Businessmodel of Aflac

Customer Segments

Aflac offers a portfolio of insurance products and related services. The Company’s customers can principally be organised into two categories:

• General Consumers, comprising general consumers across multiple demographics, with the Company providing products designed to serve both individual customers and families; and
• Employers, comprising primarily medium and large sized businesses across multiple business sectors, with the Company providing enterprise-wide and division-wide insurance schemes. While Aflac is based in the US, its principal market is Japan, which accounts for the majority of its annual revenue. The Company also does significant business in its domestic market of the US, which comprises one of the Company’s two reportable business segments. The Company does not appear to have any other significant international operations.

Value Propositions

Aflac provides value to its customers in the following ways:

• Its industry standing and track record, with the Company established as a reliable provider of insurance products, and having a reputation for offering effective and efficient services to its customers;
• Its broad portfolio of products, with the Company providing a broad range of product and services to its customers, including accident, cancer, critical illness, life, hospital, dental, and vision insurance products, among others;
• Its financial strength, with the Company having a comfortable financial position, enjoying favourable financial and credit outlook ratings from major ratings agencies; and
• Its industry expertise and experience, with the Company employing specialist insurance professionals across its enterprise, which is led by a team of experienced industry executives. ### Channels

Aflac operates a website at www.aflac.com, through which it provides information on its various product and services, markets, and corporate activities. While the Company does not operate an online sales channel, it does provide certain online tools, as well as an online customer portal, which allows customers to manage their policies, file claims, and check claim statuses.

Aflac sells its products in the US through a sales force comprising sales associates and brokers who are licensed to sell accident, health, and life insurance. These sales associates and brokers are independent contractors and are paid commissions based on first-year and renewal premiums from their sales of insurance products. The Company also operates a separate distribution channel to market its insurance products to businesses of all sizes.

In Japan, Aflac principally sells its products and services through a network of independent corporate agencies, individual agencies, and affiliated corporate agencies. The Company also sells products via a number of local banking institutions.

Customer Relationships

While Aflac does not sell products to its customers on a self-service basis, it does operate an online customer portal which enables individuals and employers to manage their policies, make insurance claims, and track the status of filed claims without interacting with sales or service personnel.

Through its network of independent agencies, brokers, and sales associates, Aflac provides personalised services to its customers, consulting with individual clients over a period of time in order to provide solutions that cater to each client appropriately. The Company seeks to establish long-term relationships with its customers, with policies frequently spanning multiple years.

Aflac provides ongoing support to its customers, with larger commercial clients having their own account management teams. Individual customers are able to contact dedicated support personnel over the phone and online in order to receive assistance tailored to their needs. Additionally, the Company offers various online resources, such as policy guides and FAQs that can be accessed independently.

Customers are also able to follow Aflac’s operations and interact with it directly through its social media accounts, including with Facebook, Twitter, YouTube, Google+, and Instagram.

Key Activities

Aflac functions as a business holding company. Through its subsidiaries and operating divisions, the Company is engaged in the provision of supplemental health and life insurance products and related services. The Company aligns its operations into two reportable business segments: Aflac Japan and Aflac US. Aflac which offers insurance policies in Japan and the US that provide a layer of financial protection against income and asset loss.

Aflac Japan sells voluntary supplemental insurance products, including cancer plans, general medical indemnity plans, medical/sickness riders, care plans, living benefit life plans, ordinary life insurance plans and annuities. Aflac US sells supplemental insurance products, including products designed to protect individuals from depletion of assets, such as accident, cancer, critical illness/care, hospital intensive care, hospital indemnity, fixed-benefit dental, and vision care plans and loss-of-income products.

Key Partners

Aflac works in close collaboration with companies across its two operating segments in order to efficiently serve its clients. These partners can be categorised broadly as follows:

• Supplier and Vendor Partners, comprising suppliers of services, technologies, and equipment that is utilised across the Company’s operating segment, as well as companies to which certain non-technical functions can be outsourced;
• Distribution and Channel Partners, comprising the Company’s network of independent agencies, sales associates, brokers, and other intermediaries, through which the Company markets and sells its products;
• Charitable and Research Partners, comprising various charitable organisations and research companies with which the Company collaborates on community projects and research assignments; and
• Strategic and Alliance Partners, comprising various market-leading companies across multiple sectors, with which the Company collaborate on joint projects. Aflac has a number of partnerships in place. This includes recently agreed partnerships with EZShield to provide fraud protection services, with VarcoMac to distribute its insurance products, and with CureFest to assist in the development of treatments for paediatric cancer.

Key Resources

Aflac’s key resources are its financial resources, its intellectual properties, its network of agents and brokers, its partnerships, its IT and communications infrastructure, and its personnel.

Aflac owns and or leases a number of physical properties across the US and Japan that are key to its operations. This principally comprises five separate primary campuses, two in the US and three in Japan, which house the Company’s administrative support and information technology offices, training facilities, claims departments, and customer call centres.

While Aflac’s annual report makes reference to intellectual properties, searches of records published by the US Patent and Trademark Office identified no patent applications filed in the Company’s name.

Cost Structure

Aflac incurs costs in relation to the maintenance of its IT and communications infrastructure, the management and retention of its network of independent service intermediaries, the settlement of claims, the management of its partnerships, and the implementation of marketing and advertising schemes.

In 2015 Aflac recorded total benefit and claims expense in the amount of $11.75 billion, and other expenses totalling $5.26 billion.

Revenue Streams

Aflac generates revenue through the provision of various insurance products and other related services. The Company’s revenue is derived primarily in the form of regular insurance premiums, as well as, to a lesser extent, investment income.

In 2015 Aflac generated total revenue of $20.87 billion, down on the $22.73 billion recorded by the Company in 2014. The bulk of this was attributed to the Company’s net premiums, principally supplemental health insurance, which amounted to $17.57 billion for the year. The majority of the Company’s premiums were derived via its Aflac Japan business.