This presentation provides a comprehensive overview of the current insurance industry. The focus is to further explore life, health and auto insurance, as well as some new trends, ideas and disruptions facing this sector. From there, we move into a discussion on consumer tools. This section breaks down customer insurance behaviors, and the changes coming up in 2014. To end we take a look into how various companies are leveraging technologies to advance the industry.

1. insurance
industry
propanestudio.com
san francisco
newbusiness@propanestudio.com
415.550.8692
private & confidential
august 10th 2013

2. agenda
•
•
•
life Insurance
health insurance
auto insurance

3. life
insurance

4. overview
statistics
91 M adults in
the U.S. do not
have any life
insurance1
40% of American
households
would be unable
to meet
expenses if their
spouse died5
57% of women
have some kind
of life insurance3
61% of men have
some kind of life
insurance2
50% of
Americans admit
they do not have
adequate life
insurance4
1-4."Life Insurance Facts & Figures." Whole Term Life Insurance Quotes. N.p., 26 Apr. 2012. Web. <http://www.infographicpost.com/termand-whole-life-insurance-facts-figures/2012/04/26>.
5-6. "What You Need to Know About Life Insurance." LIFE A Nonprofit Organization. N.p., n.d. Web. <http://www.lifehappens.org/pdf/
printable-consumer-guide/life-insurance-pcg.pdf>.
93% of
Americans agree
life insurance is
something most
people need6

5. overview
market share 2012
6%
5% 5%
21%
7%
7%
14%
10%
12%
13%
MetLife
Aflac
Prudential
Northwestern Mutual
New York Life
Lincoln National
John Hancock
MassMutual
Aegon
State Farm
Figure 1.Hersch, Warren. "NAIC Names Top 25 Life Carriers by Market Share." Life Health Pro. N.p., 13 Mar. 2013. Web.

6. overview
fundamental changes
Customer
• real time decision support
• customization and
personalization of product and
services
Technology
• full integration of old channels
with a new digital core
• harnessing the power of
predictive tools and techniques
Competition
• threat from other industries or
new startups entering the
market7
7.Jackson, Graham, Jeremy Lefebure, and Vicki Symmerhayes. "Life Insurance The Digital Insurer: Change Now to Get Ahead." Accenture. Accenture, 2012. Web.

7. trend 1:
{demographic shift}

8. trend 1
boomers vs. millennials
•
two fundamentally different groups, insurers need to
decide who they will target, will it be the 55+ or the
under 35 age group
•
each segment will require a complete restructure of
current distribution models to satisfy customer
needs
•
•
first movers will have an advantage
companies that fail to act will become providers of
commoditized insurance in a market looking for
personalization8
8. French, Doug, and James O'Neill. "The Future of Life Insurance." Ernst & Young. N.p., Sept.-Oct. 2012. Web.

9. trend 1
challenges
•
two segments have almost opposite needs and
buying preferences
•
customers may turn to buying direct from online
channels (much like what has happened to
bookstores, travel agencies and stock broker firms)
•
as customers better understand life insurance needs
through independent online research, self service will
become more popular
•
failing to adapt, insurers lose an opportunity to
strengthen existing relationships or develop new ones
with young buyers9
9. French, Doug, and James O'Neill. "The Future of Life Insurance." Ernst & Young. N.p., Sept.-Oct. 2012. Web.

10. trend 1
55 & over
•
these customers have turned to advisors for a personalized service
approach
•
they have a complex set of financial needs, and need advice on financial
planning and retirement income advice
•
insurers will need to acquire knowledge to act more like financial planners
and investment advisers
•
major investments will need to be made to meet customer needs
•
changes will occur across technology infrastructure and toolsets, product
development processes, data management, agency incentives and
training
•
insurers will face new competition from wealth management companies
as they are better equipped in technology and have a stronger suite of
products to meet customer needs10
10. French, Doug, and James O'Neill. "The Future of Life Insurance." Ernst & Young. N.p., Sept.-Oct. 2012. Web.

