INSURTECH IS HAPPENING: ARE YOU READY?€¦ · Oliver Wyman rigorously applies internal...
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© Oliver Wyman INSURTECH IS HAPPENING: ARE YOU READY? Matthew Leonard [email protected] Presentation to the Federal Advisory Committee on Insurance MAY 10, 2018
Transcript of INSURTECH IS HAPPENING: ARE YOU READY?€¦ · Oliver Wyman rigorously applies internal...
© Oliver Wyman
INSURTECH IS HAPPENING: ARE YOU READY?
Matthew Leonard [email protected] Presentation to the Federal Advisory Committee on Insurance
MAY 10, 2018
CONFIDENTIALITY Our clients’ industries are extremely competitive, and the maintenance of confidentiality with respect to our clients’ plans anddata is critical. Oliver Wyman rigorously applies internal confidentiality practices to protect the confidentiality of all client information.
Similarly, our industry is very competitive. We view our approaches and insights as proprietary and therefore look to our clients to protect our interests in our proposals, presentations, methodologies and analytical techniques. Under no circumstances shouldthis material be shared with any third party without the prior written consent of Oliver Wyman.
© Oliver Wyman
2© Oliver Wyman
Speaker introduction
• Matt Leonard is a partner and Chicago Office Leader at Oliver Wyman and is a member of the firm’s Insurance and Corporate Finance & Advisory practices. He co-leads the firm’s insurtech platform and has been a keynote speaker at InsureTech Connect, the world’s largest gathering of insurance leaders and innovators.
• Over his roughly 20-year career, Matt has worked with major financial institutions and investors in Europe, North America, and Asia involving a range of topics, including market strategy, public policy, organizational design and financial effectiveness.
• Matt has co-authored a number of Oliver Wyman publications. Examples include: “The Naked Truth: How Price Comparison is Poised to Change US Personal Insurance”; “The Implications of Financial Regulatory Reform for the Insurance Industry” a joint study with IIF; and “The New Bull Market in Risk: A Journey into the Future of Corporate P&C Insurance”. He is also a regular contributor to Oliver Wyman InsurTech
• Matt, who has an MBA from the University of California at Berkeley and a bachelor’s degree in Business Administration from the University of Wisconsin-Madison, joined Oliver Wyman in London before relocating after several years to the firm’s Chicago office. Prior to joining Oliver Wyman, Matt’s professional experience includes seven years in the commercial P&C insurance industry.
The backdrop1
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Insurance plays an important role in society
Controls losses
Pools risk across groups
Provides credit intermediation
Signals inherent risk
Enables risk-taking
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With USD ~$5.1 TR in global premiums, insurance is a large global industry
APAC 1,439
Developing APAC 712
Developed APAC 727
Americas 2,131
Caribbean 19
Latin America 109
North America 2,001
EMEA 1,553
Middle East and Africa 142
Eastern Europe 54
Western Europe 1,356
World 5,124
40%
60%
80%
100%
20%
0%
1%
2%
13%%
Life¹
16%%22%%
1%
0%
2%11%%
35%%
2%
4%
44%%
1%
Personal Accident & Health
68%%
2%%
1,283 (25.1%)
4%
2,379 (46.4%) 1,460 (28.5%)
0%
21%%
19%% 1%
Non-Life
2%
8%%
21%%
1. Life includes protection, investment and annuitiesSource: AXCO database, 2016 figures
Global written premiums in insurance2016, US$ BN
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Premium dollars divided across claims payments, producing and maintaining the product and accessing customers
15
15
10
60
100
50
75
0
25 Operations ex loss adjustment
Distribution
100
Loss adjustment cost
P&C
Losses
6.5
100
75
50
25
0DistributionOperations
100
Losses (biometric risk)Loss adjustment expense
5,0
85
2,5
Life¹ ²
Savings
Idealized allocation of premium to value chain elements1
1. Illustrative split shown orientated on mature markets – emerging markets might deviate materially2. Life includes protection, investment and annuitiesSource: Oliver Wyman, Policen Direkt
1,0
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Technology is enabling the insurance industry to better serve clients…
The world is changing rapidly…
A broad set of trends – and “collision” of trends – will reshape industries
Technology & data
Societal
Behavioral
Conversational AI
SensorsComputer Vision
Robotics and Drones
Blockchain Genomics
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Trends: Technology and interconnectivity are changing clients’ business models
of cars will be connected by 2020
90%
percent of jobs in the US that are “at risk” of being automated in
the next 10–20 years
47%
of the workforce potentially participating in the gig
economy by 2020
40%
Source: Oxford, Gartner, Forbes
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Trend: The risk profile and liability associated with technological innovation remains unclear as regulatory standards lag pace of innovation
Sharing Economy
Societal impact
Velo
city
(10
year
hor
izon
)
Consumer wearables
Connected homes
Smart utilities
DronesSmart parking
Driverless cars
Data privacy risk Safety risk Socio-economic risk
Artificial Intelligence and Robotics1
Source: Oliver Wyman, World Economic Forum1. Covers a large group of technologies including softbots (e.g., IBM Watson), prostheses/exoskeletons, and industrial robots. Drones and self-driving cars are two applications of AI and robotics
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How will the insurance sector create value in the future?
