© 2016 Majesco. All rights reserved1
Future Trends 2017:The Shift Gains Momentum
IASA Spring Meeting
April 2017
© 2016 Majesco. All rights reserved2
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
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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
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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
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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
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UnderwritingProductSales &
MarketingDistribution Quote
Issue & Service
Claims Reinsurance
New entrants and companies leveraging digital channels and technologies for new business models
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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
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Client Journey and NPS Impact
Source: The Rise of the New Insurance Consumer Research
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Implications for Insurers
Demographics
Economic challenges
Technology
New behaviorsNew needs
New expectations
Simple Affordable
Fast
TailoredTrusted
Personal
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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
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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
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Insurer’s response to business trends is growing…
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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
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Insurer’s response to technology trends is weak
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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
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Funding by innovation and technology
Source: Coverager
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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)
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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
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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
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