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The changing Digital Disruption investment landscape Steven Walker & Ian Chisholm 10 May 2016 Technology Trends “InsurTech“ Finity Director Forum

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Page 1: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

The changing Digital Disruption investment landscape

Steven Walker & Ian Chisholm 10 May 2016

Technology Trends “InsurTech“

Finity Director Forum

Page 2: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

Topics from the Boardroom

1 InsurTech (FinTech) ↑

2 Digital Disruption ↔

3 Cyber Security ↑

4 Cloud Computing ↓

5 Legacy Modernisation ↔

6 Social & Collaboration Technologies ↑

26

Page 3: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

What questions should Boards be asking?

27

• What is InsurTech? How is it different from Digital Disruption?

• Why is InsurTech attracting so much interest? What does it look like?

• What are the implications for our business? Should we be leading or following or watching?

• Why should we be investing? Should we invest directly in InsurTech opportunities or in the technology solutions as they emerge?

• How much should we be investing? How do we assess the business case?

Page 4: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

What is InsurTech?

First in Financial Services - “FinTech” - and now in the insurance world - “InsurTech” - insurers are questioning, and in some cases changing, the direction and nature of

insurance technology investment.

First 4 months of 2015

Dea

l Par

tici

pat

ion

No

.

30

25

20

15

10

5

0

2010 2011 2012 2013 2014 Jan-Apr 2015

28

Source: CB Insights, Insurance Industry Ramps Up Start-up Investing, June 2015

Page 5: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

Why is InsurTech attracting so much interest?

75% of US insurers* expect that they will have to redesign their business value chain over the next 5 years

due to the impacts of technology change. InsurTech provides the opportunity to get ahead of the game

29

Specific reasons for InsurTech investments include:

• Meeting customer expectations - new consumer technologies have created new needs for and expectations of insurance solutions and interaction channels

• The pace of innovation – the shared economy, usage based models and the internet of things are disrupting the insurers business model – incremental change is no longer enough

• Access to personal data – policyholders are willing to trade some personal data in exchange for tailored lower cost coverage

* Source: Insurance Networking News, Insurers Investment in Tech Start-ups, John Cusano. Oct/Nov 2015

Page 6: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

Trōv

“SAVE YOUR STUFF ON TRŌV BECAUSE IT PAYS TO

BACK UP YOUR STUFF”

Protect just the things you want - exactly when you want - entirely

from your phone. Trōv is a new technology platform created by an InsurTech start-up,

designed to give consumers insurance for their individual

possessions whenever it's needed. Digitising the process

from identification of what is to be insured, through premium

quote to payment and finalisation of the claim. 30

Source: www.trov.com. April 2016.

Page 7: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

Brolly “Join the revolution!”

Brolly is developing a free personal insurance concierge that will be available online and on mobile phones. Powered by artificial intelligence, Brolly promises

to tell users if they’re over or under-insured, whether they have duplicate or missing cover, and whether they can get the cover they need at a better price.

The service will allow people to purchase new cover, manage policies in one place, and provide instant access to documents, prices, and contact numbers.

31

Source: www.heybrolly.com. April 2016.

Page 8: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

32 © Copyright

Friendsurance “make insurance easier and

more affordable”

Based on a “shareconomy” approach, policy owners with the same insurance type form small groups. A part of their premiums is paid into a cashback pool. If no

claims are submitted, the members of the group get some

of their money back at the end of the year. In case of claims, the

cashback decreases for everyone. Small claims are settled with the

money in the pool.

Source: www.friendsurance.com . April 2016.

Page 9: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

33 © Copyright

Digital Risks

“It’s well overdue. Business insurance needs a shake up. We’re here to make things better.”

Digital Risks is the first insurance provider to focus 100% on the needs of digital businesses. As digital natives ourselves, we understand their goals, motivations

and frustrations better than anybody else.

Source: www. digitalrisks.co.uk . April 2016.

Page 10: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

Why should we be investing?

Depending on their size, scale and risk profile insurers will respond differently. However, at minimum all

insurers should maintain a “watching brief” as part of a balanced approach to technology investment.

34

• Global and large local insurers are getting directly involved through acquisition, direct financial investment and/or business endorsement and support

• For small and mid-sized insurers access will be through technology partnerships, incumbent technology suppliers (who are also investing in InsurTech) and as customers or suppliers to these emerging businesses

Page 11: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

How much should we be investing?

There are no clear benchmarks for direct investment in InsurTech, it should be treated like any other strategic business investment. The benchmark range for overall spend on operational insurance technology remains

steady at 3% to 4% of revenue*.

35 * Source: Gartner, IT Key Metrics Data 2014

• Investment in starts-ups or emerging technologies need to be based on specific needs or strategic objectives. This approach enables the insurer to be able to define the potential benefits, and so providing guidance for the investment approach and scale.

• Understanding the change to the customer value proposition and business operating model is a critical part of any investment in technology.

Page 12: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

Com

petin

g in

the

‘new

nor

mal

’ Focus on the customer Customer centric approach is transforming the insurance industry. Other financial services organisations, in particular banks, have been undergoing the same disruptive change.

1

Adopt a Digital first strategy Financial Services transactions are increasingly being led by smartphones, not the web, chat, contact centre or branch. Understand how your customer demographic is changing and their channel needs, and adapt to this trend.

4

Foster an innovation culture Internal entrepreneurship and ‘creative destruction’ can enhance a offering, shorten a transaction, improve the customer experience, drive better promoter scores (NPS). Build an innovation challenge or team internally to do ‘blue sky’ thinking of how to make a better customer experience; how to disrupt your own business etc.

3

Seek customer feedback Adoption of new technologies and platform are being driven by customer expectations. Increasingly customers expect and react to personalized financial services offerings and solutions.

2

Omnichannel focus Providing a seamless customer experience when customers move mid way through a transaction from one channel to another.

5

Maintain a watching brief There will be more failures than successes, for organisations that can not invest directly there will continue to be opportunities to reap benefits with out the level of risk. However, no one can afford to ignore the potential , organisations should adopt a proactive stance.

6

What practical step should insurers be taking?

36

Page 13: Technology Trends “InsurTech“ - Finity Consulting · 2016-05-17 · 10 May 2016 Technology Trends ... * Source: Insurance Networking News, Insurers Investment in Tech Start-ups,

Steven Walker Director Consulting Level 15, St Martins Tower Sydney NSW 2000 Australia M 0412 412 712 T 61 2 8220 8096 [email protected] www.frazerwalker.com

Ian Chisholm Director Consulting Level 15, St Martins Tower Sydney NSW 2000 Australia M 0401 316 004 T 61 2 8220 8096 [email protected] www.frazerwalker.com

Thank you for your attention