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August 2016
Introduction to InsurTech
ApplicationsWhat is InsurTech• Insurance industry is undergoing a
profound change where any advances in technology are incorporated in the insurance sector.
• In recent years, many insurance companies are building up their technology landscape and evolving their business strategies due to the rise in InsurTech start-ups.
• From the graph below, we are able to see an the trend of increasing deals and investment funds in InsurTech.
Source: Startupbootcamp, what is an Insurtech startup? [Infographic], 2015
Insurance Technology
2
InsurTech
4Sensors
ProvenanceVehicle TelematicsAsset and Home
Security
I o T
1
Digital Claims ProcessOnline Policy Market-place
Omni ChannelsCRM
Customer Engagement
6Pay Per Use InsuranceDynamic
UnderwritingPersonalised
PackageRisk Mitigation
Data Analytics
5Algorithm Asset
ManagementPension ManagementDigital Savings Plans
Wealth Management
2
Digital ContractsIdentity Verification
Automated Compliance
Law&Regulations
3Fraud DetectionCyber Breach
Risk ManagementData Storage
Information Security
3
InsurTech: Innovations & ApplicationsTechnological innovation has led to more opportunities for the insurance industry
Reduce Costs
Improve Efficiency
Create Innovative Products
New RevenueStream
IoT’s Impacts on the Insurance Industry • Detect and analyze data trends by aggregating sensor
data• Benefit from more real time risk data enabling tailored
products, sales, underwriting and pricing• Increase quality of life through intelligent vehicles,
buildings, healthcare
IoT Changes the Business of Insurance• Change in risk profiles• Change in product/organizational profiles• Change in business models
InsurTech: Innovations & Application
Financial• Gov. Spending• Health Reform• Alternative
Financial/ Business Models
• Public/Private Partnerships
Demographics• Aging
Population• Chronic
Diseases• Communicable
Diseases• Access• Consumer
Engagement
Operational• Infrastructure• Waste• Alternative
Care Delivery, Operational Models
• Talents• M&A
Regulatory• Patients and
Product Safety• Cybersecurity• Fraud & Abuse
Innovation• Medical
Advances• Digital
Connected Health
• Data/Analytics
DefragmentationEffective,
Efficient and Equitable Care
Population Health / Volume
to Value
4
Technological innovation has led to more opportunities for the insurance industry
Health Technology
Company assess risk
of accident
Driver’s behaviour
monitored by telematics
Information transmitted to
insurance company
Charges insurance premium
accordingly
InsurTech: Innovations & Applications
1 2 3 4
• Responsible Driving: Drivers who drive responsibly will be charged lesser premiums.
• Customer engagement: Enhanced direct interaction with the end user.
• Subcriptions: Global insurance telematics subscription could increase by 1800% in the next 5 years.
• Accident Rates: Trials conducted show that signing up for telematics insurance had a 20% lower
accident rate.
Impacts
5
Technological innovation has led to more opportunities for the insurance industry
Auto Technology
Internet of Things (IoT)The Development of IoT
197510,000 (Connected Devices)
2003500 Million
20092.5 Billion
201410 Billion
202030 Billion
…which has triggered an explosion in the number of computing devices.
6
Everyday objects now have network connectivity…
IoT: Snapshot Connected Devices
6.3 Billion 6.8 Billion 7.3 Billion 7.6 Billion
500 Million 12.5 Billion 25 Billion 50 Billion
0.08 1.84 3.47 6.58
World ProportionConnected
Devices
Connected Devices
Per Person
More Connected
Device than
people
2003 2010 2015 2020
7
IoT: Value LoopValue Loop
MagnitudeScope Scale Frequency
RISKSecurity Reliability
Accuracy
TimeLatency Timeliness
Act
Create
ExchangeAggregate
Analyze
Augmented Behavior
Standards
Sensor
Augmented Intelligence
8
Network
9
IoT: Applications
Environmental
Identity &Tracking
Farming
Connected Cars
Energy Grid
PersonalizedInsurance
Social &Local
Healthcare
Logistics &Shipping
BuildingManagement
HomeAutomation
ApplicationsWhat is Smart Home?
