Connected and Sustainable Insurance

CONNECTED AND
SUSTAINABLE INSURANCE
Matteo Carbone, Pietro Negri and Marco Harb
with the contribution of Dario Focarelli and Michael Jongeneel
Connected insurance and digital technology play critical roles
in the economy, welfare and development of a sustainable society

Matteo Carbone is Founder of the Connected
Insurance Observatory, Principal with Bain &
Company and global InsurTech thought lead-
er. Pietro Negri is Senior legal adviser and
CSR Manager of ANIA (Italian Association of
insurance firms). He is ANIA representative in
the Italian Forum for Sustainable Finance and
in the CSR Forum of the Ministry of Welfare.
Marco Harb is Consultant and Project Man-
ager at IRSA and passionate about the digi-
tal transformation and the human interaction
with new technologies
The authors would like to acknowledge the
contributions of Michael Jongeneel -partner in
Bain & Company’s Amsterdam office and expert on
sustainability and social impact – and Dario Fo-
carelli, General Director of ANIA and Member of
the Executive Committee of Insurance Europe.

1. Introduction
2. The role of insurance in
ancient, modern and future
societies
2.1 Managing the unknown
2.2 Risk management, welfare and
economic growth
2.3 The future of insurance
3. Connected Insurance
will transform the way we
manage risk
3.1 The experiences on the Italian
market
3.2 What’s in it for the Carrier?
4. Impacts on society
and the environment for
sustainable and respon-
sable development
4.1 Moving toward Corporate Social
Responsibility
4.2 Corporate opportunities for re-
sponsible industries—the integration
of CSR in strategy and in processes:
the UNI ISO26000, the B-corporation
4.3 Influencing consumers to adopt
safer, more sustainable and heal-
thier lifestyles?
4.4 Will nations indirectly benefit
from a more-connected, responsible
insurance?
5. Conclusions
3
4
4
5
6
7
7
9
11
12
15
17
21
25
TABLE OF CONTENTS

301. INTRODUCTION
1. INTRODUCTION
More and more our society expects companies
to take up their corporate social responsibility
(CSR). In the past CSR mainly consisted of
donations to charities, in many cases not very
close to the core business but initiated by rela-
tions from executives or CSR managers. Now-
adays we see a clear shift towards involvement
of the core business. There is a clear need to
address social, environmental and economic
fairness issues, such that the success of the
business and that of future generations are not
compromised by actions taken today.
With the recent financial crisis in mind trust
needs to be restored in the Financial Sector.
Many financial services players have conduct-
ed (trans)actions that are not qualifying as so-
cially responsible. The general public clearly is
demanding change. Companies experience a
request from customers and employees to en-
sure their products and services, but also the
company’s operations, are truly sustainable.
And in the Financial Services industry we addi-
tionally see that regulators are becoming more
and more active in this area.
Insurance is inherently a social responsible
type of business: set up to share risk among
each other to protect and take care of the (lo-
cal) community. So corporate social respon-
sibility is core to the DNA of the insurance
industry. But we have seem to forgotten that
somewhat.
This document brings that responsibility back
to the forefront. And even better - it also takes
the whole notion forward: the paper shows
how technological developments related to
Connected Insurance can help insurance
companies progress in making their business
more sustainable for both the customers and
society at large, as well as for the company
itself and its shareholders. In this way real
‘shared value’ is created – an important step
towards a sustainable future!
Michael Jongeneel

4 CONNECTED AND SUSTAINABLE INSURANCE
1
https://www.theguardian.com/world/2012/nov/15/merapi-volcano-spirit-guardian-tradition
Figure 1 – Merapi Eruption - https://www.flickr.com/photos/coolinsights/5127279893
With more than 100 active volcanos, Indonesia
is one of the most geologically dangerous na-
tions on Earth. The 2010 eruption of the Mount
Merapi volcano displaced thousands of inhab-
itants and killed hundreds. Among those who
perished was Mbah Maridjan1
, the “spirit keep-
er” of the volcano, who refused to evacuate
and kept offering food and flowers to calm
Merapi’s wrath.
This exotic, esoteric way of coping with risks and
natural disasters still has the power to seduce
the rational Western mind. The spirit-keeper tra-
dition harkens back to the ancient Age of Myth,
the time of the oracles, when people hedged
against their fear of future calamity by offering
sacrifices and libations to supernatural divinities.
The time may not be that far off, however,
when insurers trying to sell fire, calamity or di-
saster-recovery policies in Indonesia must first
figure out how to work alongside the beliefs of
people accustomed to rendering offerings to
Merapi’s volcanic spirit.
In this chapter, we’ll remember the dark shad-
ow of superstition cast by the volcano as we
briefly review the history of insurance and risk
management, and discuss some of the future
developments of the insurance industry that
are illustrated in the next chapters.
2. THE ROLE OF INSURANCE IN ANCIENT,
MODERN AND FUTURE SOCIETIES
2.1 MANAGING THE UNKNOWN
The ancient ways of superstition began to be
displaced by disruptive cultural change when
people adopted the tools of scientific and
mathematical risk-evaluation to deal with the
unknown and uncertain.
Peter Bernstein’s 1996 book “Against the
Gods: The Remarkable Story of Risk” is a bril-
liant account of the birth of insurance—a de-
velopment made possible, Bernstein writes,
by the development of actuarial science and
probability theory, which was driven by math-
ematicians of the last millennium who had an
intense passion for gambling.
Examples of the first forms of insurance are
traceable to Egypt in the third millennium B.C.,
when pyramid builders cooperated to pay for
the funeral expenses of their associates. Like-
wise, those with financial interests in Phoeni-
cian fishing vessels created mutuality funds to
recover their investment in ships that sank. Oth-
er examples are the assistance communities of
ancient Greece and the Sahara nomads who
took out insurance against the loss of camels.

