InsurTech and How Actuaries Can Help Truong.pdfInsurTech and How Actuaries Can Help Buu Truong –...
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InsurTech and How Actuaries Can Help Buu Truong – Insight Risk Consulting [email protected] 24 April 2017
Transcript of InsurTech and How Actuaries Can Help Truong.pdfInsurTech and How Actuaries Can Help Buu Truong –...
InsurTech and How Actuaries Can Help
Buu Truong – Insight Risk Consulting [email protected]
24 April 2017
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Contents
• What is InsurTech?
• What do InsurTech firms do?
• Types of InsurTech
– Distribution & Customer Engagement
– Peer to Peer model
– Advanced Analytics
– Internet of Things
– Operations & Infrastructure
– New Products & Markets
• Why actuaries are still needed
24 April 2017 2
Colour palette for PowerPoint presentations
Dark blue
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Gold
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Mid blue
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Secondary colour palette
Primary colour palette
Light grey
R63 G69 B72
Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
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Light blue
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Violet
R128 G118 B207
Purple
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Fuscia
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Red
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What is InsurTech?
• InsurTech encompasses the
new start-ups and technologies
that are bringing innovation to
insurance.
• There is a thriving InsurTech
‘ecosystem’ in London which is
easily accessible and
welcoming.
• Commentators differ on how
revolutionary InsurTech will be.
Regardless it is exciting!
24 April 2017 3
Colour palette for PowerPoint presentations
Dark blue
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Gold
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Mid blue
R64 G150 B184
Secondary colour palette
Primary colour palette
Light grey
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Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
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Cyan
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Light blue
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Violet
R128 G118 B207
Purple
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Fuscia
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Red
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Orange
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Dark grey
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What is InsurTech?
• $1.7bn was invested in InsurTech
in 2016:
– US continues to dominate deal activity
(59%)
– UK only 5% of total
– Source: CB Insights
https://www.cbinsights.com/blog/2016-
insurance-tech-funding/
• Both insurance industry and non-
insurance industry backers.
• What is the perspective of the
incumbent insurers?
24 April 2017 4
Colour palette for PowerPoint presentations
Dark blue
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Gold
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Mid blue
R64 G150 B184
Secondary colour palette
Primary colour palette
Light grey
R63 G69 B72
Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
R0 G156 B200
Light blue
R124 G179 B225
Violet
R128 G118 B207
Purple
R143 G70 B147
Fuscia
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Red
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Orange
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Dark grey
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What do InsurTech firms do?
24 April 2017 5
Colour palette for PowerPoint presentations
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Primary colour palette
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Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
R0 G156 B200
Light blue
R124 G179 B225
Violet
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17%
46%
22%
15%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Product Development
Sales & Distribution
Pricing
Claims
Innovations as % of Total P&C Line of Business
What do InsurTech firms do?
24 April 2017 6
Source: McKinsey Panorama InsurTech Database
Note - Pricing includes underwriting and policy issuance
Colour palette for PowerPoint presentations
Dark blue
R17 G52 B88
Gold
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Mid blue
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Secondary colour palette
Primary colour palette
Light grey
R63 G69 B72
Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
R0 G156 B200
Light blue
R124 G179 B225
Violet
R128 G118 B207
Purple
R143 G70 B147
Fuscia
R233 G69 B140
Red
R200 G30 B69
Orange
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Dark grey
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Distribution & Customer Engagement
24 April 2017 7
• Use of new technology platforms or apps, combined with a
fresh perspective, to reach and interact with customers.
• This is distribution via a new breed of digital intermediary.
• Latest intermediaries are analysing customers’ needs linking to concierge
services and insurance one-stop shops.
• Insurer buyers and increasingly expecting:
– Transparency
– Immediacy
– Seamless UX
Actuaries are not the obvious choice… Perhaps the firm should hire a
Chief Marketing officer?
Colour palette for PowerPoint presentations
Dark blue
R17 G52 B88
Gold
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Mid blue
R64 G150 B184
Secondary colour palette
Primary colour palette
Light grey
R63 G69 B72
Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
R0 G156 B200
Light blue
R124 G179 B225
Violet
R128 G118 B207
Purple
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Fuscia
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Red
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Orange
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Dark grey
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Peer 2 Peer model
24 April 2017 8
• Small groups of people get together online to pool their risks
– Private group with friends
– Public groups with a common cause or “connection”, e.g. favourite charity
• A modern take on an old concept – similar to mutual societies
• Advantages could include fewer fraudulent claims
• More transparency with cashback features
• “P2P … didn’t work as we hoped” - Lemonade
Actuaries could be useful as they understand diversification
and homogenous risk groups! Otherwise, it depends on
what else the firm plans to do.
