the geospatial future of insurance

Hugh Saalmans, IAG

Location Science Manager

hugh.saalmans@iag.com.au @minus34

“May you live in

interesting times…” We are in the age of digital disruption: a customer-led, data driven,

technology enabled age

An age where your ability to empower customers and citizens will

determine your future success

An age where change is the only constant

“May you live in

interesting times…” ancient curse

IAG

(digital) disruption

the enablers

insurance is changing

the geospatial future of insurance

IAG is ANZ’s largest general insurer

IAG is ANZ’s largest general insurer

With revenues approaching $11bn and $2tn in assets

protected; including millions of homes & cars and

100,000’s of businesses

Our brands date back to

almost 160 years ago

We’re heavy users of geospatial tech and data, across

many areas of the business.

The key things we use geospatial for - are fundamental to

insurance

For example:

2012 flood risk data

Risk based pricing: using a combination of GNAF, natural peril

data and HERE’s road data and POIs, for example, to determine

each customer’s individual risk at the property level

Asset Data: using building & property data, such as PSMA’s

Geoscape, to improve risk modelling & simplify the quotation

process for our customers

Major Event Mapping: using live weather & bushfire feeds to

be alerted to disasters before they happen; to respond more

quickly to impacted customers

Australian Business Roundtable: using our geospatial & peril modelling

expertise to generate reports into the cost of disasters through the

Australian Business Roundtable.

The Australian Business Roundtable champions disaster resilience &

community safety and is comprised of the organisations above

IAG is ANZ’s largest general insurer

and…

IAG is ANZ’s largest general insurer

and…

A customer led, data-driven

organisation

The Group’s strategy is to deliver great

customer experiences by leveraging

our market leadership to create value for

our customers, people, partners,

shareholders and the community.

STRATEGY

1.maintain leading market position in personal and

commercial insurance in Australia & New Zealand;

2.grow Asian footprint and its earnings contribution;

3.accelerate digital transformation; and

4.create deeper customer insights & an agile

response

PRIORITIES

1.maintain leading market position in personal and

commercial insurance in Australia & New Zealand;

2.grow Asian footprint and its earnings contribution;

3.accelerate digital transformation; and

4.create deeper customer insights & an agile

response

PRIORITIES

Why are we focussing on this…?

disruption

IAG is focussing on digital transformation and creating

deeper customer insights to limit the impact of

disruption to our business.

What is disruption? – there are 2 perceptions…

disruption?

First - there’s this big, scary digital wave coming that could

impact your industry, but you haven’t worked out:

Whether it’ll impact your organisation? How it’ll impact

your organisation? How big the impact will be? or How to

mitigate it’s impact?

disruption?

Or there’s this exciting opportunity to ride the digital wave and:

- create a new service that fills an existing gap in the market; or

- create a new way of doing business that provides superior

customer experiences, and gains you market share

Perceptions aside,

What is disruption?

Changes enabled by digital

technologies; occurring at

a speed & scale that

disrupt existing ways of

doing business

What it’s doing is shifting the power of

choice from institutions to the individual

Which is why this era is also referred to as

“the age of the customer”

disruption may be tech enabled,

but it’s still people led

At disruption’s heart is a deep understanding of what people want, what

motivates them, their personal preferences, their lifestyle choices & how

they want to be treated by an organisation

Traditional energy providers offer:

Lock-in plans

Limited billing options

Pricing transparency issues

Result: Low customer satisfaction

case study

The disrupter offers:

No lock-in

Purchase on the go (via app)

Clear pricing & specials

Result: Industry leading satisfaction

case study

the enablers

What’s enabling disruption, from both a

technology & work practices point of view?

the enablers smartphones

DevOps

infrastructure as code

open source

data & analytics

smartphones

In under 10 years, smartphones have become all pervasive

Pope Benedict’s appointment in 2005…

Pope Francis’ appointment in 2013…

With the smartphone came the expectation that your

services are available on any device, at any time.

Smartphones, and subsequently tablets, fundamentally

changed how easily and quickly customers expect to

interact with your organisation

DevOps

DevOps is a approach that gives

developers full ownership of an

application or API from the first line

of code, through to testing,

deployment & maintenance

DevOps

It allows organisations such as Facebook, Uber & Google

to rapidly create & update their apps and APIs at a speed

and frequency that wasn’t previously possible

DevOps

The cornerstones of DevOps are:

• Version control, task management &

collaboration using tools such as Git & JIRA

• Automated testing and deployment using

tools such as Atlassian’s Bamboo

infrastructure

as code Complementary to DevOps is the ability to

script the repeated and rapid creation of

server resources, at any scale.

