CELENT

Driving Disruption: Transforming the Latin American Insurance Sector

JUNE 25, 2013

Mike Fitzgerald

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2 CELENT 2

Program

Insurance innovation case studies

Insurance innovation current state surveys

Next steps

Insurance innovation case studies Section 1

4 4 CELENT

The next 10 years?

2014

DNA sequencing

for $100

2014

Instant Charge

Batteries

@

2016

Crash-proof

car

2020

Replacement

human organ

created with

3D Printer

Social

Commerce

2014

Commercial

space flight

Widespread use of 3D

manufacturing

2015

2020

Simple tasks done

by location aware

drones

Electric

highway

2020 2018

Smart energy

meters and smart

grids

2020

5 CELENT 5

Insurance innovations

FNOL reporting

Multi tiered pricing

D&O/Employers Liability

Direct/Internet selling

Predictive modeling

UBI

June 25, 2013

6 6 CELENT

Three key technology themes changing the competitive landscape for insurance

1 Ubiquitous data

2 User expectations of simplicity and technology doing more of the work

3 Industrialisation of IT at scale

7 7 CELENT

Its not just people sharing more and more data

2012 2008

2003 2010

2015 2020

Connected

things

People

20 houses today generate more traffic than the entire

Internet did in 2008

The number of things connected to

the Internet is greater than the

Earths population

Source: Cisco, 2011

From the beginning of time until 2003, we created five exabytes of data.

In 2011 the same amount was created every two years. By 2013 its expected to shrink to 10 minutes

The Human Face of Big Data, Publisher: Sterling. 2012

9 9 CELENT

Insurers face a torrent of location tagged data

Fa

sh

io

n

Sp

ort

s

Fa

sh

io

n

Sp

ort

s Fa

sh

io

n

Sp

ort

s

Fashion

Sports

10 10 CELENT

The UK Riots, 2011

Over four days between Saturday

6th August and Tuesday 9th August:

$320 MM damage (Source: ABI)

Up to 15 K rioters

~5 K crimes recorded

~30 towns

Spontaneous events orchestrated via social media

11 11 CELENT

AXA used publicly available data to better predict its exposure and improve customer service

Sample Screen Shot

Lighter areas show locations of riot activity

Screen Shot with further detail

Social Media Data made public

by Guardian.co.uk

Police Reports + Internal data (exposure, claims) +

12 12 CELENT

The results

Using the tools AXA could see:

Claims that fell within the affected areas

Claims that fell outside the affected areas

Customers with locations inside the affected areas who had not yet claimed

Reaching out to customers meant AXA could

Offer great customer service

Offer a view of the total exposure much earlier than would be typical

Understand the full liability of the UK government under the Riots Act in the short window allotted

Lessons learnt

Obtain databoth internal and external

Provide access to it in a usable format

Visualize it in a way that was meaningful to the team

Allow changes to the system over time to increase its potential

Relevant data Useful data Gap-fillers

Discovery

Locate Extract Move

Capture

Where What/Who When

Linking

Accuracy Validity Credibility

Testing

Exploration Redefinition Visualization

New information Revealed assumptions New gaps

Insight

13 13 CELENT

User expectations technology will do more of the work

Understand and respond to what is said

Perform image

recognition on videos

and pictures

Allow applications to augment their vocabulary

and services

Understand what is said

in the context of what is

visible

14 14 CELENT

The industry engages consumers differently as a result

The multi-page forms we

know and love

Insurance in a conversation Personal, business and life

insurance available online

and on mobile

Days or weeks for a quote Quote in minutes 10s of quotes in minutes

Foot or mail Phone Anytime, Anywhere

Paper 200+ years Voice 15 years Digital 2-4 years

15 15 CELENT

Explain why you prefer the service methods you chose

16 16 CELENT

One-time insurance

Short-term simple insurance sold via mobile phone in Japan to cover potential risks from sporadic and

short-term events

Lines: Sport, travel insurance and one day auto

Tokio Marine & Nichido, through its partnership with NTT Docomo, Japan's largest mobile carrier

Coverage tend to be for short periods like one day, and usually around a few hundred yen in price

(US$4.00)

Docomo handles sales and premium payments, Tokio Marine & Nichido responsible for u/w policies

and dealing with claims procedures

NTT Docomo automatically fills information about its subscribers from its database

Customer only specifies the insurance type and time period

Premium is included in the subscriber's phone bill

Goal: Cultivate the untapped market for small-amount, short-term insurance and

attract a new customer segment that typically does not have an interest in insurance

17 CELENT 17

Process one day auto insurance

Register

Name Birthday Address e-mail address Drivers License No. License expiry date

Input

License plate No. Date of driving

Premium is added on

the monthly mobile

phone bill

Read QR Code

(agency code embedded)

Pay Buy Pre-register

18 18 CELENT

Leveraging location awareness

Auto GPS function (Position-aware active recommendation)

19 CELENT 19

19701995 19952012 20132017

Vertical application Bespoke build Transaction oriented Single channel Internal user focused Hosted internally Employed internal team

Multiple distributed applications Mix of package and

bespoke build

Service oriented/open Multi-channel External and internal user

focused

Hosted externally Mix of insourced/

outsourced team

All applications are treated as external services

Interfaces and SLAs are managed similarly across

all services

Business processes are orchestrated across

heterogeneous services

Service selection is a joint business/IT responsibility

All-in-one application

Data

Orchestration

Enterprise systems

Channel systems

Product systems

Data

Industrialization of IT moving from inside-out to outside-in

Insurance innovation current state Section 2

21 21 CELENT

At my company, successful innovation is...

0%

10%

20%

30%

40%

50%

60%

70%

Critical to our strategy Important to our strategy

22 22 CELENT

Rate how expectations of these groups regarding the use of technology in insurance has changed in the last five years

Prospective policyholders Agents / distributionchannels

Existing policyholders Regulators

Higher expectations About the same Lower expectations

23 CELENT 23

Compared with other industries, insurance companies successfully innovate...

Much worse

Better

6% 14%

28% 52%

About

the same

Worse

24 24 CELENT

Compared with other insurance companies, my insurance company successfully innovates...

Much better

Better

4%

36% 46%

14%

About

the same

Worse

25 25 CELENT

The bar is delightfully low

Please rank the following industries in terms of their ability to deliver a great shopping

or service experience by smart use of technology

7,40

7,12

6,48

6,43

6,37

5,41

4,82

4,17

4,14

2,65

Government

Traditional Retailers Without Web

Insurance Companies

Securities & Investments Firms

Healthcare Providers

Utilities

Telecommunications

Banks

Traditional Retailers With Web Sites

Online Retailers

Next steps Section 3

27 CELENT 27

Action steps

Find opportunities to innovate in your existing project portfolio

Understand that investment in Technology Innovation must ultimately lead to Business Innovation

Don't only benchmark vs. other insurers; look at your customer's ecosystem instead

Expect resistance. Innovation is risky, scary but in the end rewarding

Don't despair but get started now

The surveys will be open until July 10 so that you can complete it if not already done so. We will share with you the final results through the email

address you provide when you complete it.

Survey: https://www.surveymonkey.com/s/InsuranceTechLATAM2013InnovationinInsu

ranceEnglish

Feel free to contact me at mfitzgerald@celent.com @mikefitz01

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