Most of our products and services are about protecting what’s important for our customers – themselves, their loved ones, and their property. Our purpose is to help our customers achieve a lifetime of financial security.
Last year, we paid out just over €48 billion in claims, benefits, and withdrawals from pensions and savings plans. That money allows our customers to plan and build for the future. It provides peace of mind; a source of income; it helps meet school fees, cover the cost of long-term care or repair damage to homes. It also supports broader economic growth, especially if we include the investments we administer on behalf of our policyholders, which at the end of last year totaled nearly €200 billion.
The relationship with our customers is changing. This is partly because of new technologies. Customers need simpler products; they want products they can buy online quickly and easily, and they want efficient, frictionless customer service. It's also because of new regulations – the end of commissions for brokers in the UK and the Netherlands, and our own decision to move to more fee-based products. Both require a closer, more direct relationship with customers.
Connecting our customers
In response to these changes, we're investing in new digital platforms. We're also adapting our internal processes and systems to become more responsive. We're automating processes in pricing and customer service, and making more use of artificial intelligence (AI). In the Netherlands, for example, we're deploying AI to speed up change of address and bank account requests. We're also bringing different skills into Aegon: we're hiring more staff specialized in digital, IT and customer relationship management – to become a more outward-facing, customer-focused company.
There's also an opportunity to develop new business models – models that wouldn't have been possible just a few years ago. These models offer customers new, more efficient ways of buying insurance and other financial products. They also provide add-on services, which help us forge closer relations with customers – important in an industry where the majority of sales are still made through intermediaries. In Asia, for example, we have our joint venture Go Bear, a comparison site with over 15 million users, and Futuready, an e-insurance broker, combining financial and personal well-being.
Just over four million of our insurance and investment customers are now connected; they have a regular and active account on one of our digital platforms. More frequent contact means we'll understand our customers better and be better placed to respond to their needs. Though direct-to-customer sales are increasing, most of our products and services are still sold through intermediaries, and often the customers' closest relationship is with their broker or agent rather than with Aegon.
Through our products and services, we want our customers to stay with us for as long as possible. We want them to recommend us to their friends and family. This is not just about offering quality products - though that is important. It's also about creating a positive customer experience. We measure customer loyalty through what's called the Net Promoter Score, or NPS1. NPS is based on customer recommendations, rather than satisfaction. The importance of NPS isn't just in the score. It's in the way it can change perspectives internally and drive improvements in customer service. That's why our businesses also measure touchpoint or transactional NPS. This gives us feedback for specific events or transactions. And, because it does that, it enables us to pinpoint potential improvements, which we can feed directly into our customer service, or sales and marketing processes.
We measure Relational NPS (which covers all aspects of a customer's relationship with us) for 97% of our customers. We also use our NPS performance to help determine variable pay for senior management. We still have work to do but, over the past three years, we've seen a significant improvement in our overall NPS scores. Last year, 61% of our businesses, where measured, were placed in the top two quartiles in their respective markets. In 2015, that figure was just 12% (see chart adjacent).
1 Copyright: Reichheld and Bain & Co.
We offer customers a number of specific ethical investment funds. Typically, these Socially Responsible Investment (SRI) funds focus on the most sustainable companies in each sector or exclude certain sectors and activities that don't meet minimum social and environmental standards (this may include companies with poor human rights records, or those involved in arms, alcohol or gambling). Demand for these investments is growing: by the end of last year, our funds in the UK, Netherlands and Hungary had more than €3 billion under management, more than double what these funds were managing five years before. Our largest SRI funds are in the UK; at the end of 2017, our UK funds had nearly €2.9 billion in investments. In addition to the UK, Hungary and the Netherlands, Aegon also has separate green and sustainability funds in China; these funds have another €1.2 billion under management.
Total assets under management in Aegon SRI funds
(2012-2017, € billion)
Chart shows total assets under management in our socially-responsible investment funds in the UK, Netherlands and Hungary. Funds in China are not included; this is because of differences in investment requirements.
Extending the insurance safety net
Insurance acts as a safety net, and it's important that we extend that safety net where we can. In many countries, we offer products specifically for those on low incomes or who otherwise have difficulty accessing insurance. In Romania, for example, we have low-cost accident and hospitalization cover. And, in Brazil, our My Family product provides basic life insurance for small business owners, previously outside the insurance net. Aegon companies also offer coverage against the consequences of serious illnesses. In India, we have a diabetes insurance – directly linked, via an app, to customers' management of the disease. In China, our flagship critical illness insurance offers protection against both diabetes and cancer, including those affecting women only (breast and cervical cancers).
Serving customers throughout their lives
Early in their working lives, customers are developing careers, starting families, and making new homes. We protect customers' lives, property and other assets, and help them manage their education and pension pots.
Saving & investment
As their working lives progress, our customers are saving and investing for the future. We manage customers' assets and provide advice on savings and investments.
At and after retirement
At retirement, customers are looking for ways to convert savings into income and transfer wealth to the next generation. Finally, we help customers manage their income and savings in retirement.