502. THE ROLE OF INSURANCE IN ANCIENT, MODERN AND FUTURE SOCIETIES
Figure 2 – OECD Statistics 2014 – Insurance penetration as % on GDP
The first structured forms of insurance were born
in the Italian port city of Genoa during a time when
marine transport was subject to the dangerous
uncertainties of rough weather and pirate attacks
. In the face of such hazards, merchants would
make bets on the safe return or loss of a ship, and
in in 1424 founded the first insurance company,
Tam mari quam terra (“both on sea and land”).
The word “premium,” a Latin term for an ad-
vanced payment, owes its origin to the practice of
betting for or against the loss of a seagoing vessel.
The statistical sciences evolved significantly in the
seventeenth century. Sophisticated mathematical
tools like probability theory, the law of large num-
bers, mortality tables, and perpetuities calculation
gave scientific bases to the first structured Insur-
ance societies, such as:
• Lloyd’s of London, formed in 1688 as a
marketplace where sailors, merchants and
ship-owners bought marine insurance
• Fire Office, the first fire insurance market, cre-
ated after the Great Fire of London in 1666
• Sales of the first life insurance policies based
on scientific calculations beginning in 1705
In the following centuries, the insurance industry
evolved to cover many kinds of risk, from natural
disasters, casualty and liability, to new modern
risks like cybersecurity.
This complete set of coverages protect indi-
viduals, families, professionals and companies
from losses and accidents that they would not
be able to manage with their own capital.
What is the contribution of insurance to the
economic growth of modern societies?
2.2 RISK MANAGEMENT,
WELFARE AND ECONOMIC
GROWTH
Insurance promotes societal welfare and de-
velopment by helping individuals, families and
companies manage any kind of risk, and in-
demnifies the insured against property dam-
age, sickness, accidents and the like.
It provides equally concrete support to pub-
lic policies, integrating uncovered areas of the
welfare of nations by filling the gap of protec-
tion and social security with private pensions
and health insurance.
Furthermore, sophisticated risk-management
tools allow companies and individuals to man-
age potential losses and to free up investment
capital that was traditionally shelved in funds and
held in reserve to cover unexpected outcomes.

6
Finally, there all the assistance services, includ-
ing auto, travel and legal, which provide direct
support to insurance consumers in highly criti-
cal moments of their lives, like vehicle crashes
or accidents resulting in injuries.
Studies by the European Insurance and Occu-
pational Pensions Authority (EIOPA) show the
correlation between insurance and financial
stability, economic growth, entrepreneurship,
risk-taking, investments and innovation pro-
motion; in 2014 insurance penetration reached
8.7% of the Gross Domestic Product of states
belonging to the Organization for Economic
Cooperation and Development.
Given the maturity level of the insurance in-
dustry, is there any other possible margin for
development, either in terms of economic vol-
umes or for the social value that insurance may
return to society?
2.3 THE FUTURE OF INSURANCE
Let’s go back to Indonesia, just after the vol-
canic disaster of 2010, as people try to restore
normality and organize the reconstruction.
CONNECTED AND SUSTAINABLE INSURANCE

703. CONNECTED INSURANCE WILL TRANSFORM THE WAY WE MANAGE RISK
Connected insurance represents a new para-
digm for the insurance business. This new in-
surance approach is based on the use of sen-
sors for collecting and transmitting data on the
status of an insured risk and the deployment
of Big Data capabilities that transform raw in-
formation into actionable knowledge along the
insurance value chain.
The insurance sector, which is considered to
be fairly traditional and resistant to change, is
currently being overtaken by this transformative
paradigm. Connected insurance represents
one of the most relevant trends, considering
its potential impact on the profitability of the
insurance business, the productivity of each
carrier, proximity to clients and portfolio per-
sistency. Analysis by the Connected Insurance
Observatory—a think-tank created by Bain &
Company and Italy’s National Association of
Insurance Companies (ANIA)—shows how
this new approach is starting to pay off. The
auto insurance sector is being transformed
by auto telematics, a technology undergoing
experimentation in business-insurance lines,
specifically the Internet of Things (IoT).
The following pages present the Italian market’s
experience and the key elements of the busi-
ness opportunities presented by connecting an
insurer with its customers and their risks.
3.1 THE EXPERIENCES ON THE
ITALIAN MARKET
In this context, traditional insurance providers
would be in charge of refunding their clients for
their losses and providing assistance for the
recovery plans.
Just a few years later, insurance will have
a greater impact, mainly during the phases
of prevention and management of the tragic
event—for example, in the form of alarm sen-
sors that rouse people from sleep, giving them
enough time to escape the eruption.
The next chapters describes in more depth
how Connected Insurance is disrupting the insur-
ance business, our lives and society as a whole.
Italy is recognized as the most advanced
auto insurance market at the global level for
telematics. Leveraging the experience of the
auto business, the country is affirming its posi-
tion as a laboratory for the adoption of this new
paradigm by other business lines. The fact
that the Italian insurance market represents
the state of the art for Connected Insurance
gave rise to the idea of creating the Connect-
ed Insurance Observatory as a think-tank to
help generate and promote innovation in the
insurance sector, offer a strategic vision and
stimulate debate.
More than 70% of Italians show a positive at-
titude2
to auto telematics insurance solutions
and 26 different insurance carriers in the Ital-
ian market are currently offering this product.
Telematics-based insurance contracts repre-
sented 16% of the personal cars insured in
Italy in the first quarter of 2015, according to
data from IVASS. This relevance of telematics
was highlight by Insurers member of the Ob-
servatory responding to a question about the
maturity level: 65% affirmed the “the way to
3. CONNECTEDINSURANCEWILLTRANSFORM
THE WAY WE MANAGE RISK
2
Connected Insurance Observatory, Bain & Company and SSI survey on auto telematics on August 2016. “How likely would
you be willing to agree to have a black box fitted in your car or a driving app on your smartphone tracking position and dri-
ving behaviors in order to receive services and a discount on your auto insurance premium?” Both 4 and 5 were considered
“positive” on a 1-to-5 scale (where 1 is “not at all likely” and 5 is “very likely”).

8
Figure 1: Auto insurance telematics maturity level—2015
Incubation
phase
Does the
approach make
sense?
What is the ROI
my main use
case?
Which is the best
way to do it for m y
company?
Exploration
phase
Learning
phase
Growth
phase
Maturity
phase
manage day by day the auto insurance busi-
ness was already impacted by the telematics.”
This kind of telematics adoption is a com-
plex process requiring many years, due to the
cross-functions impacts and the involvement
of multiple parties (tech vendors, insurers, dis-
tributors, clients). It is important to consider the
evolution path showed by the Italian market:
1. Incubation phase: It began in the
early 2000s, when first-mover players
were studying the feasibility of com-
bining the insurance product with the
technology. The main carriers’ ques-
tion was, “Does the approach make
sense?”
2. Exploration phase: This commenced
in the late 2000s, when pioneers start-
ed to achieve volumes from the solu-
tion rolled out on the market. In this
phase, the average level of awareness
in the markets was low, and other play-
ers started with pilots only based on a
“me-too approach”; their main question
was, “What is the ROI of this program?”
At the end of this phase, in 2012, the
Italian market accounted for about 1.3
million black boxes.
3. Learning phase: A few players start-
ed to move from focusing on “quick
wins” to a more holistic approach. They
were able to exploit the potential of the
solution, and were thus in a position to
start pushing the selling phase. Some
differentiation began to appear; the
approaches become more articulated:
Carriers also introduced insurance cov-
ers based on self-installed devices—
moving away from the myth of the Ital-
ian telematics business case only being
linked to anti-theft and anti-fraud—and
this new approach represented around
half of the telematics market’s growth
through those years. The key question
on the market was, “What is the best
way to do it for my company?” Telemat-
ics have become mainstream and this
phase was completed by the Italian
market on 2015.
4. Growing phase: Currently, the Italian
auto insurance sector has reached the
point where telematics solutions have
traction in the market. Each player will
develop his own approach and ex-
periment with further upgrades, intro-
ducing multiple segmented products
with his offer. The 4.8 million insurance
contracts with a black box fitted in the
car—a statistic gathered by ANIA in
December 2015—is expected to grow
to almost 14 million by 2020, based on
the Connected Insurance Observatory’s
projections.
Figure 1 below highlights the current level of
telematics maturity by country and the current
leadership of the Italian market: At the end of
2015, 4.8 million Italian contracts accounted for
more than 45% of all the insurance contracts
active globally, with sensors sending data to an
insurer.

