The Early Days of Disruption: the Online Insurance Industry

PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC

The Early Days of Disruption:

the Online Insurance Industry

Produced By:

Alan [email protected]

@SeriesAPartners

www.series-a.com

PRODUCED BY ALAN ALDEN – SERIES-A PARTNERS

21 20

4633

15

12

18

10

2015 2025

100

Product Development and Sales Support

Operations

Administrative Support

IT

Insurance Industry workforce% of FTEs1 Over the next 10 years,

up to 25% of full-time positions in the

insurance industry may be consolidated or

replaced2

1Based on Western Insurers; FTE = Full-Time Equivalent/Employees2 McKinsey & Co (2015)

Tech Is Ready To Streamline Insurance

75


Forces of Insurance Innovation

AGILE IT

DATA

Data Proprietary and Big Data Data Analytics

Collaboration Straight-Thru-Processing Connected Process Chains Connectivity with industry

and non-industry platforms Extensive APIs

Agile IT Fast and Flexible IT Interconnectivity Digital Consumer

Experience

COLLABORATION


The Need To Modernize: Consumer Satisfaction

Insurance industry has been slow to adopt new digital technologies

Focus has been more on the agents than the clients

Younger consumers expect quick and easy access, transparency, and high quality service

15.2

11.811.1

10.0

8.98.5 8.5

8.0

5.85.0

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0

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Average7.3

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RAN

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Relative satisfaction utility score

Delivering Digital Satisfaction @2013 – The Boston Consulting Group (BCG)


The Need To Modernize: Firms Understand the Need

42%

24%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Little or No Impact

Moderate Impact

Some Impact

High Impact

Very High Impact

2015 2013 2010

IT Environment’s Impact on Achieving Desired Levels of Customer Service

As mobile empowers policyholders, IT’s impact on customers is increasing

Almost 2/3 of respondents acknowledged importance of IT modernization in achieving increased levels of customer service


The Opportunity

$175Billion

2015

$189.2Billion

2017

Global Insurance IT Spending

4% CAGR


Country / Region 2013 2014 2015 2016 2017

US (7.1%) (1.7%) 1.3% 1.0% 2.3%

Canada 3.0% 7.6% 2.4% 3.5% 3.8%

UK (5.9%) (10.4%) 2.2% 3.5% 3.2%

Japan 6.8% 7.1% 2.7% 3.0% 3.7%

Australia 9.8% 26.5% (5.8%) 4.1% 2.1%

France 3.6% 8.4% 4.2% 2.6% 2.5%

Germany 2.5% 2.7% 3.1% 0.9% 0.9%

Italy 20.6% 29.5% 2.8% 2.2% 2.3%

Spain (4.3%) (2.5%) (11.6%) 0.3% 0.6%

Netherlands -5.9%) (5.2%) (10.0%) 2.2% 1.7%

Advanced Markets -2.5% 4.2% 1.9% 2.4% 2.6%

World -1.5% 4.7% 3.3% 4.0% 4.2%

Emerging Markets 4.0% 7.4% 10.6% 10.7% 10.7%

With Great Growth Ahead….

Emerging Markets 4.0% 7.4% 10.6% 10.7% 10.7%


8

The Insurance IT Landscape

Represents Near-Term

Socatra Opportunities

RATE QUOTE BIND ISSUEENDORSEMENTS & OTHER POLICY

SERVICESRENEWAL

Core Policy Admin System

Document Creation

Billing

GeneralLedger

Document Management & Workflow

Business Intelligence

Analytics

Reinsurance Management

Core ClaimsSystem

Disbursements

CRM

Rating Engine

UnderwriterWorkbench

Document Creation

CustomerPortal

AgentPortal

RATE QUOTE BIND ISSUEENDORSEMENTS & OTHER POLICY

SERVICESRENEWAL

Policy Admin Processes


Insurance Industry Landscape

Insurance Landscape

Courtesy: VentureScanner


Insurance IndustryEmerging Markets

Opportunity Overview


Emerging Markets: Small IT Presence / Large Oppty

35.9%

28.9% 28.2%

0.9%3.4% 1.5%

0%

10%

20%

30%

40%

Europe North America Asia Middle East andCentral Asis

Latin America Africa

Current Insurance Penetration Rates

$78.5

$54.5

$31.4

$5.3 $5.3

$84.4

$56.8

$35.6

$6.7 $5.8

$-

$20

$40

$60

$80

$100

North America Europe Asia Pacific Latin America All Other (Africa, MiddleEast, CIS)

2015 2017

Courtesy: SwissRe (2012)

Global Average6.6%

Courtesy: Celent (2016)

Global IT Spending By Insurance Companies


Emerging Markets: Life Insurance Growth


Emerging Markets: P&C Growth


Why Getting to Know the Local Markets is Key

Local players in emerging markets still dominate

Multi-nationals (MNCs) struggle to increase their presence

Know Various Geographic Purchasing Priorities

95

70 7079

4

30

9

10

1

2111

0%

25%

50%

75%

100%

China India Brazil Russia

Local Joint-Venture ForeignSource: McKinsey Global

Market Share of Foreign versus Domestic Players (total business)

Priorities When Investing in Digital Transformation ProjectsRank Asia / Pacific Latin America EMEA North America

1) Mobility (Devices and Apps) Business Process Automation (STP)

Sale and Service of Products Online

Business Process Automation (STP)

2) Sale and Service of Products Online

Sale and Service of Products Online

Business Process Automation (STP)

StreamliningCommunications with Customers via Portal

3) Engaging Interface / UX Mobility (Devices and Apps) Analytics Engaging Interface / UX

4) Business Process Automation (STP)

Engaging Interface / UX Engaging Interface / UX Sale and Service of Products Online

Source: Celent Survey (2015)


Go-to-Market Key Considerations

Most insurers are spending are spending between 1-6% of direct written premiums on IT*

Average is 3.2%

~25% is spent on external software and an additional 22% is spent on external services

More than 70% of vendors opt for vendor solutions (vs building own)

Growth and retention, process optimization (faster, leaner and smarter business processes), and meeting regulatory requirements are the top three drivers for IT investment at Asian insurers

* Source: Celent Asia Pacific Insurance CIO survey 2014

Thank You

Contact Information:

Alan Alden


[email protected]

@SeriesAPartners

www.series-a.com

INVESTMENT BANKING I STRATEGYINTERNATIONAL CORPORATE DEVELOPMENT

The Early Days of Disruption: the Online Insurance Industry

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