Post on 12-Sep-2021
© CELENT
DELIBERATE INSURANCE INNOVATION
Placing the right technology bets to succeed in hypercompetitive times
Craig WeberCEO
cweber@celent.com
1© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
Pressure on financial results
April 15, 2013
9.63%
4.33%
118
92
80
90
100
110
120
0%
2%
4%
6%
8%
10%
12%
1980 1990 2000 2010
Combine
d Ra
tios (P/C)
Return on Invested
Assets (LH
)Hu
ndreds 30+ Years of Insurer Performance
Source: National Association of Insurance Commissioners (NAIC)
2© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
But at least our volume is good?
April 15, 2013
0
20
40
60
80
100
120
140
160
180
Individual Group Credit Individual Group Credit
New Purchases In Force
Thou
sand
sLife Insurer Policy Counts
2001 2011
‐3%‐4%
‐1%
‐4%
‐4%
‐7%
Source: National Association of Insurance Commissioners (NAIC)
3© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
Why look to technology?
April 15, 2013
High Performance
Investment Results
Underwriting
Operational Excellence
Scale (Cost &
Capabilities)
Customer Quality
4© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
The bar is delightfully low
April 15, 2013
7.40
7.12
6.48
6.43
6.37
5.41
4.82
4.17
4.14
2.65
Government…
Traditional Retailers Without Web Sites…
Insurance Companies…
Securities & Investments Firms…
Healthcare Providers…
Utilities…
Telecommunications…
Banks…
Traditional Retailers With Web Sites…
Online Retailers…
Please rank the following industries in terms of their ability to deliver a great shopping or service experience by smart use of technology.
5© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
Insurance innovation examples
• Self-service (e.g., FNOL reporting)
• Multi-tiered pricing
• Mobile check deposits
• Direct/internet selling
• Predictive modeling
• Usage-based insurance
April 15, 2013
6© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
Three technology themes driving innovation
1 Ubiquitous data
2 User expectations that match technology capabilities
3 Industrialisation of IT at scale
7© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
#1: Ubiquitous data: Sources
Fashion
Sports
Fashion
Sports
Fashion
Sports
Fashion
Sports
8© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
#1: Ubiquitous data: Opportunities
The opportunity?Potential action?New world of data
• Check coverage• Evaluate adequacy• Understand propensity to buy
• Up-sell • Cross-sell
• Evaluate patterns of use• Understand interactions • Match cover to use/interactions
• Risk mitigation• Retention
• Timely, relevant risk advice• Influence behaviors• Incentivize an active healthy
attitude to risk
• Risk avoidance• Service • Reputation/fostering
loyalty
9© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
#2: User expectations
Understand and respond to what is said
Perform image
recognition on videos
and pictures
Allow applications to augment their vocabulary
and services
Understand what is said
in the context of what is
visible
Technology will do more of the work
10© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
1970-1995 1995-2012 2013-2017
• Custom, vertical applications • Transaction oriented• Single channel• Internal user focused• Hosted internally
• Multiple distributed applications• Package and custom build• Service oriented/open• Multi-channel• External and internal user
focused
• Business processes are orchestrated across heterogeneous services
• All applications are treated as external services
• Service selection is a joint business/IT responsibility
“All-in-one”application
Data
Orchestration
Enterprise Systems
Channel Systems
Product Systems
Data
#3: Industrialization of IT
11© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL April 15, 2013April 15, 2013
Case Studies
12© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
• Short term, simple insurance sold via mobile phone in Japan to cover potential risks from sporadic and short-term events
• Lines: sport, travel insurance, and one day auto
• NTT Docomo handles sales and premium payments, Tokio Marine & Nichido responsible for u/w policies and dealing with claims procedures
• System automatically fills information about its subscribers from Docomo’sdatabase
• Customer only specifies the insurance type and time period. Premium is included in the subscriber's phone bill
Case Study: One-Time Insurance
Business logic Comments
• Coverage tend to be for short periods, and usually around a few hundred yen in price (US$4.00)
• Demonstrates consistent philosophy in action (product simplicity, customer-focused delivery, ease of use)
13© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
• Friends provide mutual coverage for deductibles
• The more friends, the larger the coverage
• All friends advance their minimum commitment
• Every individual gets a bonus for fixed cost savings – the more friends, the bigger the bonus
• A traditional insurance company acts as a “reinsurer” to cover tail events
Business logic
• Exploits insurance deficits:
• Only 30% of premium for tail events, rest for fraud, sales, administration, small claims
• Idea: mutual cover of small claims, reinsure the real risk
• Build on current trends
• Social networks
• Free service
• Darwinist approach: trust among friends prevents fraud
Comments
Case Study: Managing the Risk Pool
14© 2012 CELENT, a Division of OLIVER WYMAN CONFIDENTIAL
Case Study: Pay As You Drive
• Targeted at 17-25 year old drivers
• Researched in 2010, piloted in 2011, launched in 2012
• Developed with Cranfield University and Williams Formula 1
• Rapid growth - $80MM GWP in 2013
• Loss ratio under 70
• Partnered with RSA
Business logic Comments
• Real-time feedback, used to condition behavior
• Delivery tools that match real-world behaviors of target market
• Willing to rethink product parameters, e.g. canceling policies for certain behaviors