9
3
Connected Insurance Observatory, Eumetra Monterosa survey on connected home showed as—on top of the current home
insurance penetration (almost 27% of families)—22% of families became interested in home insurance if combined with IoT
features.
This sequence of stages seems to be the nec-
essary evolution path for the offering of Con-
nected Insurance on a new business line, as it
is during the adoption of vehicle telematics in
other countries.
Connected insurance applied to other busi-
ness-insurance lines have been a hot topic in
the last 12 months. Insurance applied on per-
sonal lines like home and health is currently on
top of the innovation agenda of many insur-
ance carriers.
Over the last years, five pioneers in the Italian
market have introduced house-insurance cov-
erage with sensors and a gateway that sends
data to the carriers. More than 75% of the in-
surer members of the Observatory consider
Connected Insurance to be the most relevant
innovation expected in home insurance in the
next year. This potential is confirmed by the
consumers’ voice: Connected home insur-
ance use cases appear to be able to double
the penetration of home insurance in Italy. 3
The connected home insurance sector is cur-
rently transitioning from the incubation to the
exploration phase. The connected health sec-
tor is less mature. Some carriers are currently
running pilots, and only a couple are already
selling a connected health product. Around
40% of the insurer members of the Obser-
vatory consider Connected Insurance to be
the most relevant innovation expected in the
health insurance industry over the next year.
3.2 WHAT’S IN IT FOR THE
CARRIER?
The Connected Insurance paradigm opened
incredible opportunities in the insurance sec-
tor, which underwent a tremendous digital trans-
formation. Insurers can play a new proactive role
in their relationships with their customers: from
payers to cares. In a world where analysts proj-
ect 10 connected things per person by 2020—a
figure projected to grow to 200 by 2030–2040,
we can calculate the house-insurance value
proposition delivering (for a monthly fee):
• An active prevention service for all the ri-
sks that could occur in the house, based
on the data coming from the sensor;
• Proactive actions to limit the damages
and fix them, when the prevention was
not enough; and
• The guarantee of monetary reimburse-
ment limited to the cases of “service failu-
re,” meaning when the two services above
were not working as expected.
The three business opportunities
The key business opportunities (see figure 2)
for the insurance carriers are:
1. Achieve a direct impact on the insur-
ance profit and loss;
2. Enlarge the proximity and increase
the interaction with clients by deliv-
ering a vastly superior customer ex-
perience, a proven way to achieve
enlarged loyalty; and
3. Create and consolidate knowledge
about the risks and the customer base.
The value generation on the insurance P&L
was the area more exploited in these years,
and one of the key lessons learned was: there
is no “one-size-fits-all” approach. Each carrier
needs to design its own Connected Insurance
journey based on its own strategy and specific
characteristics.
03. CONNECTED INSURANCE WILL TRANSFORM THE WAY WE MANAGE RISK

10
The five value-generation levers
The value-generation levers each player must
combine in order to deploy its own approach are:
• Risk selection. Telematics can be used
to select risks either indirectly or directly
at an underwriting stage. There is the op-
portunity to generate value with the sole
goal of supporting the underwriting phase;
without any telematics, the tariff will adjust
the insurance rate base on the data ga-
thered. This can be achieved in two ways:
o Directly, using a set of information
coming from sensors to improve the
overall quality of the underwriting pro-
cess; and
o Indirectly, leveraging the ability of the
value proposition to auto-select the
customer base. The analyses of the
ANIA actuarial department of all the
Italian insurance telematics portfolios
have shown a claim frequency risk
adjusted 20% lower than the non-te-
lematics one;
• Risk-based pricing monitoring the
quantity and level of risk exposure on the
basis of information monitored continuo-
usly. This personalized price requires the
development of new risk models based on
the fusion of the traditional insurance pa-
rameter with the Connected Insurance in-
formation and the contextual information.
• Value-added services (VAS). It is about
enriching the value proposition by adding
services built upon data provided by Con-
nected Insurance. The driver’s journey was
already reinvented by innovative services
delivered by insurers—beyond the well-k-
nown exceptional emergency response
and help to the client through a critical si-
tuation—enabling many carriers to earn fees
for these services. The importance of this
aspect will grow exponentially with the volu-
me of claims-reductions due to new-car sa-
fety systems in the next couple of decades.
VAS could be the insurance sector’s way to
stay relevant in the future age of semi-auto-
nomous and autonomous cars.
• Loss control. This impact can be obser-
ved from two different perspectives. The
first is risk-prevention, already mentioned
at the beginning of the chapter. Many car-
riers have this target as a challenge for the
next years. Instead, the second area can
be one of the most relevant impacts in the
short term on profit and loss for the insu-
rers that will adapt their claims processes
in a consistent way, as proven by the auto
telematics experience. Crash-detection
and the related anticipation of the FNOL
(first notification of loss), as of the stolen
vehicle recovery service, have demonstra-
ted their effectiveness in the loss mitiga-
tion. Connected insurance reinforces the
entire claims-handling process: the carrier
can streamline claims-management using
the structured and objective information
extrapolated from the sensors’ raw data.
• Loyalty and behavior-modification
programs. This mechanism generates
value from the insurance perspective
by engaging clients and directing them
toward less-risky behaviors, (mechani-
sms to manage client engagement and
retrocession prizes other than insurance
premium discounts), but also by indirectly
creating a multi-year reward mechanism
to reinforce customer loyalty.