Getting closer to the customer
Shifting from balance-sheet to services-led
Unlocking data assets
100101010101001010101010100100101010100101011101010101010101010010101011
The insurtech landscape2
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Insurtech is now a mainstream theme within the (venture) investment community
Segment funding as a percentage of overall US fintech investment in March 2018
Insurance technology 54.8
Financial media and data solutions 19.1
Digital lending 9.3
Payments 8.7
Investment and capital markets technology 4.9
Banking technology 3.2
Source: S&P Global Market Intelligence
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2.29
0.87
0.270.35
0.14
1.291.24
0.40
0.93
0.0
2.1
2.8
180
200
220
60
80
160
140
120
100
20
0.740
1.4
020142013 2016
1.69
2015
2.67
0.50
20122011 2017
Insurtech investment growing through time
Source: CBInsights, Oliver Wyman analysis
AmountNumber of deals
AmountUS$ B
Number ofdeals
Zhong An
Zenefits Oscar
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SFO
Brazil
UK
Israel
Germany
China
IndiaCanada
NYC
Relative size of insurtech investments
40%
4%
20% <5%
<5%
6% 5%
4%
5%
Source: CB InsightsXX%
Insurtech innovation is a global phenomenon
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Insurtech activity spans a wide range of business model categories
Source: Oliver Wyman, Policen Direkt
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AMERICAS EMEA APAC• BrixLi• Figo Pet Insurance• Ladder Life• Sonnet• Veracity Insurance Solutions
• Bikmo• Fibur• Hellas Direct• mypension• Nalo
• EdirectInsure Group• Frank.co.th
• ClickQuoteSave• HealthCare.com• insuranceLevel• TuSeguro.com
• Check24• Comparadise Groupe• Samlino.dk• Ucompare.ie
• Easypolicy• GoBear• GoInsurance.com.my• OOHOO• PolicyX.com
• Matic • click2sure• Simplesurance
• Cover Genius
• Benesnap• Endeavor Plus• Hixme• Zane benefits• Zenefits
• Heaven HR• Hibob• Wealth Wizards
• Ben• CXA• Employment Hero• Hearti• SmartHR
• Covera• Minuto Seguros• PolicyGenius• Quotacy• Tacerto
• Clark• Coverfy• Coverlife• Fluo• WeFox
• Cekpremi• Coverfox• Insureme.ik• Inzurer• Shebaotong
• Bunker• CoverWallet• Embroker• Trym• Zensurance
• Finanzchef24• SOBRADO• Virtual Broker• Worry + Peace
• Insgeek• Sherpa Insurance
• Albert• Credit Karma• GuiaBolso• Mint.com• NerdWallet
• Moneymeets• MyFeelix• Octobank• Rentablo• Treefin
• Bambu
• byeo• Cake• DocuHome• Everplans• HomeZada• LegacyShield
• AssetVault• Cbien• Planned Departure• SafeBeyond
DistributionInternational comparison of activities worldwide
12
3
56
78
Source: Oliver Wyman, Policen Direkt
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DISTRIBUTION 42%
High LowInsurtech Activity
LEVEL OF INSURTECH ACTIVITY
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AMERICAS EMEA APAC• Benefix• BenRevo• Brokerlift• Insurr• LeadCloud• Zipari
• B2b Protect• Covomo• Gewerbeversicherung24• WeSavvy
• Ancileo• Aureus Analytics• Policy Street• Seasonalife
• Lumiata• Praedicat• Tyche• Vivametrica
• Atidot• Covi Analytics• Cytora• getmeIns• InsureMyTrans• QuanTemplate
• Chebao
• Megalodon Insurance Systems• Gain Compliance• Pokitdok• RedOwl• RiskMatch• TriplePoint Software
• Fortifier• IBA• NuvaLaw• Qumram
• Gen.Life
• Airwave• Groundspeed• PRXControl Solutions• Snapsheet
• Cognotekt• Nexar• RightIndem• Shift Technology• Tractable• Unfallfuchs
• ClaimLogik• MediPay Asia• Stash PH• WaveCell
• Analyze Re• Isaac Re• Ledger Investing• Rewire
• Budget Insight • Audeamus Risk
2
3
4
5
1
Source: Oliver Wyman, Policen Direkt
OPERATIONS 39%
OperationsInternational comparison of activities worldwide
High LowInsurtech Activity
LEVEL OF INSURTECH ACTIVITY
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PropositionInternational comparison of activities worldwide
PROPOSITION 19%
Source: Oliver Wyman, Policen Direkt
2
3
4
5
6
1AMERICAS EMEA APAC• Health IQ• Melody Health Insurance• Square One• Swyfft
• Alan• Bima• Element• Firstcarquote• Jamii• Karlsson
• Zhong An
• Metromile• Slice• Sure• Trov• Verifly• Zensure
• Cuvva• Drivy• Hepster• Ingenie• KASKO• Marmalade
• Bigins
• Gather• Insureapeer• Lemonade• RiskPool• Sharely.us• World Cover
• Cycle Syndicate• Darwinsurance• Guevera• Inspeer• MaTontine• Prvni Klubova
• Bandboo Pte Ltd• peercoverage• Prince Insure• Teambrella• Zhongtuobao
• Bright Health• Climate Corp• Clover Health• Fuzzy• Oscar• splitsecnd
• Carrot Insurance• Climate secure• In My Bag• OTTOnova• Schadenengel
• Carmen Automotive• OKChexian
• CelsiusPro• Getsurance• Inxure.me• TikkR
• Cloudsurance• CyberPolicy• Y-Risk
• Digital Risks• PDX Technology
High LowInsurtech Activity