A smart home, is a home that incorporates advanced automation systems to provide the inhabitants with sophisticated monitoring and control over the building's functions
IoT: Smart Home
The Smart Home
2010 2011 2012 2013 2014 2015 2016 20200
2
4
6
8
Smart Home Market Germany (€ Billions)
Smart Home Installation Smart Home ServicesSmart Home Hardware
Smart Security
Smart Temperature
Smart Lighting
Smart Appliances
Smart Entertainment
Smart Safety
10
IoT: Artificial IntelligenceArtificial Intelligence is a multi-dimensional subject area
Aspects of Artificial
Intelligence
Knowledge Representation
Machine Learning
Visualization
Deep Learning
Natural Language Processing
Natural Language Generation
Deep Q&A Systems
Virtual Personal
Assistance
Social Network Analysis
Graph Analysis
Sensors/ Internet of
ThingsRobotics
Recommender Systems
Simulation Modelling
Soft Robotics
Audio/ Speech
Analytics
Image Analytics
11
12
IoT: Insurance Industry
Area IoT Applications Insurance
Auto Smart cars; telematics Improved risk assessment, reduced losses/loss severity
Home Smart house; safety & security, flood
Improved risk management, reduced losses/loss severity
Health Smart bodies; personal health devices
Improved health and wellness; reduced loss severity
Vehicles Smart trucks/fleets; telematics Improved driving safety, fewer and less severe accidents
Buildings Smart builidings; safety & security, physical hazard detection Improved risk management, loss mitigation
Workers Comp Smart workplace; health & safety Reduced injuries; improved risk controls
Health Technology
Six Disruptive
Trends
1. Chronic Disease Crisis
Customers are looking for solutions that provide more efffective healthcare outcomes and economic value.
2. Better Outcomes, Values
Payers, employers, governments not incentivized to change long-term behaviours.
3. M-Health Technology
Mobile solutions areIncreasinglypopular amongst patients and doctors.
4. Big Data RevolutionPulling together streams of information across different health entities to form one single data picture.
5. Customer Centricity
Connecting insurers to customers for greater transparency and freedom of choice.
6. Underwriting
Constraints on income, profitare putting the underwritingbusiness under pressure.
Healthcare is entering the era of technology, but insurance companies aren’t…
13
Health Technology: Benefits Leveraging technology and data to make insurance more transparent
Simple,Fast,
Integrated
Lower Capital Expenses
• Fewer human resources
• Lower administrative costs
More Economic• Cheaper
consultation fee cheaper claim
• Lower service cost
Patient Independence
• A mobile working solution guarantees easier access to health information
14
Health Technology: UnderwritingApplying Statistical Techniques to Past Data to Find New Health “Predictors”
Agent/Broker DataSuitable if the data is held by all brokers in a consistent way
General Insurance DataSuitable for predictive analytics of risk, purchase and lapse; but this data is typically quite shallow, with only a few variables held consistently on each customer
Third Party Data SourcesThese can have very strong predictive power in markets where the data source has good breadth and depth
15
Health Technology: Strategy
Process &Operations
In-forceManagement
Capital, Risk& Finance
Customer & Marketing
Sales & Distribution
Pricing &Underwriting
Strategy & Growth
Future impacts of changing consumer demographic and socio-economic forces impact demand for our products?
What about macro-economic and regulatory changes?
How can we best utilize social media to acquire new customers and facilitate relationships with the existing customers?
How can be improve customer loyalty?
What is the growth opportunity of our products and services?
Can we optimize pricing by capturing new health data to apply to our underwriting process?
How should we structure customer experience through different sales channels to maximize sales and profits?
What are the implications of refocusing distribution channels?
What operations or technology initiatives will reduce costs without limiting our growth?