1104. IMPACTS ON SOCIETY AND THE ENVIRONMENT FOR SUSTAINABLE AND RESPONSIBLE DEVELOPMENT
Today’s global competitive environment is
more and more characterized by interdepen-
dence between economic, social and environ-
mental trends, and all the demographic and
social changes are facing the effects of climate
change and the scarcity of natural resources,
creating new risks for people, for companies
and for society in general.
The new “needs” of society, now thought to be
increasingly evident, have not found any solu-
tion and proper answer yet because the social
dimensions of the economy do not receive the
same dignity of production and finance in the
Value Chain of Corporations.
Only recently have we started to discuss the
“economy of solutions,” “problem-solving
business” or even “3D Economics.” The con-
nection between the three dimensions (social,
productive and financial) is, however, funda-
mental for an open perspective on the issue
of “organic” and “ecologic” sustainable devel-
opment in the long term—caring about both
the actual emerging needs now and the next
generation’s future ones.
In this changing environment, it is extremely
necessary to rediscover the connection be-
tween financial growth and real economy. To
implement it fully, however, it needs an environ-
ment that focuses on the values of knowledge,
innovation, solidarity of one’s own quality of
life, and that of future generations.
First, the key points of sustainable develop-
ment are based on the principle according
to which any business should go beyond the
mere pursuit of profit for the company, creating
value not only for shareholders and investors
but for the entire community of stakeholders.
There is a proven track of evidence that com-
panies pursuing the overall development of
society in a generalized vision of well-being
and shared value are creating a context where
the culture of “informed capital” based on
trust, authenticity, care, transparency, integrity,
learning and personal improvement grows.
A rapidly changing society is in itself a factor
that facilitates sustainable development.
In the financial and insurance sectors, this
evolutionary process is very evident, due to
the impact of various components—first of all,
risk-evaluation and management—which are
moving the business models toward an “econ-
omy of solutions.”
Citizens are increasingly exposed to the need
to perform autonomously economic and finan-
cial choices relevant to their current and fu-
ture well-being: for their health, for retirement,
to choose investments for their savings and,
more generally, to strengthen their protection
against external events that may affect their
lifestyle. These choices are always more trans-
ferred to the individual private will, given the
current crisis of the public social welfare.
Finance and insurance are asked to play an
important role in building a new business
model that may intercept people’s and society
emerging needs in a sustainable way (this is a
paradigm shift).
Already, at present, insurance helps the in-
sured cope with economic, climate and tech-
nology risks.
To insure, in fact, means to offer mutuality, and
this in turn is done by starting with the individ-
ual risks faced by individual policyholders and
4. IMPACTS ON SOCIETY AND THE ENVI-
RONMENT FOR SUSTAINABLE AND RE-
SPONSIBLE DEVELOPMENT

moving until a communion of risk is reached,
in which individuals’ risks become collective
risks, nullifying each other.
It means considering an insurance policy
based on the law of large numbers, and work-
ing on the basis of extensive and compre-
hensive statistical and actuarial series. It also
means having to put together a certain amount
of information and news to organize and man-
age a community of risks.
What, however, has not yet been fully under-
stood is the role that the financial sector and,
in particular, the insurance sector can con-
cretely play in the coming years, above all in
view of the enormous mass of available capital
managed, which exceeds 200 trillion dollars.
This chapter aims to highlight the role of In-
surance Industry in this brand new economic
environment, which claims big attention to the
future, the next generations, to promotion of
equality and the prevention of further conflicts.
We will track the evolution of the economy, the
society, the technology and of the legislation
drawn by national and international institutions
to promote CSR policies.
We will try to give answer to a few simple
questions that will provide a clear picture of
this topic:
1. Where does Corporate Social Re-
sponsibility (CSR) come from?
The first paragraph will discuss how CSR is
becoming more and more relevant in corpo-
rations’ strategic agenda and will analyze the
main Acts deliberated globally by international
institutions to promote CSR.
2. How can a company can benefit by
introducing CSR measures?
The second paragraph will provide evidence
about the opportunities for all companies in
adopting socially responsible business models.
3. Will the Internet of Things will be able
to support CSR policies?
The third paragraph will concentrate on the In-
ternet of Things, discussing how Connected
Insurance will contribute to CSR in developing
new processes to design innovative products,
exploit the new technologies, better analyze
better clients’ needs and provide personalized
insurance solutions.
4. How we can concretely use Con-
nected Insurance to be more socially
responsible?
The last paragraph will focus on the social im-
pact of insurance applications in the new eco-
nomic context.
4.1 MOVING TOWARD CORPO-
RATE SOCIAL RESPONSIBILITY
In 2015, many actions had been promoted
to support and solidify a global approach to a
socially responsible business model for private
companies, from G20 discussions to the new
EU/UN policies on CSR.
1) G20 discussions
Proper risk management, among other things,
is above all necessary for correct, sound and
prudent management of business. If risks aris-
ing from environmental sources are being in-
adequately incorporated into financial decision
making, for example, this is of strategic sig-
nificance to G20 financial systems—including
banking, institutional investment and the insur-
ance sectors—for at least two reasons:
1. Managing risk is central to the
effective functioning and stability of
financial institutions. Inadequate un-
derstanding of growing environmen-
tal sources of risk could allow threats
to financial institutions to accumulate
and limit progress toward sustain-

able global growth associated with a
green transition.
2. All capital is deployed on the basis
of expected “risk-adjusted” returns. If
environmental risk is being underesti-
mated, capital can be over-allocated
to higher risk activities. Improving en-
vironmental risk analysis can support
more efficient allocation of capital for
long-term stability; addressing any
mispricing of risk will trigger demand
for green finance solutions by main-
stream actors.
Financial institutions have addressed environ-
mental sources of risk in the past; however, the
traditional approaches to incorporating environ-
mental factors into risk-management systems
are insufficient in the face of environmental
sources of risk which now exist at new levels
of scale, likelihood and interconnectedness.
Social justice issues are often intrinsically linked
with risks arising from environmental sources.
The use of the word “environment” should be
interpreted in a broader sense so as to include
all elements composing it and its social impacts,
which are frequently felt disproportionately by
those least able to withstand them.
2) EU/UN policies on Corporate So-
cial Responsibility
The most important acts on CSR in the last
years have been:
a) Paris Conference in December
2015
b) Directive 2014/95/EU
c) Corporate Social Responsibility
evolution
d) Financial Stability Board (FSB)
contribution
a) Paris Conference (December 2015)
The world economy—mostly after the Paris
Conference in December 2015—has finally
accepted an “ecologic” path, which is defined
by Walter Stahel as the “circular” economy, a
model that combines the human dimension,
the safeguarding of the planet and technolog-
ical innovation4
.
One of the major elements observed at the
conference, however, was the presence of
many non-state entities, regions, municipali-
ties, small, mid-sized and large towns, individ-
13
4
The term “circular economy” was used officially for the first time in 1976, in the report “The Potential for Substituting Man-
power for Energy”, presented to the European Commission by Walter Stahel and Genevieve Reday. It outlines the vision
of a circular economy and its impact on the creation of jobs, saving of resources and waste reduction. The “circular eco-
nomy” is described (Ellen MacArthur Foundation) as “an industrial economy conceptually regenerating and it reproduces
nature in actively improving and optimizing the systems it works with.” Natural capitals – ecosystems- are preserved and
enhanced. There’s no process waste in the industrial value chains, for it becomes feedstock for others. Therefore, the
“circular economy” is based both on an idea of production and consumption of goods and services alternative to the linear
model (for example, through the use of renewable energy instead of fossil fuels) both on the role of diversity as an essential
feature of resilient and productive systems. By dissociating economic growth from the use of resources and their impact,
the circular economy offers perspectives of a sustainable and durable growth. The circular economy calls into question
the role of money and finance because, for an adequate evaluation of the economic performance, it uses measurement
instruments that take into account more aspects than the ones that determine the GNP. The “green economy” goes even
beyond. In fact, it has been defined (by UNEP) as “a system of economic activities related to the production, distribution
and consumption of goods and services that result in improved human well‐being over the long term, while not exposing
future generations to significant environmental risks or ecological scarcities”. This definition is very similar to the one of su-
stainable development. The “green economy” introduces a new idea of prosperity and well-being, not based on GNP and
consumption anymore. Prosperity is given by the growing of human, natural, social (and, certainly, also financial) capital
stocks. So, cash and resource flows are not anymore the guidelines of prosperity, but they become variables internal to
the system where they preside over exchanges.

