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The Digital Insurer

  1. 1. Page § 1Confidential YOUR LOGO Digital Technology : The New Frontier For Insurers Kalpesh Desai CEO Agile Financial Technologies kalpesh.desai@agile-ft.com
  2. 2. Page § 2Confidential "In a time of accelerating turbulence, the valuation of a company will be strongly affected by how it executes change."
  3. 3. Page § 3Confidential Source : Celent, May 2016
  4. 4. Page § 4Confidential 1 Digital Technology & New Frontiers For Insurers 3 4 2 Digital Technology & Its Relevance To Insurers The Digital Insurer Of The Future Digital Technology Disruption – Case Studies How Do YOU get there
  5. 5. Page § 5Confidential 1 Digital Technology & New Frontiers For Insurers 3 4 2 Digital Technology & Its Relevance To Insurers The Digital Insurer Of The Future Digital Technology Disruption – Case Studies How Do YOU get there
  6. 6. Page § 6Confidential Digital Technology & Its Relevance To Insurers Insight based customer experiences The digital “channel” Changing role of agents Aggregators Ecosystems Internet of Things
  7. 7. Page § 7Confidential Creating insight based customer experiences Move from a product focused sales process To Customer focused sales process Needs-based selling based on real-time data Dynamic pricing using customer data analytics at the point of sale
  8. 8. Page § 8Confidential The Digital “Channel” § Digital channels will play an increasing role at every stage of the sales process § It is possible today to conclude all lines of business digitally from start to finish
  9. 9. Page § 9Confidential Changing roles of agents Deploymentof mobile technology Redesign of compensation models to allow omni- channel environments Enhance skills to enable cross-selling and advisory Refocus agent’s efforts where they add most value
  10. 10. Page § 10Confidential Aggregators § Aggregators are an increasingly important channel § Insurers have to tailor products and master dynamic pricing to compete § Insurance companies are participating together to set-up their own aggregator businesses § Carriers expect over 50% of their customers to use aggregators over the next 3 years The Digital Policy-Holder Renewals Policy purchase and service Research
  11. 11. Page § 11Confidential New Ecosystems Integrate into a holistic buying experience Travel Portals (Expedia/MakeMyTrip, Cleartrip) Social Media platforms such as Facebook Blur industry boundaries and identify new ecosystems to work with Insurers need to work with insurance technology startups who otherwise can disrupt the traditional models Partner with non- insurance companies to offer a broader range of relevant products and services
  12. 12. Page § 12Confidential Internet of Things (IoT) No longer a “gimmick or a fad” Auto- telematics Environmental sensors Wearables Self-drive cars
  13. 13. Page § 13Confidential Internet of Things (IoT) Telematics - Auto insurers use devices to derive driving behavior such as speed, distance travelled, turning & braking patterns, time of day, locations travelled to to price and maintain “usage based insurance” (UBI). - Responsible drivers get the benefit of lower premiums. - Carriers are able to effectively improve margins and reduce loss ratios. - Weather warnings can be pushed to the car - Accident alerts on the road ahead can be pushed to the driver to ensure awareness and reduce risk of accidents
  14. 14. Page § 14Confidential Internet of Things (IoT) Environmental Sensors - IoT devices today can be installed in homes, offices, factories and warehouses to detect temperature, smoke, toxic fumes and hazardous conditions. - These devices provide predictive alerts to both the policy owner and the carrier - Carriers can now price the risk based on actual data from IoT sensors and improve loss ratios - Applications : homeowner’s, commercial property, workmen’s compensation, general liability, agriculture & weather-linked insurance
  15. 15. Page § 15Confidential Internet of Things (IoT) Wearables/Connected Biometrics - Insurance companies are deploying gaming applications to encourage healthy behavior and reward healthy lifestyles documented by their daily activity, calorie burn, sleep patterns, etc. - Disability claimants can be tracked for compliance to rehabilitation protocols thus benefiting the employer, insured and the carrier by shortening the time to return to work and reducing loss ratios, and hence providing better premiums to the plan sponsors
  16. 16. Page § 16Confidential 1 Digital Technology & New Frontiers For Insurers 3 4 2 Digital Technology & Its Relevance To Insurers The Digital Insurer Of The Future Digital Technology Disruption – Case Studies How Do YOU get there
  17. 17. Page § 17Confidential Case Study 1 : The Climate Corporation § Sells weather-linked insurance, traditionally underwritten manually § Clients go to its site and outline what range of temperatures and/or rainfall/weather conditions they want protection from, for a set period of time. § 30 years of geological survey data for the user’s location including weather patterns, climate trends and soil characteristics is crunched down to the farmer’s field, within milliseconds, and a policy is offered, accounting minutely for climate change § Farmers work with independent local agents or directly interact through the website § Payouts are triggered automatically without paperwork when the company’s data shows that a weather event has caused damage. § The Climate Corp was finally sold to the Monsanto Group for USD 930 Mn
  18. 18. Page § 18Confidential Case Study 2 : Peer2Peer Insurance Customers join an online social network to share risk Portion of the premium contributed by members are allocated to a mutual pool Balance of the premium is ceded to an insurer Members pay small claims from the mutual pool and hence eliminate claims staff and costs The insurer funds the excess and provides services such as policy administration to the pool Money left in the pool is refunded to members or carried forward as premium contribution to another year Hence what would have been an insurer’s traditional profit will now become the members’ saving
