Evolution and Revolution in a Digital World · PDF fileSeptember 8, 2014 Insurance and...

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Transcript of Evolution and Revolution in a Digital World · PDF fileSeptember 8, 2014 Insurance and...

  • Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. * = This Research Report has been partially prepared by analysts employed by non-U.S. affiliates of the member. See page 2 for the name of each non-U.S. affiliate contributing to this Research Report and the names of the analysts employed by each contributing affiliate. += Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

    B L U E P A P E R

    September 8, 2014

    Insurance and Technology Evolution and Revolution in a Digital World The insurance industry is on the brink of major technology-driven change. This creates exciting opportunities for insurers that are keen to embrace it, but significant risks for the laggards. While some aspects of technological change are common to many industries, several challenges are specific to insurance.

    A step change in consumer engagement is needed. Our global survey suggests that consumers are less satisfied with their digital insurance experience than with other industries. They would like a simpler, more direct relationship with their insurer.

    Digitisation of distribution and operations is vital for insurers to stay competitive. Digitally born insurance models can gain an advantage over traditional models, reducing expenses (by ~10% of premiums) and claims (by ~8%).

    We could see disruptive models emerge, enabled by the Internet of Things, Big Data and the ability to access broader ecosystems than before. These could have a dramatic impact on the insurance industry all along the value chain, changing the nature of risk assessment and management, as well as the consumer engagement model.

    We also see opportunities for technology players as insurers invest in digitisation. The major challenges, we think, will be in consumer channels and new data sources (Internet of Things, Big Data). Investment will also be needed in core systems to enable digitisation and cut costs. Vendors exposed to these areas should see strong growth.

    M O R G A N S T A N L E Y R E S E A R C H G l o b a l

    Jon Hocking1

    Adam Wood1

    Nigel Dally2

    Kai Pan2

    Ben Lin3

    Hideyasu Ban4

    Daniel P Toohey5

    Xinmei Wang1

    Francois Meunier1

    Sara Lee 6

    *See page 2 for all contributors to this report

    1 Morgan Stanley & Co. International plc.+ 2 Morgan Stanley & Co. LLC 3 Morgan Stanley Asia Limited+ 4 Morgan Stanley MUFG Securities Co., Ltd.+ 5 Morgan Stanley Australia Limited+ 6 Morgan Stanley & Co. International plc, Seoul Branch+

    BOSTON CONSULTING GROUP G l o b a l

    Michael Niddam

    Nicholas Barsley

    Jean-Christophe Gard

    Ugo Cotroneo

    Boston Consulting Group is an international management consulting firm. For more information, visit www.bcg.com

    Boston Consulting Group is not authorised nor regulated by the FCA and as such is not providing investment advice. Boston Consulting Group authors are not research analysts and are neither FCA nor FINRA registered.

    For disclosures specifically pertaining to Boston Consulting Group please see the Disclosure Section located at the end of this report.

    Morgan Stanley Blue Papers focus on critical investment themes that require coordinated perspectives across industry sectors, regions, or asset classes.

    http://www.bcg.com/

  • September 8, 2014 Insurance and Technology: Evolution and Revolution in a Digital World

    Morgan Stanley contributors Boston Consulting Group contributors European Insurance Jon Hocking1 +44 (0)20 7425 2307 [email protected] Maciej Wasilewicz1 +44 (0)20 7425 9104 [email protected] Marcus P Rivaldi1 +44 (0)20 7677 1464 [email protected] David T Andrich1 +44 (0)20 7425 2449 [email protected] Xinmei Wang1 +44 (0)20 7425 1868 [email protected] Janet Van Den Berg1 +44 (0)20 7425 4055 [email protected]

    US Life Insurance Nigel Dally2 +1 (212) 761-4132 [email protected] Hayley Locker2 +1 (212) 761-6271 [email protected] Laura Sanchez Bolanos2

    +1 (212) 761-1330 [email protected]

    US P&C Insurance Kai Pan2 +1 (212) 761-8711 [email protected] Quentin McMillan2 +1 (212) 761-3640 [email protected]