ual communities, and so on, who by stating
their commitment to support—with concrete
actions—a reduction in the phenomenon of
global warming, aspired to being the uphold-
ers of change, apart from the will expressed by
their governments.
It’s a snapshot of a trend in which citizens di-
rectly become the main characters of their lives
and claim, rightly, to be able to have their say
without having to submit passively to choices
made by others. It’s the beginning of the end
of delegated democracy, accompanied by the
onset of a new awareness that makes every-
one more aware of the consequences of their
actions.
b) Directive 2014/95/EU
Starting in 2017 throughout the EU, Directive
2014/95/EU will be applied. For certain types
of enterprises with certain thresholds of turn-
over and a number of workers employed, it
the directive obliges a company to integrate
its accounting statements with non-financial
information related to the impact of its financial
choices on the environment and on society as
a whole.
The importance of this approach is represent-
ed by the fact that the determination of the
economic value of a company, in addition to
what is reported in its financial information
disclosures, must be made in light of the con-
sideration and assessment of its non-financial
information, among which figures, for exam-
ple, company’s impact on the environment, its
reputation, its adopted business strategy the
internal processes by which it ensures its sus-
tainability as a going concern.
Through this information, stakeholders can
evaluate the quality of the corporate risk-man-
agement system, including risks relating to so-
cial and environmental issues.
c) Corporate Social Responsibility evolution
Corporate Social Responsibility, in particular,
has undergone over the years a remarkable
transformation: From a simple system of re-
porting to stakeholders the “beneficial” and
virtuous activities carried out by the compa-
ny, CSR reporting has become, especially in
the last two years, a real management tool in
which information neither directly nor exclu-
sively of a financial or business nature has be-
come an essential part of the definition of busi-
ness strategy. This tool also has direct impact
on a company’s ability to recruit personnel, to
manage risks effectively and, finally, to accu-
rately assess its “overall value.”
To give an account of such non-financial in-
formation involves, first of all, the integration
into the business processes of an internal ap-
proach to sustainability, and accelerates along
a path toward integrated thinking, which facili-
tates dialogue between “central” professional-
ism in the future development of companies:
a risk officer on the one hand and a corporate
social responsibility manager on the other. In
the coming years, we will set the stage for a
significant challenge characterized by the pas-
sage of the use of non-financial information ex-
clusively for reporting purposes related to the
use of this information in management-control
processes that support integrated thinking in a
quantitative manner.
This approach also implies a different rela-
tionship with company employees, of whom
a different motivation and sensitivity will be
demanded in this technology-driven context
dominated by increased flexibility, open mind-
edness, agility and resilience, matched by a
greater specialization.
All this will make companies much more at-
tractive for investors and stakeholders, while
strengthening the bond of trust between busi-
ness, society and institutions.

d) Financial Stability Board (FSB) contribution
These considerations have led the Financial
Stability Board (FSB) to create an international
working group composed of representatives of
the financial and non-financial industry. These
people have been assigned to draft docu-
ments and plans based on the information that
is available about the environmental and social
activities of financial institutions. The aim—to
achieve transparency, in order to make such
data available to insurers, pension funds,
hedge funds, investors and, more generally, to
all potentially interested parties.
4.2 CORPORATE
OPPORTUNITIES FOR
RESPONSIBLE INDUSTRIES—
THE INTEGRATION OF
CSR IN STRATEGY AND
IN PROCESSES: THE
UNI ISO26000, THE
B-CORPORATION
Being socially responsible is a big opportunity
for companies from different points of view: In
a more and more informed and attentive mar-
ket, contributing to the sustainable develop-
ment of society can make a difference even at
for-profit companies.
Italian 2016 Stability Law (Legge n. 208/2015)
and the B-Corporation
The growing importance of these issues is
also reflected in the 2016 Stability Law (Law
No. 208/2015), which also introduced in Italy
the discipline of the so-called “B-corporation.”
Under this legislation, any existing or newly es-
tablished company will have the opportunity to
indicate in its scope of activity that it “pursues
one or more purposes of common benefit and
operates in a responsible, sustainable and
transparent way versus people, communities,
territories and the environment, property and
cultural and social activities, organizations and
associations, and other stakeholders.” These
companies will have to follow certain admin-
istrative management rules and report on their
efforts to contribute to the common good.
There are currently over 1,600 Certified
B-Corps around the world, all of them seeking
to redefine success in business.
BOX—The Lemonade Case
An incredible media finding reported the recent
news that the insurance company Lemonade
approved a decision to become a Certified
B-Corporation, as announced by its board of
directors and shareholders.
These for-profit companies are certified by the
non-profit B Lab and must meet high standards
of social and environmental performance, ac-
countability and transparency. Lemonade is
the first B-Corp in the insurance industry. This
represents, according to its top management,
a source of “tremendous pride for our team.
Lemonade’s mission is to redesign insurance
from the ground up to make it honest, instant
and delightful.”
UNI ISO 26000/2010 giudelines on Corporate
Social responsibility
With the publication of the UNI ISO 26000/2010
Social Responsibility guidelines for companies
of any legal form, the importance of integrating
into its internal processes the habit of paying
attention to stakeholders on the issues of risk
analysis and enterprise asset-management
was clear.