  19. 19. Page § 19Confidential Case Study 2 : Peer2Peer Insurance § Guevara - UK based P2P motor insurance network - Saves members 80% on their premiums § Friendsurance - German P2P property insurance network – Saves members 33% on their premiums
  20. 20. Page § 20Confidential 1 Digital Technology & New Frontiers For Insurers 3 4 2 Digital Technology & Its Relevance To Insurers The Digital Insurer Of The Future Digital Technology Disruption – Case Studies How Do YOU get there
  21. 21. Page § 21Confidential Physical channels will be replaced by digital channels § The new age Digital Insurer will replace and/or augment physical channels § 40% ~ 50% of physical activities in insurance distribution will be transitioned to digital processes § This transition will require incremental IT and integration transformation Proposal Policy Issuance Servicing Renewals Claims administration Customer feedback & resolution
  22. 22. Page § 22Confidential The “Millenials” will change all the questions § The success of the digital insurer will depend on millenials § Millenials only wish to interface digitally § Insurance companies will be forced to focus on user experience and turn their IT systems around § Traditional systems were designed for workflow, assuming that customers were willing to wait for a response § These assumptions are NO LONGER TRUE § The digital customer wants information and service on-demand (mobile devices and the web)
  23. 23. Page § 23Confidential Evaluate your IT systems & infrastructure § Identify your technology deficit quickly § Partner with a technology provider who is ahead of the curve § Start with the end in mind and work backwards to ensure that the foundation for digital delivery is in place
  24. 24. Page § 24Confidential Digitize Customer Relationships § Customer relationship used to be a purely human practice § Relationship management is now digital § Modern insurance call centers must have a real-time, 360 degree view of social media engagement, mobile application interaction and inputs from all digital channels, including IoT devices employed by the insurer § These are not possible to accomplish with archaic or legacy systems. Modern infrastructure with up-to-date web APIs, cloud based services, IoT aware systems is required
  25. 25. Page § 25Confidential Wearable technology as a tool for usage based pricing
  26. 26. Page § 26Confidential IoT § IoT has led to extensive data being generated and this needs to be analyzed and acted upon § IoT data can allow insurers to offer discounts for behavior and activity § Activity-based products require activity based data and systems, and require the ability to process massive amounts of streaming information from devices § Investments need to be made in technology that would help insurers analyze this streaming data, and derive usage based pricing, as opposed to traditional pricing matrices
  27. 27. Page § 27Confidential Shift to algorithmic risk assessment Insurance companies will face an inflection point where they would need to deploy real-time algorithmic systems to make sense of the data from mobile apps, wearable devices, social media interactions, geo-positioning systems to § Arrive at competitive risk-based pricing § Identify cross-sale and up sale opportunities § Identify risks and threats and diminish loss ratios § Identify fraud or risky behavior
  28. 28. Page § 28Confidential Are insurers ready for driverless cars? § Driverless cars pose new forms of risk. § Risk management will not be the same in the digital era § If automated driver feature has a bug and causes an accident, is the owner of the vehicle at fault? Will the cover extend to the car manufacturer ? How will surveyors evaluate forensic data? § Will regulators force insurers to evaluate forensic data?
  29. 29. Page § 29Confidential The Actuary Vs The Digital Data Scientist § The new digital Data Scientist steps to the forefront. § Actuaries used to be the data scientists in the insurance industry § In the new era, data science applies to IoT data and forensics, predictive and historical analytics, location awareness, etc. § The modern actuary will have to relearn skills to keep pace with the digital insurer
  30. 30. Page § 30Confidential 1 Digital Technology & New Frontiers For Insurers 3 4 2 Digital Technology & Its Relevance To Insurers The Digital Insurer Of The Future Digital Technology Disruption – Case Studies How Do YOU get there
  31. 31. Page § 31Confidential How do YOU get there? Move swiftly and assertively •The one who waits, will not have to worry about a future Make innovation and customer- centricity the cornerstone of distribution strategies Evaluate your current IT and infrastructure urgently in the context of what you wish to achieve as a digital insurer Strive for simplicity of access, transactions and offerings
  32. 32. Page § 32Confidential How do YOU get there? Focus agents on advice, value add, and deeper customer relationships Place bets on chosen businesses and distribution models, moving beyond a succession of pilots Proactively define your position in new ecosystems, cooperation models and partnerships Move from indemnification to real-time protection
  33. 33. Page § 33Confidential Though some may argue that digital technology may replace paper 3
  34. 34. Page § 34Confidential There are still some processes where paper cannot be replaced
  35. 35. Page § 35Confidential For more information, write to: info@agile-ft.com Visit us on: www.agile-ft.com U.S.A. Ÿ Mauritius Ÿ U.A.E. Ÿ India Ÿ Singapore