Ripe for disruption: from insurance #hashtags to unicorns, the who, what and why of frontier...
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Transcript of Ripe for disruption: from insurance #hashtags to unicorns, the who, what and why of frontier...
Ripe for disruption?
© 2016 Willis Towers Watson. All rights reserved.
from insurance #hashtags to unicorns, the whose, whats and whys of frontier innovation
in insurance
Dr. Magdalena Ramada (Willis Towers Watson) Research and Innovation
Center)
Insurance 2020: three key global trends affecting the insurance industry in the next 4 years
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 2
1Change in the
nature of Risk
Acceleration in
#insurtechNew (social)
interaction paradigm
2 3
#TrendOrReality1 – New (social)
interaction paradigm
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4
Baby Boomers
Age in 2015
52 - 69
Estimated population size
(U.S.)
76 million –
79 million
Individualistic
Loyal
Career-focused
Generation Z
Age in 2015
5 - 19
Estimated population size
(U.S.)
~25 million
(and growing?)
Realistic
Aware
Technology native
Generation Y
Age in 2015
20 - 35
Estimated population size
(U.S.)
80 million –
90 million
Group-oriented
Idealistic
Socially conscious
Generation X
Age in 2015
36 - 51
Estimated population size
(U.S.)
34 million –
40 million
Entrepreneurial
Self-reliant
Globally minded
New demographics:
Gen Y has arrived — Gen X are emerging leaders -– Gen Z is on the cusp
1946 - 1963 1964 - 1979 1980 - 1995 1996 - 2010
New interaction paradigm
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What will 2018 workforce look like?
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Illustrative company demographic shift
Global company population — By age
Pre-Boomer Boomer Individualistic
Loyal
Career-focused
Gen. X Entrepreneurial
Self-reliant
Globally minded
Gen. Y Group-oriented
Idealistic
Socially
conscious
Gen. Z Realistic
Aware
Technology
native
New interaction paradigm
6
Technology native Generations Y and Z are accelerating the interaction paradigm shift
The number of text messages
sent and received in one day exceeds
the population of the planet
Before age 40the average U.S. student today
will have had 10 to 14 jobs
By 2025, they’ll constitute 75%of global workforce
Generation Y (Millennials) are
first generation born with
technologyThey are more inter-connected, harder to
please, have a holistic view of experience
and need seamlessly integrated interaction
systems that are quick and versatile
24%Is the customer satisfaction gap between
Gen Y and others cohorts in the US when
asked about the insurance industry
40%of Gen Yers in the US uses digital
channels at least once a month for
insurance needs, twice as much as
consumers from other generations
73%would prefer new financial services
products from Google, Amazon,
Apple, PayPal or Square than from
traditional players
Is likely to buy insurance
from technology
companies such as
Google1/3
New interaction paradigm
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Source: Sparks & Honey, 2015
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Generation Y (“Millennials”) Generation Z
Tech savvy: 2 screens Tech innate: 5 screens
Think in 3D Think in 4D
Radical Transparency: Share all Judiciously share (GeoLoc OFF)
Slacktivists Active volunteers
Multi-cultural Blended (race & gender)
Tolerance Togetherness
Immature Mature
Communicate with text Communicate with pictures
Share stuff Make stuff
Have low self-confidence Have humility
Now focused Future focused
Optimists Realists
Want to be discovered Want to work for success
Team orientation Collective consciousness
New interaction paradigm
Employees aren’t just
looking for a career;
Customers aren’t just
looking for a product;
they’re looking for a
personal Experience
It’s no longer about segmentation, it’s
about personalization
#TrendOrReality2 – The nature of risk is
changing
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Global Risk report 2016
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Increase in social and technological
risks
Increase in interconnection of global
risks
Why does it matter?
Insurance Industry insures against
those risks!
How is your talent base prepared to
understand and deal with complexity?
Social innovation and sharing
economies are “Uberizing” the global
economy to deal with economic
uncertainty and inefficiencies
Millennials and Gen Zers are socially
conscious and the latter are anxious to
work on tackling these risks
Evolution of Risk
The nature of Risk and how we measure it are evolving with technology
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Technology also has had an impact on risk and how it can now be measured:
Multiple, measurable, interconnected sources of risk
Risk transparency is increasing with Internet of Things and data sharing
Risk sharing is increasing
New sharing economy models have different risk transfer consequences
Dealing with risk is no longer a low-frequency business: real-time risk assessment and
adaptive insurance pricing is expected
From compensating losses to avoiding them: data based risk mitigation services are
expected from consumers
Risk type varies and can be measured for the same person on an hourly basis: “Uberization” of
economy, geo-location, on-off and hybrid products necessary
Evolution of Risk
#TrendOrReality3 – The acceleration of
#insurtech
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
The insurance industry is ripe for disruption…
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Very large global market, with established traditional
players facing obsolete systems and strong inertia
US P/C net premiums sold by agency writers. 67% for
commercial P/C lines. Too many different types of actors
and intermediators – agents, brokers, reinsurers;
expensive distribution in highly regulated industry
While personal banking has a consumer satisfaction score
of 15.2 with respect to online experience/offering,
insurance’s score is only 4.0, ranking very poorly on
digital satisfaction (bottom three of all industries’
surveyed)
Rise in #insurtech investments from 2014 ($740B) to
2015 ($2.7T). Main areas of #insurtech: online distribution,
personalization/flexibility, IoT/Big Data for optimized
pricing/risk measurement, sharing economies
4.8T
47%
4.0
258%
…and here is why
$
#insurtech acceleration
The take-off of #insurtech
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3.5xYoY increase of
#insurtech financing in
past 12 months
$60+MAverage funding for
Product insurance technology ventures
76%of #insurtech
deals happened in the U.S.
