Digital Technology and how it will affect insurance companies

1. Page § 1Confidential
YOUR LOGO
Digital Technology :
The New Frontier For Insurers
Kalpesh Desai
CEO
Agile Financial Technologies
kalpesh.desai@agile-ft.com

2. Page § 2Confidential
"In a time of accelerating turbulence, the
valuation of a company will be strongly
affected by how it executes change."

3. Page § 3Confidential
Source : Celent, May 2016

4. Page § 4Confidential
1
Digital
Technology &
New Frontiers
For Insurers 3
4
2
Digital Technology & Its Relevance To Insurers
The Digital Insurer Of The Future
Digital Technology Disruption – Case Studies
How Do YOU get there

5. Page § 5Confidential
1
Digital
Technology &
New Frontiers
For Insurers 3
4
2
Digital Technology & Its Relevance To Insurers
The Digital Insurer Of The Future
Digital Technology Disruption – Case Studies
How Do YOU get there

6. Page § 6Confidential
Digital Technology & Its Relevance To Insurers
Insight based customer experiences
The digital “channel”
Changing role of agents
Aggregators
Ecosystems
Internet of Things

7. Page § 7Confidential
Creating insight based customer experiences
Move from a product
focused sales process
To
Customer focused
sales process
Needs-based
selling based on
real-time data
Dynamic pricing
using customer
data analytics at
the point of sale

8. Page § 8Confidential
The Digital “Channel”
§ Digital channels will play an increasing role at every stage of the
sales process
§ It is possible today to conclude all lines of business digitally from
start to finish

9. Page § 9Confidential
Changing roles of agents
Deploymentof
mobile
technology
Redesign of
compensation
models to
allow omni-
channel
environments
Enhance skills
to enable
cross-selling
and advisory
Refocus
agent’s efforts
where they
add most
value

10. Page § 10Confidential
Aggregators
§ Aggregators are an increasingly important channel
§ Insurers have to tailor products and master dynamic pricing to
compete
§ Insurance companies are participating together to set-up their own
aggregator businesses
§ Carriers expect over 50% of their customers to use aggregators over
the next 3 years
The Digital Policy-Holder
Renewals
Policy
purchase
and
service
Research

11. Page § 11Confidential
New Ecosystems
Integrate into a
holistic buying
experience
Travel Portals
(Expedia/MakeMyTrip,
Cleartrip)
Social Media platforms
such as Facebook
Blur industry
boundaries and
identify new
ecosystems to
work with
Insurers need to work
with insurance
technology startups
who otherwise can
disrupt the traditional
models
Partner with non-
insurance companies
to offer a broader range
of relevant products
and services

12. Page § 12Confidential
Internet of Things (IoT)
No longer a “gimmick or a fad”
Auto-
telematics
Environmental
sensors
Wearables Self-drive cars

13. Page § 13Confidential
Internet of Things (IoT)
Telematics
- Auto insurers use devices to derive driving behavior
such as speed, distance travelled, turning & braking
patterns, time of day, locations travelled to to price and
maintain “usage based insurance” (UBI).
- Responsible drivers get the benefit of lower premiums.
- Carriers are able to effectively improve margins and
reduce loss ratios.
- Weather warnings can be pushed to the car
- Accident alerts on the road ahead can be pushed to
the driver to ensure awareness and reduce risk of
accidents

14. Page § 14Confidential
Internet of Things (IoT)
Environmental Sensors
- IoT devices today can be installed in homes, offices,
factories and warehouses to detect temperature,
smoke, toxic fumes and hazardous conditions.
- These devices provide predictive alerts to both the
policy owner and the carrier
- Carriers can now price the risk based on actual data
from IoT sensors and improve loss ratios
- Applications : homeowner’s, commercial property,
workmen’s compensation, general liability, agriculture
& weather-linked insurance

15. Page § 15Confidential
Internet of Things (IoT)
Wearables/Connected Biometrics
- Insurance companies are deploying gaming applications
to encourage healthy behavior and reward healthy
lifestyles documented by their daily activity, calorie burn,
sleep patterns, etc.
- Disability claimants can be tracked for compliance to
rehabilitation protocols thus benefiting the employer,
insured and the carrier by shortening the time to return to
work and reducing loss ratios, and hence providing better
premiums to the plan sponsors

16. Page § 16Confidential
1
Digital
Technology &
New Frontiers
For Insurers 3
4
2
Digital Technology & Its Relevance To Insurers
The Digital Insurer Of The Future
Digital Technology Disruption – Case Studies
How Do YOU get there

17. Page § 17Confidential
Case Study 1 : The Climate Corporation
§ Sells weather-linked insurance, traditionally underwritten manually
§ Clients go to its site and outline what range of temperatures and/or
rainfall/weather conditions they want protection from, for a set period
of time.
§ 30 years of geological survey data for the user’s location including
weather patterns, climate trends and soil characteristics is crunched
down to the farmer’s field, within milliseconds, and a policy is offered,
accounting minutely for climate change
§ Farmers work with independent local agents
or directly interact through the website
§ Payouts are triggered automatically without
paperwork when the company’s data shows
that a weather event has caused damage.
§ The Climate Corp was finally sold to the
Monsanto Group for USD 930 Mn