The UNI intended to encourage the adoption
of best practices in terms of responsibility
and contribute to a sustainable development,
pushing companies to go beyond mere com-
pliance with the law. According to the disposi-
tion, social responsibility is “The responsibility
of an organization for the impacts of its deci-
sions and its activities on society and the en-
vironment, through a transparent and ethical
behavior that: contributes to the sustainable
development, including health and welfare of
society; It takes into account the expectations/
interests of stakeholders; It is in accordance
with the applicable law and consistent with in-
ternational norms of behavior; It is integrated
throughout the organization and practiced in
its relationships.”
It is now clear that this approach makes com-
panies more attractive for investors and cus-
tomers helping build customer loyalty and
encouraging the construction of a more stable
and durable relationship.
As examples:
• the current debate on the concept of “fi-
duciary duty”—especially with regard to
financial intermediaries—still focuses only
on short-term financial performance that
may result from the investment. Instead,
fiduciary duty should make financial insti-
tutions that to “act in the best interest of
the beneficiaries” means having a long-
term approach and encouraging the de-
velopment of “patient capitals” able to
assess the effects of an investment in the
medium to long term by measuring the
outcome environmentally and socially as
well. In some non-European countries,
however, rulings have been handed down
to some banks that had financed subjects
who turned out to be polluters without
having passed an adequate prudential ve-
rification and thus violating the so-called
fiduciary duty toward those who had en-
trusted their savings to the bank.
• In Brazil, a Supervisory Authority applied
stress-tests that incorporated environ-
mental, social, governance (ESG) va-
riables to ensure the stability of financial
firms. Through the use of these variables,
the Social Capital Requirement is acted
upon, in a risk-mitigation key.
Sustainability Indexes
On the other hand, sustainability indexes are
becoming increasingly prevalent in regulated
markets (such as the Dow Jones Sustainability
World, Dow Jones Sustainability Europe, the
FTSE4Good Index, and the STOXX ESG, to
name a few). These include listed companies
grouped by different criteria but having in com-
mon the goal of identifying the companies rat-
ed best in terms of sustainability performance
and corporate social responsibility, based on
independent analysis by companies that use
diversified weighting methodologies and elab-
orate ad hoc ranking systems.
Empirical evidence now shows that the returns
produced by the companies included in these
indices are able to replicate and, very often,
exceed the performance of traditional indexes,
while maintaining a close relationship with the
integration of environmental, social and gover-
nance aspects within their own activities, from
a win-win point of view.
According to a recent survey over the past
five years, the percentage of companies in the
Standard & Poor’s 500, which is committed
to reporting on aspects of sustainability, has
increased from 20% to 80%. It is a significant
figure that includes 500 US companies with
the highest capitalization.
Impacts on Stock Exchanges and Investments
• Big investment funds (Blackrock, Norwe-
gian Sovereign Fund, and others) invest
in insurance companies as shareholders
and pay increasing attention to ESG fac-
tors in their investment choices. Directive

2014/95/EC will increase the disclosure of
such indicators, and will also increase the
stewardship exercised by the investors.
• The last revision of the Code of Gover-
nance for listed companies (El Código
de buen gobierno de las sociedades co-
tizada) by the Commission of the Madrid
Stock Exchange (Comisión Nacional del
Mercado de Valores) introduced a new
principle and two new recommendations
specifically regarding Corporate Social
Responsibility. According to the Com-
mission, adequate attention must be
paid to CSR principles, which must aim
to “promote an adequate policy of social
responsibility, as a non-delegable power
of the board, and give transparent infor-
mation on its developments, applications
and results.” According to the Spanish
authorities, the listed company must cle-
arly specify its CSR objectives and stra-
tegy; its practices for sharing information
with stakeholders; its results-measure-
ment model; its supervision system; and
its communication policies by adopting a
reporting document that adheres to inter-
national best practices.
• Denmark, Norway and Sweden require
sustainability reports at various levels, and
France’s Loi Grenelle II requires that larger
companies (listed and unlisted) disclose
in their annual reports how they take into
account the environmental and social im-
pacts of their activities and their contribu-
tion to the development of a sustainable
society. The law even requires this infor-
mation to be verified by an independent
third party in an Assurance Report.
• From February 2016 the Internet site of
the Italian stock exchange market upda-
ted its sustainable financial section with a
contribution of the Italian Forum for sustai-
nable finance.
• In conclusion, as regards medium to long-
term investments—set up by the forms of
supplementary pensions, it is interesting
to refer to the recent Italian law 190/2014
(Stability Law 2015) that established (see
paragraph 92) a tax credit of 9 percent of
income annually accrued, provided that
an amount corresponding to the result just
mentioned is invested for at least five ye-
ars in a financial business represented by:
(i)Shares, or shares in companies and
entities established in Italy or in the
EU or in the EEA, or bonds or other
debt securities issued by the same
persons, that operate “mainly in the
development or implementation of
projects related to the infrastructures
linked to tourism, culture and environ-
ment, water, road, rail, port, airport,
health, public non-residential real es-
tate, telecommunications, including
digital ones, and related to the pro-
duction and transportation of energy;
(ii)Shares and units of collective in-
vestment undertakings for saving
(“UCI”) over a period of not less than
five years, which invest primarily in se-
curities of such companies.
Legislation is a sure incentive for those compa-
nies who want to renew their production pro-
cesses by deploying infrastructure and more
environmentally friendly technology.
4.3 INFLUENCING CONSUMERS
TO ADOPT SAFER, MORE
SUSTAINABLE AND
HEALTHIER LIFESTYLES?
Up to this point, we have discussed the op-
portunities CSR gives insurers; the next step
is to analyze how Connected Insurance may
concretely support the industry to increase its
positive impact on society.
The big challenge for insurance is to combine