$2.7BInvested in #insurtech
start-ups in 2015
24%Of #insurtech ventures are innovating in marketplace
platforms and 17% is seeking backend innovation
51%Non-health #insurtech investments in the
US in 2015, up from 30% in previous year
311Insurance and Technology
companies investing in
#insurtech in 2015
16#insurtech start-ups are
looking exclusively at P2P
insurance
#insurtech acceleration
#insurtech areas
15
Regulation
& Legal
framework
Wealth
management
Data &
Analytics
Information
security
Health
Internet of
things
Customer
engagement
#insurtech acceleration
Vehicle telematics
Environmental Sensors
Provenance / Asset tracking
Home security
CRM
Price aggregation
Omni channel acquisition
Digital claims processing
Online policy purchasing
Digital contracts
Blockchain
KYC Identity verification
Automated compliance processes
Algorithm asset management
Digital savings plan
Pension management
Wearables
Genetic data
Chronic condition management
Preventive healthcare
Claims fraud detection
Cyber breach insurance
Risk management
Personal data storage
Real time risk mitigation
Pay per use insurance
Dynamic underwriting
Personalized premiums
Source: StartupBootcamp
#insurtech
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The Future?Early adoptionIn progress
The waves of #insurtech change
16
Big data
Predictive analytics
Internet of Things
Blockchain
P2P
Comparison platforms
Automation
Artificial Intelligence
Instantaneous billing
Real-time adaptive pricing
based on changing customer
needs and shared data
Per-use and personalized
products
Ongoing Developing Disruptive
#insurtech acceleration
Globalization
Mobile technology
Medical advances
Integration with social media
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Some tweets from the #insurtech world
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2014 AXA Data Innovation Lab - SciencesPo Paris Joint Research Initiative "Understanding
and Enhancing Individuals Trust in Data Sharing"
@FinLeap now offers #fintech in an exchange platform through its new venture
#SolarisBank to empower start-ups
Oscar tries to untangle the giant hairball called American Healthcare #InsurTech
Together, the five most well-capitalized insurance tech startups including Zenefits and Oscar
have raised $2.5B in aggregate funding
Sept 2015: AXA launches Kamet, a €100m InsurTech incubator
Next Insurance Matches Lemonade for Largest US Tech Seed Round Since Start of 2015
March 2016: @ShareSafeGlobal first insurer to use #blockchain in a hybrid insurance
product for the #sharingeconomy #insurtech
#insurtech acceleration
HitFox
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Founded in 2011 as a game distribution platform
2012: becomes a company builder
35 employees, 10 nationalities, 3 locations: Berlin, San
Francisco, Seoul
2014: Enters the #fintech market by founding a
company builder devoted to Financial Technology
start-ups called FinLeap.
2015 FinLeap launches 5+ new companies, hires 150
new employees. The first company to be launched
was Savedo, a retail investment marketplace.
2016: 600+ employees of 45 nationalities, 15+
companies and 6 international offices make up the
HitFox Group.
#insurtech acceleration
The quick evolution of an outside player
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“In 2010, the founders of the FinTech company, Friendsurance, realized that insurance is expensive
and lacks transparency: people pay high premiums each year and get nothing in return.
This is why Friendsurance has developed a revolutionary peer-to-peer insurance concept, which rewards
small groups of users with a cash-back bonus at the end of each year they remain claimless. The claims-
free bonus is available on our website www.friendsurance.de.
The vision of Friendsurance is to make insurance easier and more affordable for customers, helping
to save customers time and money that can better be spent on the finer side of life. Fifty people work
passionately daily toward achieving these goals in Friendsurance’s Berlin Headquarters, which is hiring.
Friendsurance currently operates as an independent broker in the German market with approximately 60
domestic insurance partners.”
(From the welcoming homepage of Friendsurance)
#insurtech acceleration
The traditional insurance brand problem
P2P Healthcare UBI/Auto
Sharing Economy
Spot Insurance
Product insurance
Backend
Marketplace & online
consumer platforms
Data, Software & Analytics
Accelerators
Reinsurance
IoT
Recognize these logos? Here are 1/3 of #insurtech players
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#insurtech acceleration
Gafanomics and customer centricity
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http://www.slideshare.net/faberNovel/gafanomics/34-34_GAFA_are_really_managing
#insurtech acceleration
Customer Centricity call for the Omnichannel
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Seamless integration and synchronization
Physical
World
Big
Data
Social
Media
Online
& Mobile
Customer analytics
Risk analytics
Internet of Things
Artificial Intelligence
Real time pricing
Social dimension of risk sharing and risk mitigation
P2P
Social Media Distribution Channel
Multiple devices in synch
providing same, personalized experience
Concierge
Real time risk mitigation services
Physical location
CRM
Call centre
#insurtech acceleration
Going for the Omni-Channel: When Mobile technology meets #insurtech
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Selling platform apps &
pay-per-use insurance
Mobile Insurance
Management & Concierge
UBI & Telematics
Mobile enabled claims
processing
Sources: CBInsight.com, Allstate.com, TelematicNews.info, InternetofBusiness.co.uk
#insurtech acceleration
Why haven’t we seen more new entrants and disruption (yet)?
Historic claims
data is private and owned by
incumbents
Understanding people
is not the same as understanding
risk
Regulation makes entry more
difficult
Cost of entry, capital and balance
sheet requirement are high
We do
know,
what we
do know
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#insurtech acceleration
Questions?
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 25
Magda Ramada
@MagdaRamada Magdalena
@WTWrisk Ramada Sarasola, PhD