How do we optimize the multi-channel customer service experience for each of our segments?
How do we improve our policyholder persistency?
How do we analyze mortality and morbidity results to improve pricing?
How do we identify emerging experiences more accurately?
What should be our capital allocation strategy in order to respond to different economic and regulatory changes?
How do we optimize our portfolio of investments given our external constraints?
16
Auto Technology
Telecommunications Informatics
Telematics enables wireless data communication in your vehicles
Web Access
Cellular
Security
Repair Info& Diagnosis
RoadsideAssistance
Navigation& Directions
Music & Entertainment
17
Auto Technology: TelematicsInsurance Telematics
Geo-Location and trip data; Driver scoring; etc.
Web based application; Social media engagement; etc.
Emergency, medical and roadside assistance; Vehicle tracking; incentive and loyalty schemes; etc.
Risk rating engine, algorithms and scorecards; Driver
behavior analysis; etc
Different driver detection;Theft and hi-jacking Detection; etc.
Vehicle damage and injuryEstimations; Vehicle usageActivities; etc.
InsuranceTelematics
Risk Profiling
Driver Style
Profile
Vehicle Claim Re-
constructionReal time
Driver Behavior
Consumer Interaction
Lifestyle Services
18
Auto Technology: BenefitsBenefits of Automotive Technology
For Insurers For Customers
Reduce customer acquisition costInsurers get early access to potential customer and
learn more about their actual risk
Reduce claim costs & fraudInsurers benefit from self selection, reduced fraud
& improved claims management
Increase customer life-time-valueInsurers increase customer lifetime by creating engagement via unique technology solutions &
improved customer experience
Better rates for safe driverCustomers can learn about their driving style & how to improve in order to get better pricing
Reduced risk & better assistanceThey receive an individual premium based on their driving behavior & benefit from tailored services
Fringe BenefitsCustomers get a better & additional services. The insurance company becomes a partner instead of opponent
19
Investment Trends
20
Source: Accenture
Global investments in InsurTech are surging
• Number of investors willing to invest with insurance startups have increased by 40% in 2016.
• Q1 of 2016 saw a record high of more than 45 deals totalling more than $650 million in funding.
• Total InsurTech startup investments in 2016 is on track to top investments from last year by over 42%.
• Most prominently, US-based startup, Oscar, led by Fidelity Investments, received over $400 million in funding from participants like Goldman Sachs and Google Capital.
80% of funding went to non-life insurance innovation
6% of all underwriting jobs will give way to automation in the next 5 years
67% of all InsurTech
deals have been in insurance automation
Investment Trends: Changing Landscape
21
Source: Accenture
Collaboration vs. Disruption
• Insurers are no different from other financial sector players when identifying top threats to their business models, and the potential of FinTech in the long run.
• Three out of four insurance companies believe that some part of their business is at risk of disruption, while 65% of insurers are actively dealing with InsurTech solutions.
• In the past year, 70% of global investments went into ventures that enhanced the propositions of existing incumbents
• Over $1.4 billion of funding have gone into insurance startups, intermediaries and reinsurance companies in 2015.
Investment Trends: Disruptions Drivers
22
Source: Accenture
New needs for radical innovations in insurance solutions
Customer ExpectationWidespread adoption of new consumer technologies has created new needs for and
expectations of insurance solution and interactive channels.
Pace of Innovation With the demands of the shared economy, usage-based models, internet-of-things (IoT),
autonomous cars, and wearables, therein lies possibilities of radical innovations and new
business models.
Startup EmergenceWith easy access to open source frameworks, scaled cloud computing and development
on-demand, technology barriers to entry have been lowered – which new players are
able to take advantage of.
Customers now expect personalized insurance solutions. One size simply does not fit all anymore.
Usage-based models are partially addressing these expectations, but the sharing economy is also challenging existing, more traditional insurance products.
New players are also able to work from a clean slate and leverage on a variety of available resources to fill market gaps.