The foundation of this is cloud computing,

virtual machines and containerisation.

What’s containerisation?

infrastructure

as code Containerisation allows you to run single

purpose software inside a stripped down

operating system, making it highly reliable

and less resource hungry.

By chaining containers together – e.g. a db

container, a geo server container & a web

server container – you can have your geo-

app or API running in no time at all

infrastructure

as code

The best known container platform is Docker,

which runs well inside the best known cloud

computing platform – Amazon

infrastructure

as code Here’s a sample Docker script to build a

Geoserver container from scratch in a few

minutes. Using a few more scripts you

could deploy that container to Amazon,

across 100 servers if you want to.

No system architect required, no network

administrator, no hardware procurement!

open source

open source

Open source allows you to deploy your apps and APIs cost effectively

It’s another key reason why startups and disrupters have low

operating costs

Zero licensing costs, regular updates, proven reliability & scalability,

established developer & user communities, tools that are designed for

DevOps & infrastructure as code – open source ticks many boxes

open source

It’s the combination of open source + code based infrastructure +

DevOps that allows Facebook to change 10 lines of code and then

redeploy their app globally on 10,000 servers, several times a day if

needed!

…and here’s a big threat - as more organisations move towards a

more disruptive approach - this combination will slow the growth of

the IT industry as organisations become more self-sufficient

…and the geospatial industry will not be immune to this!

data & analytics

In the disruptive world – data and your ability to use data,

through analytics, makes the difference between bad,

good and great

Having large amounts of your own customer data can be

an advantage here, but only if you can access and use it!

If you’re a start-up, then you’re going to have to lean

heavily on external datasets – and this is where open

data, and open Government data in particular becomes

valuable.

data & analytics

The best open data example in Australia

being the PSMA’s recently opened GNAF

By having access to a national,

geocoded, validated address set –

disrupters can now validate their

customer data and analyse it down to the

property level, with minimal startup costs

A powerful capability!

data & analytics

Other good examples of open data

include:

- Weather and bushfire alert feeds from

BoM and fire authorities

- The entire Landsat library from GA and

others

data & analytics Your customer data will be similar to

your competitors; and everyone has

access to the same open data…

So, your analytical capability needs to

be the thing that separates you from

your competitors

In other words: the better your analysis

driven insights are into your customers

and your organisation - the better your

decision making will be

insurance

is changing Recent research from PwC found that the global insurance industry ranked

second only behind media and entertainment as the industry most

significantly affected by technological change.

When you couple that with consistently low customer satisfaction across the

industry – you realise that disruptors have both the tech and the motivation

to enter the market

There are a lot of disruptors targeting the insurance industry right now.

There’s obviously a lot of hype surrounding Insuretech, but there’s also a

lot of money being thrown at it

In 2013, the total funding for InsurTech startups was US$600 million. In

2015 it was over US$1.4 billion!

trends On-demand, micro & P2P insurance

Usage based insurance

• Telematics

• Home sensors (IoT)

Autonomous vehicles

Improving the customer experience

on-demand, micro

& P2P insurance

In an effort to make insurance more

meaningful and affordable…

You can now get time based

insurance in the UK for your car

e.g. I want to insure my car from

9am to 12pm on Saturday

on-demand, micro

& P2P insurance

You can also now insure

individual items of value,

(known as micro-insurance),

through sites such as IAG’s

Insurance4That

on-demand, micro

& P2P insurance

Peer 2 Peer insurance is also growing

with German based Friendsurance

starting up in Australia soon

It’s based on the simple premise that

customers pay a premium into a

communal pool, and then get some

money back if the pool isn’t emptied

throughout the year by claims

on-demand, micro

& P2P insurance For P2P insurance to work it needs

accurate, property level risk ratings

(as IAG’s done for a number of years)

using spatial data

This is because each customer’s

contribution is based on their

individual, location based risk

Again, this highlights the value of

open datasets such as GNAF

UBI - telematics

UBI - telematics

Telematics, or pay as you drive, products account for ~5% of the US &

UK personal motor insurance markets and have a small penetration in

Australia through products like Insurance Box

UBI - telematics

UBI - telematics Whilst the data collected from telematics sounds like a gold mine of

location enabled, behavioural big data - the reality is that the product in

Australia is niche and self selecting. Safe drivers are mainly the ones

using the products.