11. trend 1
under 35
•
younger generation is looking for fairly basic protection and
savings as they enter the market for the first time
•
they prefer to conduct as much as possible online
•
insurers who plan to serve this segment will need a technologically
savvy and connected agency force
•
agents will have to play new roles and capture data about
individual consumers and feed it back to the home office in order
to effectively measure customer engagement
•
there is no optimal data source to track these trends, an agency
force with the listening capabilities and agility to play this role will
succeed11
11. French, Doug, and James O'Neill. "The Future of Life Insurance." Ernst & Young. N.p., Sept.-Oct. 2012. Web.

12. trend 1
defining future success
•
10 - 15 years the number of people in different life stages will be a
significant driver for life insurers choosing which primary market to
serve
•
who they will serve should be determined by a self assessment of
carriers current operational strengths, as well as where they are
most strategically positioned to succeed
•
depending on the segment life insurance carriers must understand
how and what customers want to buy more precisely than they do
today
•
this will require a retooling of their distribution channels to address
the unique needs and opportunities associated with each of the
major segments12
12. French, Doug, and James O'Neill. "The Future of Life Insurance." Ernst & Young. N.p., Sept.-Oct. 2012. Web.

13. trend 2:
{the digital insurer}

14. trend 2
the digital insurer
Successful life insurers will demonstrate
3 characteristics.
1. Connected - reinvent the customer
experience and place customers at
the heart of their business
2. Analytic - exhibit richer insights and
smarter decisions to enable better
outcomes
3. Agile - constantly stay one step
ahead13
13. Jackson, Graham, Jeremy Lefebure, and Vicki Symmerhayes. "Life Insurance The Digital Insurer: Change Now to Get Ahead." Accenture. Accenture, 2012. Web.

15. trend 2
the digital insurer
connected
•
physically and emotionally connected with consumers, and
stay in tun with changing customer sentiments, behaviors
and expectations
•
multi-channel sales and service as a standard offering, fully
integrating old channels with a new digital core
•
embracing and actively engaging through relevant social
media, such as social and mobile platforms
•
harnessing deeper collaboration and connection with a
broader group of stakeholders including customers,
employees, partners, distributors and suppliers14
14.Jackson, Graham, Jeremy Lefebure, and Vicki Symmerhayes. "Life Insurance The Digital Insurer: Change Now to Get Ahead." Accenture. Accenture, 2012. Web.

16. trend 2
the digital insurer
analytic
•
richer insights and smarter decisions to enable better
outcomes
•
tap into and exploit value from the explosion of data
•
harness the power of next generation predictive tools and
techniques
•
wire analytics into core processes and decision making
•
integrate real-time decision support, drive more value from
each customer interaction
•
customize and personalize products and services15
15. Jackson, Graham, Jeremy Lefebure, and Vicki Symmerhayes. "Life Insurance The Digital Insurer: Change Now to Get Ahead." Accenture. Accenture, 2012. Web.

17. trend 2
the digital insurer
agile
•
execute operational excellence built around lean core
business processes and strong process management
disciplines
•
use an intelligent sourcing approach, making cost effective
and flexible use of supplier capabilities
•
develop early warning and rapid response mechanisms to
constantly scan, assess and initiate changes based on market
movements and opportunities
•
deliver greater, faster and cheaper change through agile
methods
•
foster a culture of innovation and entrepreneurship16
16.Jackson, Graham, Jeremy Lefebure, and Vicki Symmerhayes. "Life Insurance The Digital Insurer: Change Now to Get Ahead." Accenture. Accenture, 2012. Web.

18. new
entrant
competition

19. competition
IEnetwork
Mobile life insurance app to find the
best quotes quickly and easily.
•
easily estimate quotes across 100+
carriers
•
no annual/monthly fees
•
up-to-date quotes
•
includes policy fees17
17. "IEnetwork." Manage, Market & Recruit. N.p., n.d. Web. <https://www.ienetwork.com/>.

20. competition
cakehealth
The best free way to manage health
care plans online.
•
track health spending by entering
insurance credentials
•
visibility into medical payments,
and peace of mind that you are on
top of your bills
•
helps you find a plan that’s
optimized specifically for your
needs
•
keep up with routine check-ups and
doctor’s appointments18
18. "The Best Free Way to Manage Healthcare." CakeHealth. N.p., n.d. Web. <https://cakehealth.com/>.