Colour palette for PowerPoint presentations
Dark blue
R17 G52 B88
Gold
R217 G171 B22
Mid blue
R64 G150 B184
Secondary colour palette
Primary colour palette
Light grey
R63 G69 B72
Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
R0 G156 B200
Light blue
R124 G179 B225
Violet
R128 G118 B207
Purple
R143 G70 B147
Fuscia
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Red
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Orange
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Dark grey
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Advanced Analytics
24 April 2017 9
• Use of tools and techniques such as data science and
machine learning to:
– Convert data into meaningful information
– Find patterns, trends and regularities to assist insurer’s decision making
• InsurTech firms and partner insurers will increasingly use social profiles,
online search and “big data” to improve:
– Pricing
– Underwriting
– Detection and prevention of fraud
Oh yes, this is the sweet spot! Actuaries are perfectly positioned
to help a firm utilise advanced analytics within its business.
Colour palette for PowerPoint presentations
Dark blue
R17 G52 B88
Gold
R217 G171 B22
Mid blue
R64 G150 B184
Secondary colour palette
Primary colour palette
Light grey
R63 G69 B72
Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
R0 G156 B200
Light blue
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Violet
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Purple
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Fuscia
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Red
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Orange
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Dark grey
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Internet of Things
24 April 2017 10
• Connected vehicles
– Telematic boxes in cars and industrial equipment
• Connected homes
– Data-collecting sensors and devices in everyday devices, e.g. fridges, toasters, televisions, …
• Connected wearables (“e-Health”)
– Lifestyle intelligent apps for health device users such as runners, skiers and surfers
• Significant potential benefits for society when linked to risk mitigation…
It depends on what the firm wants to do with all this new data. The
actuarial need is with the previous category in the use of that data.
Colour palette for PowerPoint presentations
Dark blue
R17 G52 B88
Gold
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Mid blue
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Secondary colour palette
Primary colour palette
Light grey
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Pea green
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Forest green
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Bottle green
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Cyan
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Light blue
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Violet
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Purple
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Operations & Infrastructure
24 April 2017 11
• Efficiency gains in day-to-day operations of insurers:
– Underwriting
– Compliance & regulation
– Customer payments
– Policy management
– Claims handling
– Renewals
• Blockchain: a type of distributed ledger
– R3i consortium is the insurance equivalent to the R3 consortium for FinTech
– MetLife became its 60th member
Probably no actuaries are needed for this type of firm. Hires are more
likely to be ‘engineers’.
Colour palette for PowerPoint presentations
Dark blue
R17 G52 B88
Gold
R217 G171 B22
Mid blue
R64 G150 B184
Secondary colour palette
Primary colour palette
Light grey
R63 G69 B72
Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
R0 G156 B200
Light blue
R124 G179 B225
Violet
R128 G118 B207
Purple
R143 G70 B147
Fuscia
R233 G69 B140
Red
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Orange
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Dark grey
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New Products & Markets
24 April 2017 12
• Enabling customers to purchase coverage for their needs.
• On-demand insurance (“Pay-as-you-go”)
– Pay-by-mile or hour car insurance
• Micro-duration insurance
– Travel insurance for single journey
– Item-wise “one-off” cover
• Sharing economy is creating new risks that need insurance
Whether pricing, reserving or capital modelling, these firms (or the capacity
providers supporting them) have a new actuarial challenge. This is
traditional actuarial work, without any data.
Colour palette for PowerPoint presentations
Dark blue
R17 G52 B88
Gold
R217 G171 B22
Mid blue
R64 G150 B184
Secondary colour palette
Primary colour palette
Light grey
R63 G69 B72
Pea green
R121 G163 B42
Forest green
R0 G132 B82
Bottle green
R17 G179 B162
Cyan
R0 G156 B200
Light blue
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Violet
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Purple
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Fuscia
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Red
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Why actuaries are still needed
• Which business models are more likely to need actuaries / data scientists?
• For InsurTech firms, pricing is the key skill needed rather than reserving or
capital modelling.
• Why don’t more start-ups become full stack insurers? Because it’s hard!
• Existing insurers will therefore continue to need actuaries across all
disciplines.
• Smarter technology will change the way we work and what we do.
• Conclusions from data-driven analysis will always need to be put into the
context by technical humans with domain knowledge.
• … and not forgetting The Actuaries Code.
24 April 2017 13
How Actuaries Can Help InsurTech
Buu Truong – Insight Risk Consulting [email protected]
24 April 2017
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