18. Page § 18Confidential
Case Study 2 : Peer2Peer Insurance
Customers join an online social network to share risk
Portion of the premium contributed by members are
allocated to a mutual pool
Balance of the premium is ceded to an insurer
Members pay small claims from the mutual pool and
hence eliminate claims staff and costs
The insurer funds the excess and provides services
such as policy administration to the pool
Money left in the pool is refunded to members or carried
forward as premium contribution to another year
Hence what would have been an insurer’s traditional profit will
now become the members’ saving

19. Page § 19Confidential
Case Study 2 : Peer2Peer Insurance
§ Guevara
- UK based P2P motor insurance network - Saves members 80% on their
premiums
§ Friendsurance
- German P2P property insurance network – Saves members 33% on their
premiums

20. Page § 20Confidential
1
Digital
Technology &
New Frontiers
For Insurers 3
4
2
Digital Technology & Its Relevance To Insurers
The Digital Insurer Of The Future
Digital Technology Disruption – Case Studies
How Do YOU get there

21. Page § 21Confidential
Physical channels will be replaced
by digital channels
§ The new age Digital Insurer will replace and/or augment physical
channels
§ 40% ~ 50% of physical activities in insurance distribution will be
transitioned to digital processes
§ This transition will require incremental IT and integration
transformation
Proposal
Policy
Issuance
Servicing Renewals
Claims
administration
Customer
feedback &
resolution

22. Page § 22Confidential
The “Millenials” will change all the questions
§ The success of the digital insurer will depend on millenials
§ Millenials only wish to interface digitally
§ Insurance companies will be forced to focus on user experience and
turn their IT systems around
§ Traditional systems were designed for workflow, assuming that
customers were willing to wait for a response
§ These assumptions are NO LONGER TRUE
§ The digital customer
wants information
and service
on-demand
(mobile devices and
the web)

23. Page § 23Confidential
Evaluate your IT systems & infrastructure
§ Identify your technology deficit quickly
§ Partner with a technology provider who is ahead of the curve
§ Start with the end in mind and work backwards to ensure that the
foundation for digital delivery is in place

24. Page § 24Confidential
Digitize Customer Relationships
§ Customer relationship used to be a purely human practice
§ Relationship management is now digital
§ Modern insurance call centers must have a real-time, 360 degree
view of social media engagement, mobile application interaction and
inputs from all digital channels, including IoT devices employed by
the insurer
§ These are not possible to accomplish with archaic or legacy
systems. Modern infrastructure with up-to-date web APIs, cloud
based services, IoT aware systems is required

25. Page § 25Confidential
Wearable technology as a tool for usage based pricing

26. Page § 26Confidential
IoT
§ IoT has led to extensive data being generated and this needs to be
analyzed and acted upon
§ IoT data can allow insurers to offer discounts for behavior and
activity
§ Activity-based products require activity based data and systems,
and require the ability to process massive amounts of streaming
information from devices
§ Investments need to be made in
technology that would help
insurers analyze this streaming
data, and derive usage based
pricing, as opposed to traditional
pricing matrices

27. Page § 27Confidential
Shift to algorithmic risk assessment
Insurance companies will face an inflection point where they would
need to deploy real-time algorithmic systems to make sense of the
data from mobile apps, wearable devices, social media interactions,
geo-positioning systems to
§ Arrive at competitive risk-based pricing
§ Identify cross-sale and up sale opportunities
§ Identify risks and threats and diminish loss ratios
§ Identify fraud or risky behavior

28. Page § 28Confidential
Are insurers ready for driverless cars?
§ Driverless cars pose new forms of risk.
§ Risk management will not be the same in the digital era
§ If automated driver feature has a bug and causes an accident, is the
owner of the vehicle at fault? Will the cover extend to the car
manufacturer ? How will surveyors evaluate forensic data?
§ Will regulators force insurers to evaluate forensic data?

29. Page § 29Confidential
The Actuary Vs The Digital Data Scientist
§ The new digital Data Scientist steps to the forefront.
§ Actuaries used to be the data scientists in the insurance industry
§ In the new era, data science applies to IoT data and forensics,
predictive and historical analytics, location awareness, etc.
§ The modern actuary will have to relearn skills to keep pace with the
digital insurer

30. Page § 30Confidential
1
Digital
Technology &
New Frontiers
For Insurers 3
4
2
Digital Technology & Its Relevance To Insurers
The Digital Insurer Of The Future
Digital Technology Disruption – Case Studies
How Do YOU get there

31. Page § 31Confidential
How do YOU get there?
Move swiftly
and assertively
•The one who waits,
will not have to
worry about a future
Make innovation
and customer-
centricity the
cornerstone of
distribution
strategies
Evaluate your
current IT and
infrastructure
urgently in the
context of what
you wish to
achieve as a
digital insurer
Strive for
simplicity of
access,
transactions and
offerings

32. Page § 32Confidential
How do YOU get there?
Focus agents
on advice,
value add, and
deeper
customer
relationships
Place bets on
chosen
businesses and
distribution
models, moving
beyond a
succession of
pilots
Proactively
define your
position in new
ecosystems,
cooperation
models and
partnerships
Move from
indemnification
to real-time
protection

33. Page § 33Confidential
Though some may argue that
digital technology may replace paper
3

34. Page § 34Confidential
There are still some processes where paper cannot be replaced

35. Page § 35Confidential
For more information, write to: info@agile-ft.com
Visit us on: www.agile-ft.com
U.S.A. Ÿ Mauritius Ÿ U.A.E. Ÿ India Ÿ Singapore