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  • A Path to Insurance Distribution Leadership:

    New Channels and New Data for Innovative Outcomes September 2015

  • 2015 Majesco Page : 1 of 11

    Confidentiality Statement This document contains proprietary and confidential information and data of Majesco Ltd. and its affiliates. This

    document is provided, on the express condition that such information and data will not be used, disclosed, or

    reproduced in any form, in whole or in part, for any purpose (other than solely for evaluation purposes by

    authorized representatives with a need to know), without the express written approval of Majesco. The right to

    use, disclose, and reproduce such information and data shall be governed by the service agreement between the

    client and Majesco.

    Warnings and Disclaimer The information provided is on an as is basis. Every effort has been made to make this book as complete and as

    accurate as possible, but no warranty or fitness is implied. The authors and the publisher shall have neither liability

    nor responsibility to any person or entity with respect to any loss or damages arising from the information

    contained in this book. Screenshots and data used within are for illustration purpose and may vary from the actual

    application.

    2015 Majesco. All rights reserved.

  • 2015 Majesco Page : 2 of 11

    Contents

    Executive Summary ............................................................................................................... 3

    The Changing Landscape of Insurance .................................................................................... 3

    Limitless Possibilities: Analytics to Empower Insurance Distribution ....................................... 5

    Boundless Opportunity .......................................................................................................... 6

    Distribution Efficiency and Effectiveness ................................................................................ 7

    Investing in Data Analytics: Taking the First Step .................................................................... 7

    The Path to Distribution Leadership is Unfolding .................................................................... 9

    References .......................................................................................................................... 10

  • 2015 Majesco Page : 3 of 11

    Executive Summary

    If there is one business topic that dominates boardroom discussions in insurance companies today, it is growth. If

    there is one technology topic, it is analytics. No longer confined to CEO and CFO tablets, and no longer limited to

    simple operational reporting and dashboard reports, analytics has emerged as a strategic tool to transform the

    insurance business across its entire life cycle, including distribution management. Unfortunately, as industry

    research by KPMG indicates, while insurance company executives acknowledge its importance and business value,

    many are yet to define strategies and begin the evolution of organization-wide adoption.i

    This whitepaper examines a strategic area of analytics opportunity and impact distribution management based

    on the perspectives of industry leaders from a Majesco Roundtable on Leveraging Digital Technology to Reinvent

    Distribution Models. The roundtable discussion provided insights into how to leverage analytics to deliver business

    value and reshape distribution models to support market growth strategies.

    Distribution management is a unique cogwheel of the enterprise, positioned to influence transformational changes

    that impact the entire organization. The use of analytics when approached strategically and deployed operationally,

    can deliver real business benefits including organization-wide efficiency, profitability, agility, and time-to-market,

    while strengthening both customer and distribution experience and relationships.

    The Changing Landscape of Insurance

    The insurance industry continues to be poised for growth with many countries indicating an optimistic economic

    outlook. IMFs World Economic Outlook - April 2015 forecasts the global economic growth to be 3.5 percent and 3.8

    percent in 2015 and 2016, respectively, with recovery potentially visible across Europe, USA and Canada and a steady

    growth in the Asia Pacific region.ii

    The insurance sector, however, is expected to witness increased competition in both Life & Annuity and Property &

    Casualty segments. Many new companies are emerging in the space, both within and outside the industry. Some of

    these companies are backed by large investment firms and are becoming active through acquisitions posing

    competition to established players. Additional competition has arisen from subsidiaries or new brands launched by

    established insurers, hoping to position their organizations to compete in new markets, existing markets or in new

    business segments to enable growth strategies.

    However, rising competition coupled with low interest rates in developed markets continue to trim insurance profit

    margins. According to Connings 2015 report on Global Insurance Distribution & Services Sector Mergers &

    Acquisition, US insurance M&As grew by 48 percent in aggregate announced transaction values and 12 percent in

    announced transaction volume in 2014 over 2013, indicating the effects of competition felt by the US insurers.iii

    Already in 2015, M&A is rapidly unfolding with Ace purchasing its rival Chubb in a $28.3 billion deal, creating the

    second largest P&C insurer in the US. This is one of the many mergers where consolidated data may result in a host

    of coveted analytics, with the power to redefine the quality of underwriting and customer interaction. Adding to the

    2015 momentum, the US-based health insurer Anthem agreed to purchase its rival Cigna in a $48.3 billion

    transaction. The deal is expected to close in 2016. This deal, combined with Aetnas $37 billion purchase of Humana,

    leaves fewer large health insurance companies in the US market.

  • 2015 Majesco Page : 4 of 11

    Each of these changes is reshaping and intensifying the competitive landscape for insurance. To respond to

    competitive pressures, insurance companies need to expand and strengthen their distribution channels. Insurance

    distribution is the cogwheel that drives growth. It is a crucial link between insurers and customers and can play a

    critical role in helping companies remain relevant, competitive, and stable in the choppy waters of change and

    disruption.

    Over the last 10 to 15 years, insurance distribution has been undergoing a powerful revolution, often starting in one

    geographic region and spreading quickly to others. Empowered by the Internet and digital technology which

    together provide greater access to information retailers are creating new, engaging customer experiences, such

    as those provided by Amazon, Apple and Google. As a result, todays insurance customers are increasingly more

    demanding, wanting an Amazon or Apple-like experience. This experience runs dramatically counter to traditional

    agency distribution methods.

    While the traditional agency distribution model continues to play a dominant role in many markets, increasingly,

    consumers (especially Gen X and Gen Y) are demanding new methods to connect with insurers in a direct-to-

    consumer model. Across different regions, alternative channels like bancassurance, customer portals for self-service,

    aggregator sites, and new channels like Google are emerging as strong alternative channels, intensifying the need

    for traditional distribution to modernize and transform.

    A modern distribution channel should be attracting and engaging millenials, who are increasingly affluent with

    potential insurance needs.iv Born from 1981 to 2000, millenials who hold at $100,000 in assets are further classified

    as affluent millenials. There are as many as 15.5 million of affluent millenials in the USA who spend $2 trillion

    annually. These customers expect quick service, such as digitally powered pre-filled approaches to documentation,

    among various other personalized and attentive servicing models.

    These developments and others will have far-reaching impact on how insurers engage with their customers and

    potential customers, conduct business, and most importantly remain relevant and competitive in this rapidly shifting

    marketplace. The strategic use of analytics can play a major role in how insurers respond to these shifts, leveraging

    an array of distribution channels to create an omni-channel experience for their customers over the next few years.v

  • 2015 Majesco Page : 5 of 11

    Limitless Possibilities: Analytics to Empower Insurance Distribution

    Distribution channels are critical to insurance companies growth (new customers) and retention (existing

    customers). From small improvements in channel efficiency and effectiveness, to large improvements through

    optimization and innovation, the changes can deliver significant cumulative benefits to the organization. Benefits

    range from increased operational efficiency to improved customer reach, customer satisfaction and retention, new

    customer acquisition, sales growth and new market segment growth opportunities.

    In a recent Ernst & Young report, Improved distribution and product development is at the top of the top 10