Also, most of the risk of each driver is primarily based on how many km

they drive, not how they drive. So the behavioural insights are limited

The impact of telematics in the insurance industry is real, but not on the

same scale as autonomous vehicles…

UBI - home sensors

UBI - home sensors

Home sensors are already impacting the insurance market - both Liberty

Mutual in the US and Allianz in Germany have partnerships with Google

Nest and Panasonic.

Install a home safety or security device, hook it up the internet and get a

discount on your insurance!

UBI - home sensors

UBI - home sensors

But this is where it gets interesting…

As smart doorbells, home security and weather sensors become

commonplace in Australian & NZ homes over the next 5-10 years…

We can foresee a future where there are 100,000’s of weather and

security sensors across each city!

UBI - home sensors

Imagine what impact that data will have on:

• Insurers’ understanding of risk; and

• Emergency responders & insurers’ ability to understand what’s

happening in a disaster;

As well as potentially improving weather forecasting itself

Autonomous

vehicles

Autonomous

vehicles

A 2015 KPMG report estimates that autonomous vehicles will reduce the

size of the personal motor insurance market by 60% within the next 25

years.

Given the personal motor insurance is the most profitable product line in

general insurance – the impact of this will be profound

Autonomous

vehicles

The effect of this will start to be felt in the next few years as semi-

autonomous vehicles fitted with sensors & vehicle to vehicle (V2V)

communications enter the market

Autonomous

vehicles To offset this steep decline in revenue - insurers are now turning to 3 key

areas for growth:

1. Liability insurance for autonomous vehicle manufacturers and car

share service providers;

2. Advanced customer analytics to help improve the customer

experience; and

3. A more advanced understanding of home insurance risk

Autonomous

vehicles

A more advanced understanding of home insurance risk is heavily

geospatial and will rely on acquiring large amounts of property asset data

(such as PSMA’s Geoscape)

This will allow us to start asking complex questions like – “what’s the

chance of the tin roofed house next door damaging our customer’s house

in a storm” or “what’s the tallest tree that could fall on the house”

Autonomous

vehicles

The data that autonomous vehicles capture is big!

They capture and analyse up to 1Gb of LIDAR, radar, imagery & high

precision GPS data per second

Autonomous

vehicles

Now, let’s jump to the future - 15-20 years from now when there will be

100,000’s of autonomous cars on the road capturing this data...

…if processing power and wireless internet speeds continue to grow

exponentially over this time – then we can imagine a future where entire

city streetscapes will be mapped in 3D, every day

What impact will that have on insurance and geospatial industries?

the customer

experience

Right now, the smart insurers are focussed on improving their processes

and capabilities to enable both incremental and groundbreaking changes

to the way customers experience their brands

I’d like to finish off with a couple of recent, real world examples of this…

the customer

experience

A year ago, a combination of severe storms due to an East Coast Low,

combined with a severe hailstorm 7 days later – left us facing ~50,000

claims – the largest number in the history of IAG

This would’ve have normally taken over a year to process and settle

Instead, we were able to settle 90% of all claims in 90 days (the target

we quietly set ourselves)

the customer

experience

This was achieved by re-engineering our processes, the rapid

deployment of micro-sites on our web site and bringing analytics into the

process to better understand how to help our customers…

the customer

experience

…as well as using new geospatial techniques to visualise the impact

the customer

experience

More recently, we became the first insurer in Australia to deploy drones

after a major event

After the Wye River bushfires last Xmas, the area was cordoned off due

to asbestos contamination

the customer

experience

With our assessors unable to get into the area, IAG got permission from

the CFA and our customers to fly drone missions over the area and

capture images of the damaged & destroyed homes

This allowed us to help customers who had lost everything by giving

them some certainty about their future soon after the event

I hope some of the themes around customer centricity &

technology enablement - and their impact on insurance &

the geospatial industry - have resonated with you and got

you thinking about the future of your organisation

I’d like to leave you with this quote, which best summarises

how to respond to the Age of Disruption

“Don't create a

digital strategy…

Create a strategy

for the digital age”

thank you

Hugh Saalmans, IAG

Location Science Manager

hugh.saalmans@iag.com.au @minus34