the new technologies with useful available data
to promote a socially sustainable economy—an
economy that can support coming generations,
reduce social disparities and prevent conflicts.
The insurance industry, more so than others,
can today become the vehicle through which
greater awareness can be created among the
insured and among consumers more gener-
ally regarding the way society produces and
finances the goods and services it needs, influ-
encing lifestyles with a view to overall econom-
ic and social sustainability.
In this framework, it is clear that the informa-
tion society—the Internet, human networks,
social and technology networks—can be very
useful for the development of the society as a
whole and can help to improve the quality of
people’s jobs, their leisure time, and consump-
tion levels—in short, their life conditions.
In an era of low returns, what should be done is
to regenerate the use of money by matching it
to social innovation and to the sharing of tools
able to create shared value. The IT and connec-
tivity era that we are experiencing has delivered
great knowledge and power to consumers.
More and more consumers use this power not
only to get “good prices” but also to support
“good companies.” In this context, to set up a
new form of business or to sell a new product
“ethically” and sustainably, while paying major
attention to the needs of stakeholders, means
doing something new and virtuous, not mere-
ly avoiding misconduct. It means adopting
behaviors that allow us to develop the com-
pany’s value and the people who relate with it
and help customers do the same. Markets will
be increasingly dominated by those who man-
age to implement an “ethical” and sustainable
behavior in their business model.
A study by the Forum for Sustainable Finance
and Doxametrics in 20135
shows that there is
a growing demand for sustainability from retail
investors as well: in a sample of 1,000 inves-
tors 30-to-50 years old, (43% of them holding
a degree), 47% in fact expressed willingness to
change their investment decisions in favor of
companies that differentiate positively in terms
of sustainability.
If, on the one hand, the technological revolu-
tion requires considerable flexibility in the of-
fer, on the other hand, if well directed, it can
change the course of history. It is an opportu-
nity that must not be wasted, and if it is true
that it poses new challenges it is equally true
that it creates new opportunities.
Technology significantly influences the behavior
of customers. Internet access is now available
permanently. Users expect that all Internet func-
tions be available at all times, and that all re-
quests made online be processed immediately.
However, unlike the tools that were used until a
few years ago, the latest technology, especial-
ly tablets and smartphones, are sealed boxes.
There is no possibility of dismantling the pack-
age. It is impossible to see inside, and in using
them, we feel satisfied just by looking at the
world through them.
The technology itself is transparent—not be-
cause we completely understand its func-
tioning, but simply because it’s impossible to
assess, since its evolution and dissemination
goes hand-in-hand with its ease of use and
ease of usability. Stated another way, its natu-
ralness in use hides its technological complexi-
ty, showing as human a reaction that is instead
mediated by the machine.
An audience of aware consumers is the best
source for the entrepreneur seeking to under-
stand consumer needs and the exigencies of
learning to manage them while improving upon
one’s ability to give answers to the problems of
people and society as a whole.
5
The study represents the first market research in Italy on the responsible consumer and was presented at the Forum for Su-
stainable Finance during the CSR Week 2013. The survey was conducted by Doxametrics with contribution of Natixis GAM,
UBS, Unipol Gruppo Finanziario and Etica SGR.

The consumer must have the right and duty to
think and to act advisedly, being aware of the
things he does and of the reasons and motiva-
tions that support his choices and the conse-
quences resulting therefrom.
In a few years, maybe less, we will have a
different consumer, more aware, multitasking
and interactive; able to directly influence the
companies thanks to digital tools. An educat-
ed consumer who is informed, who wants to
know and learn about the offer that is being
proposed and, only after having evaluated it—
in all respects, not only the strictly economic
ones—makes his decision.
Technology, information technology and dig-
itization should help us find solutions, solve
problems and make decisions oriented to the
common good. As repeatedly stated, in fact,
the greater availability of data and information
makes risk-assumption more transparent and
comprehensive, as well as facilitating the mak-
ing of much more simple and well-informed
investment choices.
It is for this reason that the interaction can fos-
ter the development of new investment tools
oriented on average to the long term: Social
Impact Bonds, green bonds, venture cap-
ital instruments aimed at innovative SMEs,
and the like can be found in the technologi-
cal evolution an instrument of transparency
and control that can increase the safety and
reliability enhancing the role of financial insti-
tutions (banks, insurance companies, pension
funds, investment funds) in the construction of
the circular economy and the green economy.
Insurers—as medium to long term institutional
investors—through the Connected insurance
can improve their investment and risk as-
sessment criteria, reducing the risks of fraud
and influencing the behavior of the subjects in
which they invest, indirectly working on the en-
vironment and society.
Finally, it has been understood, for example,
that the Sustainable Development Goals can
only be achieved with the active intervention of
the private sector. In fact, the Global Goals—17
objectives contained in the action plan shared
by the 193 UN member countries concerning
issues relevant to world development (like the
fight against poverty, hunger eradication and
climate change)—should be realized by 2030.
The implementation of the plan is fostering
important and particular cooperation between
actors who normally are confronted with skep-
ticism: Representatives of the social sector on
the one hand, and representatives of private
and public institutions on the other. “Blended
finance” is a term coined recently to describe
the strategic use of public and philanthropic
funds to attract private capital into investments
with social impact in emerging markets.
With the support of public co-investment, pri-
vate investors benefit from lower risk and/or
returns superior to traditional forms of invest-
ment. At the same time, public investors can
amplify the impact of private capital, attracting
funding that otherwise would not be available
for certain activities. The measurement of this
impact requires increasingly sophisticated and
complex digital technologies that are efficient
and “neutral” tools to be used in the shaping
of judgment.
In this fluid and rapidly changing context, the
insurance industry is gradually transforming.
Insurance companies today are increasingly
using cloud computing, mobile devices, data
analysis and social media to meet the chang-
ing needs and expectations of customers, and
we are witnessing a gradual shift in the provi-
sion of insurance services. The pace of digital
change and its impact will continue to acceler-
ate in the coming years.
Many insurance companies have already
made changes to their working processes—a
phenomenon identified by the neologism In-
sTech. It’s important to remember, however,
that the amount of information acquired does
not always serve to improve knowledge and

