in the 2014/2015 race by up to 30 per cent by introducing a standard. All boats are built in the same way and come from the same shipyard. In addition, the boats will be used in the 2017/18 competition which gives them a market value after the 2014/2015 competition. The competition organisers are looking to create the same conditions for the contestants. Besides that, this results in reduced costs so that hopefully more and more people will want to get involved and the competition gets more attention. Furthermore, it strengthens the brand Volvo Ocean Race and increases in value.
In the insurance industry there is an equivalent competition in progress. This concerns the ITP occupational pension scheems. 14 players have submitted offers. In total there is just over SEK 10 billion in annual premiums for 3 ½ years and the opportunity to get the ”customer” to move his or her savings. The revenues come from insurance fees whose prices are kept down by contractual parties and kick-backs from the fund company.
But it costs a lot too.
Of course the insurer must be convinced about changing insurance company and it will be interesting to follow what strategies the players adopt in the fight for occupational pensions. Mass-market campaigns or carefully targeted promotions to those who fit into the intended customer segments – based on preferences.. But then there are more costs to be paid and more so every year. Adjustments to the existing often old IT systems or the increasing number of manual steps in the process bring down the profitability of the players working in the traditional self-developed world. Standardisation provides a way to accessing the same benefits as the consortia who want to be included in the Volvo Ocean Race. Since 2003 Itello has helped more and more players to achieve really low costs of the policy administration of occupational pensions. Our customers have the lowest administrative costs. But it’s also about getting in enough big premiums for them in order for them to make good business.