21. life insurance industry
summary
Life insurers will need to provide customers with a innovative and
personalized experience. Insurers will need to embrace digital
technologies that are preferred by their target segment. On the
retail side, insurers will need to focus on acquiring and training
high performing agents and providing with them with the proper
tools to effectively serve their customer base. Ultimately, insurers
who accomplish this will gain a significant advantage in the
marketplace, while those that don’t will be replaced by new
entrants.

22. life Insurance Industry
opportunities for the future
•
develop integrated tools to give customers access to
information and educate themselves on different types of life
insurance
•
create mobile and online tools to provide agents with the
ability to collect, monitor, manage and quantify data
•
design mobile tools to assist insurers with segmented
targeting and selling strategies

23. health
insurance

24. overview
statistics
Individuals’
contribution to
health care is
rising 10% a
year19
Medical bills are
a major cause of
60% of
bankruptcies in
the US23
875,000
Americans were
medical tourists
in 201021
18% of
Americans are
uninsured20
41% of working
Americans have
medical bill
problems or are
paying off
medical debt22
Women pay
approximately
30% more for
health
insurance24
19. Komisar, Harrient. "The Effects of Rising Health Care Costs on Middle Class Economic Security." AARP Public Policy Institute. N.p., n.d. Web.
20-24. "Health Insurance Facts." EnhanceInsurance.com. Enhance Insurance, n.d. Web. <http://www.enhanceinsurance.com/images/health-insurance-facts-infographic.jpg>.

25. overview
health insurance companies

26. overview
fundamental changes
•
customers are more likely to purchase insurance from nontraditional sources
•
private insurers and employers are likely to pursue contracts
with accountable care organizations
•
increase in private health insurance exchanges
•
new legislation, starting the 1st of the new year, health
insurers won’t be able to turn people away because of health
problems25
25."Health Reform: Seven Things You Need to Know Now." Consumer Reports. Consumerreports.org, n.d. Web.

27. trend 1:
{health insurance
exchanges}

28. trend 1
overview
•
PwC estimates by 2019 28 million
Americans will purchase health
insurance through this new online
channel
•
52% of health insurance executives
plan to compete and participate in
the exchanges
•
exchanges will create an array of
new choices for customers in the
individual and small group markets
•
top concerns for insurers are
adverse selection and technology
integration (payment & enrollment
transactions)26
26.Barnes, Kelly, Michael Galper, and Jeffery Gitlin. "Change the Channel Health Insurance Exchanges Expand Choice and Competition." PwC. PwC, July 2011. Web.

29. trend 1
2014 changes
Health insurers will not be permitted to...
•
deny coverage or charge different premiums based on a
person’s health or claim history
•
charge premiums that are more than 3x higher than the
lowest premium, based on age, for the same product and
geography
•
spend less than 80% of premium dollars on medical expenses
for the individual and small group markets27
27. Barnes, Kelly, Michael Galper, and Jeffery Gitlin. "Change the Channel Health Insurance Exchanges Expand Choice and Competition." PwC. PwC, July 2011. Web.

30. trend 1
2014 changes
What insurers can do...
•
charge different rates based on geography, number of
persons covered (ie. single, family), age and tobacco use
•
there are limitations on the premium variation for age and
tobacco use
•
charge a smoker 1.5x the premium of a non-smoker28
28. Barnes, Kelly, Michael Galper, and Jeffery Gitlin. "Change the Channel Health Insurance Exchanges Expand Choice and Competition." PwC. PwC, July 2011. Web.

31. trend 1
for customers
top things health insurers can do to make insurance purchasing
more user friendly...
•
72% provide a clear view of what is covered
•
46% make it easy to talk to someone at the insurance
company
•
43% provide tool to estimate costs of common procedures
•
37% offer a way to compare insurance products
•
31% make it easy to change plans
•
20% offer multiple methods of payment (ie. electronic or
automatic payment)29
29. Barnes, Kelly, Michael Galper, and Jeffery Gitlin. "Change the Channel Health Insurance Exchanges Expand Choice and Competition." PwC. PwC, July 2011. Web.

