Ripe for disruption? - Willis Towers Watson · · 2016-10-066 Technology native Generations Y and...

Ripe for disruption?

© 2016 Willis Towers Watson. All rights reserved.

Achieving a customer-centric culture

from insurance #hashtags to unicorns, the whose, whats and whys of frontier innovation

in insurance

Dr. Magdalena Ramada (WTW 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


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


(U.S.)

~25 million

(and growing?)

Realistic

Aware

Technology native

Generation Y

Age in 2015

20 - 35


(U.S.)

80 million –

90 million

Group-oriented

Idealistic

Socially conscious

Generation X

Age in 2015

36 - 51


(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

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

What will 2018 workforce look like?


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


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



Source: Sparks & Honey, 2015

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.7

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


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


Global Risk report 2016


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


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


The insurance industry is ripe for disruption…


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


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 areas

15

Regulation

& Legal

framework

Wealth

management

Data &

Analytics

Information

security

Health

Internet of

things

Customer

engagement


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


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


Globalization

Mobile technology

Medical advances

Integration with social media


Some tweets from the #insurtech world


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


HitFox


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.


The quick evolution of an outside player


“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)


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



Gafanomics and customer centricity


http://www.slideshare.net/faberNovel/gafanomics/34-34_GAFA_are_really_managing


Customer Centricity call for the Omnichannel


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


Going for the Omni-Channel: When Mobile technology meets #insurtech


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


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



Questions?


Magda Ramada

[email protected]

@MagdaRamada Magdalena

@WTWrisk Ramada Sarasola, PhD

Ripe for disruption? - Willis Towers Watson · · 2016-10-066 Technology native Generations Y and...

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