Future Trends 2017: The Shift Gains Momentum · A major market shift –Driving a revolution of disruption and change Silent Boomer Gen X Millennial Gen Z Digital Age INDUSTRIAL AGE

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Future Trends 2017:The Shift Gains Momentum

IASA Spring Meeting

April 2017


INSURANCECOMPANIES

Market Trend: Pressure on insurance industry driving new expectations, innovations and competition

NEW INNOVATIONS

Source: Future Trends – A Seismic Shift Underway

People

Changing customer expectations

Psychology /Behavioral Economics

Changing customer demographics

Impacts of economic conditions

Shifts in needs and risk profiles

Technology

Pay-As-You-Need Insurance Enterprise

Platform Solutions

Emerging Technologies

Explosion of New Data

Market Boundaries

InsurTechCompetition for talent

and capital

New Competitors and Product Innovation

Shifting and expanding Channels

Shifting and changing Market Boundaries


We are in the midst of a revolution

Silent

Boomer

Gen X

Millennial

Gen Z

INDUSTRIAL AGE INFORMATION AGE DIGITAL AGE

Mainframe

Client-Server

PCs

Internet

SOA

Open-Source

Cloud

Mobile

Apps

IoT

Wearables

Autonomous Vehicles

Blockchain

Artificial Intelligence

Teletype

Adding Machine Punch Cards

IBM 305 RAMAC

Calculators

Defined Industry Boundaries

Single-Purpose Products

Competition as Zero-Sum Game

Producer + User Roles

Business EcosystemsPlatforms

Connected Multi-Purpose Products

Strategic Cooperation

User as Producer, Co-creation

Buying Economy Sharing Economy

Revolutionary

CH

AN

GE

AN

D D

ISR

UP

TIO

N

Evolutionary

Mar

ket

Shif

t

Mar

ket

Shif

t

Innovation

Effectiveness

Efficiency

Automation


A major market shift – Driving a revolution of disruption and change

Silent Boomer Gen X Millennial Gen Z

Digital Age

INDUSTRIAL AGE INFORMATION AGE DIGITAL AGE

RevolutionaryEvolutionary

Market Shift and Separation - Shift in Fundamental Business Models

Business Model designed to support a new market, technology and demographic assumptions for Gen Z, Millennial & some Gen X

Business Model designed to support a traditional market, technology and demographic assumptions for Silent, Boomer & some Gen X

Source: 2016 Future Trends – A Seismic Shift Underway


Market Trend: Insurance value chain deconstruction and disruption

Source: Reinventing Insurance: Leveraging the Power of Data, Analytics and Cloud Core Systems Report

Marketing Distribution Pricing Underwriting Risk TransferPolicy

ServiceClaims

Traditional Carrier Strengths:Brand & Agent Network

Traditional Carrier Strengths:Large, Historical Data Sets

If adjacent players are successful, this could be what is left for traditional insurers.

Non-traditional competitors can also get capital and contracts with third parties.

Aggregators, Compare Sites

MGAs

External Data and Content Providers

Hedge Funds,Venture Capital TPA, BPO


UnderwritingProductSales &

MarketingDistribution Quote

Issue & Service

Claims Reinsurance

New entrants and companies leveraging digital channels and technologies for new business models


Customers: Insurance is not easy to do business with

Source: The Rise of the New Insurance Customer, The Rise of the Small-Medium Business Insurance Customer

Online retailers (e g Amazon com)

National retail stores (e g Wal Mart)

Local retail stores (e g clothing, grocery,

drugs, etc )

Mobile phone providers

Banks

Streaming TV / video / music

service

Cable TV providers

Credit card rewards / frequent flyer

programs

Insurance – Auto or Home/Renter

Insurance – Life or Annuity

1

2

3

4

5

6

7

8

9

10

Research Buy Service

"Ease" Rank

Online retailers (e g Amazon com)

National retail stores (e g Costco, Home Depot)

Local services / retail stores

Banking Services

Credit card rewards / frequent

flyer programs

Mobile phone providers

Insurance –Property, auto, general liability, workers comp

Office Services (HR, Legal, Taxes, etc )

Insurance – Life

Employee benefits providers – health,

disability, life, voluntary benefits

1

2

3

4

5

6

7

8

9

10

1-9 employees 10-99 employees 100-499 employees

Buying"Ease" Rank

ConsumersSmall-Medium Businesses


Client Journey and NPS Impact

Source: The Rise of the New Insurance Consumer Research


Implications for Insurers

Demographics

Economic challenges

Technology

New behaviorsNew needs

New expectations

Simple Affordable

Fast

TailoredTrusted

Personal


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Gen Z Gen Y Gen X Boomer Silent Gen Z Gen Y Gen X Boomer Silent Gen Z Gen Y Gen X Boomer Silent Gen Z Gen Y Gen X Boomer Silent Gen Z Gen Y Gen X Boomer Silent Gen Z Gen Y Gen X Boomer Silent

Get charged for auto insurance basedon how many miles you drive

Let your auto insurance price bepartially based on data you share from a

device that tracks your drivingperformance

Have insurance integrated into the next car, house, or other item you purchase –

and not purchased separately

Let your life or health insurance price bepartially based on data you share from a

fitness tracker

Let your home or renters insuranceprice be partially based on data youshare from a connected device like athermostat, smoke detector or home

security system

On-demand insurance - Buy insurancefor a specific item or event (like a rentalcar, camera or a trip) for a set period oftime (like an hour or a day) whenever

you need itVery Likely 5 4 Swing Group

A large “swing group” could accelerate adoption

Pay per mile Behavior Based PreventionLifestyle & Behavior

Bundled On-Demand

Source: The Rise of the New Insurance Consumer Research

Market Trend: Interest in New, Innovative Products & Channels Rapidly Growing for Consumers