32. new
entrant
competition

33. competition
covered california
•
goal is to increase the number
of Californians with health
insurance
•
customers can shop online, over
the phone and in person choose
the health plan that offers the
best services and greatest
value for their individual needs
•
individuals and small businesses
can discover if they qualify for
federal financial assistance
•
customers have access to
financial assistance 30
30."Covered California." About Us. N.p., n.d. Web. <https://www.coveredca.com/about/index.html>.

34. competition
bloom
•
Bloom works with employers and
health plans to define and control
health benefit spending
•
employers pre-deposit tax defined
contribution dollars on behalf of
each employee into a Bloom
account
•
employees take an health survey
that matches them with plans and
services to meet their needs
•
recommendation engine generates
tailored insurance plan options for
each employee (displayed through
Virtual Shelf, online marketplace) 31
31."Bloom." Our Help Your Benefit. N.p., n.d. Web. <http://www.gobloomhealth.com/>.

35. competition
oscar health
•
Oscar makes it simple to guide
customers through the complex
process of health insurance
•
revolutionizing care delivery, log
into your account, type your
symptoms and a doctor will call
you to chat within 20 minutes
•
if you need to see someone, the
site offers a list of nearby providers
•
allows customers to check prices
for procedures ahead of time and
offers 3 free in person doctors
visits and free generic drugs 32
32."Oscar Insurance." New York Health Insurance. N.p., n.d. Web. <https://www.hioscar.com/>.

36. health Insurance Industry
summary
New legislation and regulations are paving the way for change
within the health insurance industry. Current health insurers are
facing increased competition from new market entrants. In order
to retain their market share, traditional insurance companies will
need to take on health insurance exchanges. Successful insurers
will be able to simplify the insurance buying process and provide
customers with personalized plans.

37. health Insurance Industry
opportunities for the future
•
destination for customers to search health conditions and
compare different types of plans
•
easy definable personalized access to plan pricing
information
•
portal to access insurers and make it easy for customers to
ask questions and get immediate answers

38. auto
insurance

39. overview
statistics
$1,029 is the
average amount
spent on auto
insurance per
year33
Auto premiums
usually go down
substantially
after a driver
turns 2537
16% of drivers
are uninsured at
any given time35
On average a
driver will have
an accident
claim every 17.9
years34
All 50 states
require drivers
to carry
insurance36
33. Copeland, Larry. "The Cost of Owning Your Car? $9,000 a Year." USA Today. Gannett, 16 Apr. 2013. Web.
34. Aho, Karen. "Here's How Many Car Accidents You'll Have." CarInsurance.com. N.p., 17 June 2013. Web
35.- 37 Stauffer, Eric. "Automobile Insurance Facts (Infographic)."ExpertInsuranceReviews.com. N.p., n.d. Web. <http://www.expertinsurancereviews.com/insuranceeducation/car-insurance-facts-infographic/>

40. overview
fundamental changes
customer
•
shift to individual customer data collection instead of
industry wide statistics
technology
•
impact of car technology could completely alter auto insurers
current business models
•
demand for online and mobile tools to give customers the
convenience and access they desire
competition
•
increased competition from new entrants 38
38. Brockman, Marik, and Anand Rao. "The Insurance Industry 2013." Reshaping Auto Insurance. PwC, 2013. Web.

41. trend 1:
{car technology}

42. trend 1
insurance by manufacturers
•
in-car technology, such as telematics, location awareness and
collision avoidance sensors will shift the risk of driver liability to
manufacturers
•
a new auto insurance, that comes packaged with these
technologically advanced cars
•
coverage would be marketed to customers directly by the auto
manufacturers and/or dealers
•
profound impact on insurers, changing the entire value chain from
product definitions, to pricing, marketing and distribution 39
39. Brockman, Marik, and Anand Rao. "The Insurance Industry 2013." Reshaping Auto Insurance. PwC, 2013. Web.

