Unbundling the Insurance Value Chain - Disruption in the Insurance Sector - The 7th. International Istanbul Insurance Confrence - Prof. Dr. Selim YAZICI (2016)
Unbundling the Insurance Value Chain - Disruption in the Insurance Sector - The 7th. International Istanbul Insurance Confrence - Prof. Dr. Selim YAZICI (2016)
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Unbundling the Insurance Value Chain - Disruption in the Insurance Sector - The 7th. International Istanbul Insurance Confrence - Prof. Dr. Selim YAZICI (2016)
1. Unbundling the
Insurance Value Chain
Disruption in the Insurance Sector
The 7th. International
Istanbul Insurance Conference
Prof. Dr. Selim YAZICI
Istanbul University
FinTech Istanbul
October 6, 2016
2. Short Bio – Prof. Dr. Selim YAZICI
ContactInformation
Selim@FinTechIstanbul.org
https://www.linkedin.com/in/selimyazici
Email:
LinkedIn:
Twitter: @selimyazici @FinTechIstanbul
5. Insurance CEOs feel more vulnerable to technological
disruption than other industries’ CEOs
PwC 2015 CEO Survey
*automotive, retail, asset management, power & utilities, entertainment, pharma & lifescience, healthcare, and hospitality & leisure
6. What are your organization’s biggest opportunities in the next 2 years?
7. Today’s Key Questions?
1. What are the emerging innovations effecting the Financial Services?
2. How will they impact the ways in which the Insurance Industry is
structured and doing business?
3. How will you respond to those challenges?
10. FinTech
• FinTech is the use of technology to make
financial services more efficient
• Innovation in financial services using
technology
• Disruptive???
• FinTech companies are generally startups,
trying to disintermediate incumbent
financial systems and challenge traditional
corporations that are less reliant on
software.
12. World Economic Forum - Davos 2016
“The Fourth Industrial Revolution”
“The most imminent effects of disruption will be felt in the
banking sector; however, the greatest impact of disruption is
likely to be felt in the insurance sector”
Session: The Transformation of Finance
Topic: Digital Economy
Report: The Future of Financial Services
13. Disruptive Innovation in
Financial Services
• 6 Functions of Financial Services
• 11 Clusters of Innovation
Six Cross-functional Themes Touching
Multiple Cluster
1. Streamlined Infrastructure
2. Automation of High-Value Activities
3. Reduced Intermediation
4. Strategic Role of Data
5. Niche, Specialized Products
6. Customer Empowerment
14.
15. Drivers for InsurTech
• Innovations
• Technology
• Web
• Mobile
• Big Data
• Connected Devices (Cars, Homes, Lifestyles)
• Smarter, cheaper sensors
• IoT (Internet-of-Things)
• Communication Protocols
• Advanced Analytics
• Better Understand the Customer
• Millennials (Digital Natives)
• Needs
• Expectations
• Anywhere, anytime
• Simple
• Quick
• Reliable
• DIY (Do It Yourself)
16. Drivers for InsurTech - Technology
• Artificial Intelligence
• Connected Devices (IoT – Internet of
Things)
• Telematics
• Wearables
• Household appliances
• Drones
• Remotely controlled, Unmanned vehicles
• Risk Management and Claims Management
• For objects and large areas from a distance
• New Payment Methods
• Mobile
• Bankless money transfers
• Blockchain Technology
• Timestamped data blocks
• Validate data and keep it safe from alteration or
tampering
• Roboadvisors
• Underwriting
• Risk Assessment
• Automated Insurance
• Digit
• Acorns
19. What do InsurTech StartUps Provide?
• New Product/Service
• Mobile apps offering digital management and optimization of consumers’ insurance policies
across multiple providers
• Free for consumers, receives brokerage fees from insurers
• Innovation
• Easy and seamless integration of users’ insurance policies in the app
• Automatically discovers potential savings and optimization of insurance coverage
• Innovative distribution channels
• Provide technology to reduce risk/number of claims
• Ease of Use (Customer Experience)
• User-friendly solutions
• Consumer interaction
• Reach underserved markets
• Younger generations
• First-time insurance seekers
• Cost Savings
• Both for consumers and insurance company
• Lower cost of claims processing
20. InsurTech Categories
• Product Insurance —These companies offer insurance/warranties for products that you purchase, from tech gadgets to diamonds.
• Auto Insurance — These companies offer car insurance, including car telematics products which detect your mileage and driving behavior to
customize your insurance plan.
• Health/Travel insurance—These companies offer health or travel insurance, either for individuals or for businesses.
• Life, Home, Property & Casualty Insurance — These companies offer life, home, and property & casualty insurance, as well as other kinds of
insurance such as renters, disability, and marriage insurance.
• Enterprise Insurance —These companies offer insurance plans for businesses, startups, freelancers, etc.
• Insurance Comparison/Marketplace — These companies serve as a marketplace for consumers to buy insurance of any kind (car to home to
health), or compare different insurance providers. These are 3rd party companies that don’t offer insurance plans themselves, but act as a
brokerage agent between insurance providers and consumers.
• Reinsurance—These companies provide insurance for other insurance companies.
• P2P Insurance — These companies offer peer-to-peer insurance, in which a group of policyholders jointly pay for the insurance of an item that
they mutually own, share, or rent (a car, a house, media equipment, etc).
• Insurance Data/Intelligence– These companies collect, process, and analyze data analytics and business intelligence for the insurance
industry.