Overview Companies
MetroMile - Entered a partnership with Uber that allows them to switch from personal to Uber Insurance.
USAA - Invested $24m in Automatic Labs, a telematic platform with a full suite of integrated apps (including wearables)
Sureify - Developed a platform that allows insurers to underwrite life insurance based on lifestyle data inputs.
Key Opportunities #11. Changing Needs
23
2. Augment existing capabilities
The insurance industry historically has included intermediaries, service providers and reinsurers.
In most cases, the carrier has led the business relationship because of its retail market position and scale.
However, companies increasingly are peers. Accordingly, joint ventures and partnerships are a good way to augment existing capabilities and establish symbiotic relationships.
Overview Companies
BIMA Mobile – Partnered with mobile telecom companies to provide life insurance solutions to uninsured segments in less developed countries.
AXA – Acquired an 8% stake in Africa Internet Group for €75million, opening new opportunities for the company in unpenetrated markets.
Flock – Offers free HR and benefits solutions to fellow B2C market entrants.
Key Opportunities #2
24
3. Leverage data analytics to generate risk insights
Established insurers traditionally have had the advantage over prospective newcomers of being able to leverage many years of detailed risk data.
However, data – and new types of it – now can be captured in real-time and is available from external sources.
As a result, there are new market entrants who have the ability to generate meaningful risk insights in very specific areas.
Overview Companies
Mnubo - Provide analytics that generate insights from sensor-based data and additional external data sources like telematics and real-time weather observation.
American Family - investing in drone technology in order to facilitate real-time data collection and explore new approaches to access and capture risk data.
Key Opportunities #3
25
4. Use new approaches to underwrite risk and predict losses
Protection-based models are shiftingto more sophisticated preventivemodels that facilitate loss mitigationin all insurance segments.
More deterministic models like the ones that now exist for crop insurance, are starting to emerge and new entrants are offering both risk prevention (not just loss protection) and a more service-oriented delivery model. For example:
Overview Companies
Discovery - managing genetic risks in advance can benefit both the end-consumer and the insurer with the aim of avoiding long-term health problems and associated expenses.
Nauto - Offers visual context and telematics with actionable information about driving behavior, including distracted driving. Aims to help insurers design new pricing strategies and pinpoint areas of premiumthat they otherwise may not notice. leakage
Key Opportunities #4
26
5. Enable businesses with sophisticated operational capabilities
Effective core systems enable insurers to operate at a large scale. Because of cost, establishing these systems has traditionally been a barrier to market entry.
However, access to cloud-based core solutions has facilitated scalability and flexibility. Developments like this, combined with new developments like robotics and automation, have provided new market entrants compelling market differentiators.
Overview Companies
OutsideIQ - Offers artificial intelligence solutions via an as-a-service underwriting and claims workbench that uses big data to address complex risk-based problems.
Tyche - Offers a solution that uses analytics to help clients estimate the value of legal claims. In addition, automating claims can improve efficiency and also effectively assess losses.
Key Opportunities #5
27
Property Casualty/Auto Infrastructure/ Backend
Data Analytics/ IoT
Life/Health Insurance
Enterprise Insurance
User AcquisitionP2P Insurance Product Insurance
Reinsurance
Blockchain
Customer Engagement
Comparison/ Marketplace
InsurTech Landscape: Global
28
InsurTech Landscape: APAC
Property Casualty/ Auto Infrastructure/Backend
P2P Insurance
Data Analytics/ Iot
Enterprise Insurance
Wealth / Robo Advisory
Comparison/ MarketPlace Life/Health Insurance
Product Insurance
Consumer Engagement
BlockChain
Bank Bazaar
29
30
27-28 September 2016Suntec Convention & Exhibition
Singapore
www.InsurTechconf.com
InsurTech 2016 aims to be the knowledge-exchange platform to foster synergies among market players to find solutions to implement and promote best innovative insurance practices in a collaborative, open and transparent manner.
InsurTech Conference
@insurtechconf