43. trend 1
pay per mile insurance
•
urban living and the increasing availability of car sharing suggest a
future in which premiums move from 24 hour asset coverage to
pay per use model
•
currently 80% of the US, and 50% of the global population are
considered urban dwellers and car sharing is rapidly growing
•
Forbes reported in 2012 that the global car sharing market is
expected to grow and could exceed 10 billion by 2020
•
result would increase the number of low frequency drivers, which
would reduce individual insurance premiums 40
40. Brockman, Marik, and Anand Rao. "The Insurance Industry 2013." Reshaping Auto Insurance. PwC, 2013. Web.

44. trend 1
then there’s google...
•
success and adoption of driverless vehicles could change the entire
industry
•
Google’s driverless, laser equipped vehicles have logged over
300,000 miles without an accident
•
2012 study by JD Power found that 37% of US drivers were
interested in this new technology
•
driverless cars can reduce traffic accidents, the number of cars on
the road and wasted commute time and energy by 90%, resulting
in savings of 2 trillion per year for the US economy 41
41. Brockman, Marik, and Anand Rao. "The Insurance Industry 2013." Reshaping Auto Insurance. PwC, 2013. Web.

45. trend 2:
{driver monitoring}

46. trend 2
gps monitoring
•
gps systems in cars are being used to rate individual drivers
on their driving habits, instead of relying on statistics of
accidents reported in the area as a whole
•
systems collect the following:
•
•
•
•
•
average speed driven, occurrence of sudden stops
average times of day driven
number of miles driven per day
location of parked vehicle
systems benefit less risky drivers, who can now receive lower
premiums and more discounts thanks to this technology 42
42."Auto Insurance Chnages in 2013." VehicleInsure.com. N.p., n.d. Web. <http://vehicleinsure.com/auto-insurance-changes-in-2013/>

47. new
entrant
competition

48. competition
leaky
Leaky helps you compare car car
insurance the easy way for free.
•
compare prices, plans and
potential scenarios to take the
mystery out of your insurance
•
manage all your insurance
information in one easy spot
•
provide alerts when customers
can save money so you get the
best deal possible on
insurance 43
43. "Compare Car Insurance the Easy Way." Leaky. Leaky, n.d. Web. <http://leaky.com/>.

49. competition
metromile
MetroMile is per mile car insurance
designed for people who drive less than
10,000 miles a year.
•
calculates insurance costs each month
based upon actual miles you drive
•
customers pay a few cents per mile
and a low monthly base rate, that’s
significantly less than standard
insurance
•
rewards customers for driving less, so
when your car is parked or when you
decide to take the bus or ride your
bike you save money
•
charges are capped at 150 miles per
day, regardless of how far you drive 44
44."MetroMile - Because You Drive Less." MetroMile. MetroMile, n.d. Web. <https://www.metromile.com/>.

50. competition
drivefactor
Drivefactor is the trusted worldwide source
for driving data and analytics
•
use a sensor telematic platform to
gather better driving data for
superior scoring and customer
rewards
•
smart ways for customers to monitor
and improve personal driving
behaviors through a plug and drive
device
•
insurers can utilize drivefactor’s
technology to roll out usage based
insurance programs and gain a key
competitive advantage in the
marketplace 45
45. "The Trusted Worldwidesource for Driving Data and Analytics." Drivefactor.com. Drivefactor, n.d. Web. <http://www.drivefactor.com/>.

51. auto Insurance Industry
summary
Changing technology is dramatically impacting auto
insurance companies. Advances like GPS monitoring, in
car telematics are paving the way for a new insurance
model known as usage based. Successful auto insurers
will need to recognize these changes and act quickly
before they are displaced by new entrants.

52. auto Insurance Industry
opportunities for the future
•
develop apps for auto insurers that monitor
individual driving behaviors
•
create apps and online comparison tools for auto
insurers to provide customers with access to pricing
and plan information
•
develop interactive quizzes or games that allow
customers to estimate individual insurance needs
based on personalized scenarios

53. propane studio is a full-service
digital agency focused on
developing experiences and
solutions that fuel the way people
connect with brands and each other.
propane studio | 1160 battery street, suite 350 san francisco, ca 94111 | 415.550.8692 | www.propanestudio.com