• Insurance User Acquisition—These companies help insurance companies acquire and manage new leads and clients.
• Insurance Infrastructure/Backend — These companies help insurance companies with their day-to-day operations, including CRM for agents
and lawyers, communication tools, claim filing tools, etc.
• Insurance Investors/Education — These companies are investment firms that specifically invest and incubate new insurance companies,as
well as resources that give information about how insurance works
• Consumer Insurance Management Platforms — These companies offer platforms that enable consumers to manage their insurance and
claims, including mobile apps that allow them to file claims right at the spot of the caraccident.
28. The Spectrum of InsurTech Business Models
1. Distribution
2. Enterprise
3. Mutual
4. Consensus
5. Engagement
6. Experience
7. Data
29. Distribution
• Distribution is all about making insurance easier to buy, consume,
understand and relevant.
• They put the customer first and build their insurance proposition from the
customer out (unlike incumbents who organize their business around
internal capabilities).
• These startups are all about the customer and their propositionsare
characterized by convenience, on-demand, personalization and
transparency (and of course, digital).
• Examples:
• Bought by Many
• Knip
• Cuvva
• PolicyGenius
• Moneymeets
30. Enterprise Platform Solutions
• A new breed of enterprise class software providers.
• Software as a Service (SaaS) platforms running on the cloud. They
have consumption based pricing models that replace the traditional
$million up front license fee and multi-year implementation.
• Examples:
• Vlocity
• Insly
• Surely
• Riskmatch
• Zenefits
31. Mutual (P2P)
• P2P (Peer to Peer) business models return insurance to its roots of
mutualization and community.
• The model relies on the notion that social grouping and affinity will
change behavior and address moral hazard (thereby reducing claims
payouts and premiums).
• The question of scalability still hangs over P2P insurance but if it succeeds
as a business model, it could form the foundation of a new breed of
insurer.
• Examples:
• Friendsurance
• Guevara
• Lemonade
• Uvamo
• Gaggel
• TongJuBao
32. Consensus
• Blockchain technology will fundamentally change the way the
insurance industry works (as well as banking and society).
• The promise is huge although as yet, unproven.
• From smart contracts to identity authentication, from fraud
prevention to claims management, blockchain technology will
provide the underlying technology foundations for a trustless
consensus that is transparent to all parties.
• Examples:
• Everledger
• Tradle
• SmartContract
• Dynamis
• Blockverify
33. Engagement (Customer Lifestyle)
• The most significant characteristics from InsurTech in personal lines.
• The product becomes integrated in the customer’s lifestyle. It
becomes sticky and overrides the annual buying exercise where price
is the key buying criteria.
• Digital natives are responding well to lifestyle apps that sit on top of
the underlying insurance product.
• Examples:
• Oscar
• Vitality
• Trov
34. Experience
• The true value of insurance is only realized when the customer makes
a claim.
• New tech solutions that improve the customer journey through the
claims process will not only improve the customer experience, they
will also reduce the cost of claims and claims payouts.
• Examples:
• 360Globalnet
• RightIndem
• Tractable
• Vis.io
• Roundcube
35. Data (Risk Management)
• This is all about new sources of data to rate and underwrite risk.
• This is about using data science, machine learning, artificial intelligence
and high performance computing to process data in completely new ways.
• Whilst Distribution is vital to change the way customers interact with
insurers, it is the data players that hold the key to fundamental change in
the way insurance is manufactured.
• Examples:
• Quantemplate
• Analyze Re
• Meteo Protect
• The Floow
• Fitsense
• Influmetrics
• RiskGenius
39. Start-up Boosters
• Axa
• Kamet 100 M Euro InsurTech Incubator
• AXA Lab (San Francisco, Shanghai)
• AXA Strategic Ventures (ASV) Venture
Capital Firm (Investment Structure)
• AXA Factory
• DIL
• Allianz
• Digital Accelerator
• Aegon
• Kroodle
• Swiss Re
• InsurTech Accelerator - Bangalore
40. InsurTech Focused Accelerators
• Startupbootcamp in London
• Global Insurance Accelerator in Des Moines, USA (about to start it’s
second cohort)
• Mundi Lab announcing its startups for their insurance program in
Madrid
44. How will you respond?
• Digitally Enhanced Customer Experiences
• Understand customer behaviors and needs
• Omnichannel Sales and Distribution Model
• Create an online and mobile presence
• Optimizing Operations Using Digital Technologies
• Redesign the organization to be a digitalized business
• Advanced Analytics and Big Data Applied Throughout the Organization
• Use big data analytics for business decisions
• Start Digital Transformation
• Align IT spendings to focus on strategic issues
• An Innovation-ready Organization
• Cultivate the right capabilities and culture for innovation
Customers
Processes
Mindset
45. Conclusions
• 4tn USD Global Insurance Industry
• The entire insurance value chain will be transformed by technological
innovations such as artificial intelligence, connected devices, drones, new
payments, and the Blockchain.
• Entirely new value propositions and distribution methods will be enabled.
• There is a huge market for startups and incumbent insurers that embrace the
new technologies.
• Relative to the market’s size I feel confident that InsurTech startups will have
more funding than they have thus far.
• Tocapture this vast opportunity startups and incumbent insurers need to
establish effective cooperation models, leveraging each party’s key strengths.
• While one-third of these startups can be seen as disruptive to incumbent
insurers, most enable existing insurers to harness technology.
• Thus, insurers have much to gain from fruitful collaboration with startups.