LEVEL OF INSURTECH ACTIVITY
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There may be a mismatch of current activity and strategic potential
Proposition Distribution Operations
“Overcrowded – shakeout possible• Situational• Community-based
White space• From insured to protected• Risk partner• Digital risks
“Overcrowded – shakeout possible• PCW• B2C Online Broker / VCW
White space• Affiliate integration• Corporate platform• Financial partner
“Overcrowded – shakeout possible• Digital sales enabling
White space• Underwriting
Activity level Strategic assessment Activity level Strategic assessment Activity level Strategic assessment
High Low High Low High Low
Source: Oliver Wyman
Maintaining competitiveness in insurtech
3
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Bay Area Software/ web development, artificial intelligence, microprocessor development
AustinComputertechnology (soft-& hardware)
SydneySoftware, web development
BangaloreSoftware/ web development, e-Commerce
MoscowSoftware development
Sao PauloFinTech, software development, SaaS
ParisSharing economy, artificial intelligence
SingaporeFinTech, e-Commerce
Berline-Commerce, gaming, SaaS
LondonFinTech, web development
Tel AvivCyber security,defense
Boston &New YorkLife science, biotech, robotic, pharma (Boston); FinTech (NYC)
Chicago & TorontoE-Commerce, software/ web development
MontrealArtificial intelligence/ deep learning
AmsterdamSharing economy, 3D printing, eCommerce
MunichInsurtech
Los Angeles Mechanical engineering, software engineering
Top global tech hubs footprintTech hubs are spread globally across various cultures with a strong concentration in North America and Europe
Source: Business Insider; Oliver Wyman
SeattleB2B solutions, software engineering
Vancouversoftware development, biotechnology, entertainment
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Success factors for tech hubsThe success of dominating existing hubs is based on a clearly identified set of success factors
+
NETWORKING EFFECT
Self-reinforcing
WINNING FACTORS
Globally leading expertise
Lighthouse visionaries
Culture
Factors that differentiate a hub and that are needed to sustain hub success on a long-term basis
Virtuous circle – factors attract players whose involvement into the hub reinforces the factors
Location Talent
Public Authorities
BASICFACTORS
Funding
Infrastructure
Prerequisite factors that need to be in place andsufficiently satisfied for hub development to be possible
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Location
Public authorities
Infrastructure
Success factors – self assessment for the US?
Funding
Talent
Poor Top
Sufficient
Hub basic factorsHub basic factors Hub winning factorsHub winning factors
Globally leading expertise
Lighthouse visionaries
Culture
Poor Top
Sufficient
Poor Top
Sufficient
Poor Top
Sufficient
Poor Top
Sufficient
Poor Top
Sufficient
Poor Top
Sufficient
?
?
?
?
?
Poor Top
Sufficient
?
?
?
QUALIFICATIONS, ASSUMPTIONS AND LIMITING
CONDITIONS
This report is for the exclusive use of the Oliver Wyman client named herein. This report is not intended for general circulation or publication, nor is it to be reproduced, quoted or distributed for any purpose without the prior written permission of Oliver Wyman. There are no third party beneficiaries with respect to this report, and Oliver Wyman does not accept any liability to any third party.
Information furnished by others, upon which all or portions of this report are based, is believed to be reliable but has not been independently verified, unless otherwise expressly indicated. Public information and industry and statistical data are from sources we deem to be reliable; however, we make no representation as to the accuracy or completeness of such information. The findings contained in this report may contain predictions based on current data and historical trends. Any such predictions are subject to inherent risks and uncertainties. Oliver Wyman accepts no responsibility for actual results or future events.
The opinions expressed in this report are valid only for the purpose stated herein and as of the date of this report. No obligation is assumed to revise this report to reflect changes, events or conditions, which occur subsequent to the date hereof.
All decisions in connection with the implementation or use of advice or recommendations contained in this report are the soleresponsibility of the client. This report does not represent investment advice nor does it provide an opinion regarding the fairness of any transaction to any and all parties.