    Asia ex. Japan Insurance Ben Lin3 +85 2 2848-5830 [email protected] Jenny Jiang3 +85 2 2848-7152 [email protected] Sara Lee6 +82 2 399-4836 [email protected]

    Japan Insurance Hideyasu Ban4 +81 3 6836-5410 [email protected] Koki Tanaka4 +81 3 6836-5409 [email protected]

    Australia Insurance

    Daniel P Toohey5 +61 2 9770-1315 [email protected] Andrei Stadnik5 +61 2 9770-1684 [email protected]

    European Software Adam Wood1 +44 (0)20 7425 4450 [email protected] Sid Mehra1 +44 (0)20 7425 2686 [email protected]

    US Software Keith Weiss2 +1 (212) 761-4149 [email protected] Jennifer Lowe2 +1 (415) 576-23889 [email protected] Brian Essex2 +1 (212) 296-5569 [email protected]

    Asia Technology and Internet Philip Wan3 +85 2 2848-8227 [email protected] Tetsuro Tsusaka4 +81 3 6836-8412 [email protected] Shawn Kim6 +82 2 399-4940 [email protected] Parag Gupta7 +91 22 6118-2230 [email protected]

    European Semiconductors Francois Meunier1 +44 (0)20 7425 6603 [email protected]

    US IT Hardware Katy Huberty2 +1 (212) 761-6249 [email protected]

    Amsterdam Hanno Ketterer +31 20 548 5843 [email protected] Australia

    Sam Stewart +61 2 9323 5677 [email protected] Canada

    Benjamin Rehberg +1 646 448 7637 [email protected] Eric Brat

    +1 514 228 5815 [email protected]

    China

    Koh Loon Loh +88 6 2 8722 2028 [email protected]

    France

    Jean-Christophe Gard +33 1 4017 1135 [email protected] Gilles Fabre

    +33 1 4017 1453 [email protected]

    Germany

    Heiner Leisten +49 221 5500 5130 [email protected] Astrid Stange +49 211 3011 3202 [email protected] Christopher Freese

    +49 30 2887 1133 [email protected]

    India

    Alpesh Shah +91 22 6749 7049 [email protected] Israel

    Michael Niddam +972 3 793 1017 [email protected] Italy

    Ugo Cotroneo +39 02 65599 213 [email protected] Japan

    Yasushi Sasaki +81 3 5211 0670 [email protected] Netherlands

    Jan Willem Kuenen +31 20 548 5863 [email protected] Spain

    Miguel Abecasis +351 21 3214 846 [email protected] UK

    Nick Barsley +44 207 753 5621 [email protected] Miguel Oritz +44 207 753 3980 [email protected] Ralf Dreischmeier +44 207 753 5704 [email protected] US

    Benjamin Rehberg +1 646 448 7637 Rehberg[email protected] Chris Rittenmeyer -- [email protected]

    1 Morgan Stanley & Co. International plc+ 2 Morgan Stanley & Co. LLC 3 Morgan Stanley Asia Limited+

    4 Morgan Stanley MUFG Securities Co., Ltd.+ 5 Morgan Stanley Australia Limited+

    6 Morgan Stanley & Co. International plc, Seoul Branch+ 7 Morgan Stanley India Company Private Limited+

    See page 123 for recent Blue Paper reports.

    mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:+852%202848-5830:Ben%20Lin:Workmailto:[email protected]:+852%202848-7152:Jenny%20Jiang:Workmailto:[email protected]:+82%202%20399-4836:Sara%20Lee:Workmailto:[email protected]:+81%203%206836-5410:Hideyasu%20Ban:Workmailto:[email protected]:+81%203%206836-5409:Koki%20Tanaka:Workmailto:[email protected]:+61%202%209770-1315:Daniel%20Toohey:Workmailto:[email protected]:+61%202%209770-1684:Andrei%20Stadnik:Workmailto:[email protected]:%[email protected]:[email protected]:%[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:%[email protected]:%[email protected]:%[email protected]:%[email protected]

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    September 8, 2014 Insurance and Technology: Evolution and Revolution in a Digital World

    Table of Contents

    Executive summary ................................................................................................................................................................ 6

    Setting the scene .................................................................................................................................................................... 9

    Implications for insurers ...................................................................................................