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1-9employees

10-99employees

100-499employees

1-9employees

10-99employees

100-499employees

1-9employees

10-99employees

100-499employees

1-9employees

10-99employees

100-499employees

1-9employees

10-99employees

100-499employees

1-9employees

10-99employees

100-499employees

Get charged for auto insurance basedon how many miles you drive

Join a group of other businesses to share the costs of insurance premiums

and small claims, but also share rebates if the group doesn’t file any claims in a

year

Buy services that prevent accidents or claims instead of buying insurance that

pays you after you’ve had an accident or claim

Let your commercial property insuranceprice be partially based on data youshare from a connected device like athermostat, smoke detector or home

security system

Let your auto insurance price be partially based on data you share from a

device that tracks your/employees’ driving performance

On-demand insurance - Buy insurancefor a specific item or event (like a rentalcar, camera or a trip) for a set period oftime (like an hour or a day) whenever

you need it

Very Likely - 5 4 Swing Group - 3

Market Trend: Interest in New, Innovative Products & Channels Rapidly Growing for Small Medium Businesses

A large “swing group” could greatly accelerate adoption

Pay per mile P2P PreventionConnected property

Pay how you drive

On-Demand

Source: The Rise of the New Insurance SMB Research


Insurer’s response to business trends is growing…


Technology Trends: Advance Innovation

Autonomous Vehicles• Premium Decline• Embed insurance in Subscription• Rental Fleets• Commercial Fleets

Cognitive / AI• Digital Intelligence• Customer Engagement• Game-changing knowledge• Learn & adapt• Talent expansion

Internet of Things• Vehicle/Property• Lifestyle• Safety• Rehab / Recovery

Alternative Payments• Mobile (Apple Pay)• PayPal• Messenger Services• Bitcoin

Drones• Underwriting• Claims• Vehicle & Property• Cat Events

Blockchain• Claims payments• Life and Group markets• Commercial & Wholesale markets• Reinsurance & London Market

Chatbots / Robotics• 80% business use by 2020• New native app & replace “mobile apps”• Robo Advisors / Agents• Customer Engagement

Virtual / Augmented Reality• Claims• Loss Control• Rehab / Recovery• Customer Engagement• Training


Insurer’s response to technology trends is weak


Market Trend: Shift to innovation & InsurTech - new brands end of 2016

• NA represents 61% of 2016 funded entities

• EU represents 24%

• Asia represents 11%

• Africa represents 1%

• Australia represents 1%

Source: Coverager


Funding by innovation and technology

Source: Coverager


Growth and innovative businesses model transformation

4x

17x

3x

1.5x

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Expanded/were expanding channels Developed/were developing new businessmodels

Developed/were developing new products Replaced/were replacing legacy systems

% w

ho

sai

d t

hei

r co

mp

any…

Companies that had Lower Growth in past year (1-6) Companies that had Higher Growth in past year (7-10)


NEW INNOVATIONS

Market Trend Disconnects: Knowing vs. Planning vs. Doing

▶ Pace of change▶ Emerging tech▶ Customer expectations▶ Business models▶ Competition from

outside the industry▶ Digital▶ Legacy systems▶ Data & Analytics▶ Security▶ Talent

Hits

▶ Competition from inside the industry

Misses

KNOWINGWhat companies are

worried about

PLANNINGWhat companies’

priorities are

DOINGCompanies’ responses to

changing market

▶ Customer experience▶ Digital strategy▶ Product innovation▶ Channel expansion▶ Legacy replacement▶ Data & Analytics▶ Cost reduction

Hits

▶ InsurTech engagement

Misses

▶ Business model dev.▶ New market segments▶ New LOBs

Borderline

▶ Product innovation▶ Channel expansion▶ Legacy replacement

Hits

▶ Sharing economy, Tech for well-being, Gig economy, Healthcare

▶ Chatbot, Payments, AI, Wearables, Blockchain, Drones, Gamification, Connected cars & homes, Driverless cars, 3D printing

Misses

▶ Customer experience▶ Business model dev.▶ Demographics

Borderline

REALITY

▶ “New” Issues

▶ “Traditional” Issues


Race to the Future – Implications & Options

MA

RK

ET

DR

IVE

RS

Modernization / Transformation Programs & Cloud

Keep & Grow Existing Business -Transform & replace legacy

Optimize existing business while creating new

Digital Front-End and Engagement

New Business Model for New Generation of Buyers

Greenfield & Startup Initiatives

Insurance ranks at the bottom overall as compared to other businesses /

industries

Online and national retailers set the standard for all industries, creating the

“Amazon Effect”

Traditional business models, processes, channels and products rapidly

irrelevant, opening door to fresh, culture-savvy competition

Millennials, Gen Z and increasingly Gen X highlight a gap between traditional

insurance and what is needed today and in future

Insurance NPS ratings are 40-60 points behind other industries like online

retailer Amazon

Digital first, multi-channel model is critical for insurers to remain relevant, let alone

competitive

Use and behavior drive needs and expectations toward new, innovative

products

Insurers who do not develop new products risk loss of market share and customers at

a an increasingly rapid pace


www.majesco.com


Thank You

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www.majesco.comDenise [email protected]

Documents

Future Trends 2017: The Shift Gains Momentum · A major market shift –Driving a revolution of disruption and change Silent Boomer Gen X Millennial Gen Z Digital Age INDUSTRIAL AGE