awareness, because computerization allows
us to merge specific information, but not to
automatically shape it in a context understand-
able to the recipient.
Today we are living a paradox: we can instantly
have information that in the last century was
acquired in a life time, but we are unable to
use it in its entirety. That is why the ability to fo-
cus the information to a frame of reference be-
comes important. Consideration of these con-
nections translates into the ability to be present
in the knowledge network that determines the
inclusion of all stakeholders (even “potential”
ones). In fact, the spreading of information,
along with the learning process itself, has be-
come increasingly related to the field of social
relations rather than to the field of information
tout court—without qualification— hence the
need for a new “professionalism” and sensitivity
in decrypting the data collected. This profes-
sionalism will increasingly need to focus on the
most important elements of the production pro-
cess, such as research and development, pro-
cess control and quality of the service offered.
According to Italy’s Institute for the Supervision
of Insurance (IVASS), in 2015 the country’s in-
surance companies received 106,908 claims
(+14.1% compared to 2014), 77% relative to
the non-life branches and 23% relative to life
(78% and 22%, respectively, in 2014).
This is why the insurance industry should
start developing and producing innovative,
more understandable contractual models and
adapting them to the electronic tools in which
they will be available, perhaps by using simpler
language than that used by “experts”—a lan-
guage that does not facilitate full comprehen-
sibility and consumer awareness.
Connected Insurance (C.I.) can increase the
spread of “smart contract,” in which, for exam-
ple, the management of payments to the cus-
tomer after an accident allows for a lump-sum
assessment of the damage with the help of an
electronic platform and central operation. A third,
independent party could certify the existence of
the claim, allowing the insured to receive com-
pensation without any administrative fulfillment.
An approach of this type requires profession-
alism to perform an intermediation between
conventional systems of information and us-
ers. If the technical language is not mediated, it
becomes an imposition that ends up manipu-
lating the user, generating litigation in the con-
tractual relationship, reputational damage, and
transmigration toward competition.
The next phase of Directive 2016/97/EU, the
European Union’s Insurance Distribution Di-
rective (IDD), confirms the expansion in the
focus of the industry from prudential regulation
and risk-based measures toward policyholder
protection and conduct. The IDD will change
companies’ behavior by applying new rules to
sales situations to ensure customers are pro-
tected throughout the contract term. This will
reinforce the trend to reexamine how insurers
go to market and use customer data.
The risk of new forms of abuse should be
prevented. In fact, each time a new service
is offered, the information gathered about the
parties increases, and there is no doubt that
in the information society the problems of pri-
vacy will multiply. But if an operator flouts or
even circumvents the rules, the damage will be
borne by the entire industry, causing it to lose
credibility, reputation and accountability. This
will nullify the advocacy work that has been
built very slowly over time.
The tradeoff will probably involve taking into
account individualities, even when working
on the community as a whole, so as to draw
more and more tailor made products and ser-
vices, to satisfy more and more personalized
needs. In any case, the industry must bear in
mind that the product is important, but that the
process of development and quality of service
provided before and after the contractual re-
lationship established with the client is even
more important.

21
Connected insurance will allow you to gener-
ate and spread trading and confrontation en-
vironments that will become real incubators of
knowledge—environments where the users of
insurance can learn to make better use of new
technologies and have more options to behave
in an ethical and aware manner. In addition to
doing business according to the dictates of its
commercial nature, the industry will also per-
form a teaching and narrative function. In the
process, the industry will reshape itself using
input contributed by all the actors involved, in-
cluding the opinions of policyholders and so
on, to fully respond to consumer needs.
4.4 WILL NATIONS
INDIRECTLY BENEFIT FROM
A MORE-CONNECTED,
RESPONSIBLE INSURANCE?
The insurance sector is aware of the fact that
there is potential demand for emerging risk
coverage, mainly for households and real es-
tate. However, this demand remains dormant:
there is not full awareness of the proactive role
the industry must play in the integration of en-
vironmental factors, technological innovation
in production processes and the “global qual-
ity” of the products and services it provides.
The road toward the greening of the insurance
sector will also require a strong emphasis on
dematerialization.
This is why Connected Insurance, besides
making customer experience more stable, effi-
cient and satisfactory, will also provide positive
effects on sustainable development of society
as a whole. It will be necessary to use assess-
ment methods capable of measuring such ben-
efits—for example, Social Return on Investment
(SROI), but if these prove unsatisfactory, it will
be necessary to find other criteria, such as
making a more and more scientific approach to
assessing the environmental, social and gover-
nance (ESG) variables of production activities.
On the other hand, new technologies are be-
coming smarter and less invasive. This tech-
nology can be easily implemented in any con-
text, although implementation is being done
primarily in the urban context. Industry adjust-
ments to the technological features have re-
al-time effect on goods and services, on peo-
ple, and on the things that surround them. In
this light, a basic element which will be strongly
highlighted by digital technology is the gradu-
al transition from possessing goods to having
access to goods.
Personal Insurance:
The use of devices is shifting consumers’ at-
tention toward a healthier and pro-active life-
style, oriented to preventing diseases rather
than treating them, capable of increasing life
expectancy and guaranteeing higher quality
with a consequent lower need of assistance
and specific treatments. Digitalization is de-
veloping new forms of sharing and supporting
the effort of insurance services to orient peo-
ple toward certain behaviors—for example,
gaming with friends and other users/insureds,
and being rewarded for behaviors that pro-
mote healthier lifestyles with complementary
services like gyms, beauty farms, fidelity and
rewards programs based on consumption,
periodic checkups linked to the expiration of
documents, and so on.
There will be new opportunities to build goods
and services dedicated to the needs of older
and very old people (assistance, attention to
daily needs, cohousing and so on) where Con-
nected Insurance will rationalize interventions
and create measurable market economies that
directly impact public spending.
The increased use of eco-friendly means of
transportation like bicycling and fit-walking is
modifying insurance needs in the areas of acci-
dent, assistance and geolocation, among oth-
ers. However, dietary habits and diseases can
deeply influence emerging risks and needs.
Certainly, people suffering from celiac disease,

the obese, and vegan people are constantly
growing in number, and the insurance sector
can work to promptly introduce technolog-
ical products that complement such trends
while influencing habits and consumption at
the same time. Thanks to the growing and
widespread public awareness of ESG issues,
in fact, people are living healthier lifestyles,
thinking critically about their diets and becom-
ing more informed about high-quality food
(certified or zero-kilometer, directly monitored
by consumers), as well as consumer goods
which are less and less polluting (electric cars
and bikes, with strong dematerialization in us-
ing financial services and payment systems).
Consequently, IT risks linked to data protection
and cybercrimes on customers’ devices are
growing (worms in home computers, identity
thefts in transactions, and so on); in this field
too, the role of insurers is crucial.
Motor Insurance—mobility and transport
Mobility in our towns is changing dramatically
thanks to digital technologies. Just think of car
sharing. The real revolution will come from driv-
erless cars, which will give further momentum
to shared use. This innovation will eliminate the
distinction between public and private trans-
port, and some studies prove that some large
towns in the world would already meet the mo-
bility demand with about 30% of the circulating
car fleet. Implications deriving from Connected
Insurance in this field are extremely clear for the
insurance sector and indicate the path to follow.
The economic crisis and a growing aware-
ness of the risks arising from climate change,
despite the oil price reduction, mark an irre-
versible trend. Installing technological devic-
es capable of measuring driving style fosters
risk-reduction, but also consumption-reduc-
tion, and influences the consequent impact on
the environment. The development of smart
mobility, slower but more constant, is increas-
ingly evident, using bikes or collective means,
based on the sharing economy.
Connected insurance technology monitors
tire wear, triggers vehicle-maintenance alerts,
tracks geolocation, locates emergency and
assistance services, and collects data that can
guide the creation of new products and ser-
vices to improve customers’ experience. And
cyclists can utilize a range of applications to
summon immediate assistance from non-pol-
luting cycle rickshaws, view interactive maps,
locate hotel and restaurant discount offers
and custom-tailored complementary services
linked to mobility.
Clearly, rationalization and efficiency must be
applied to every type of transport, whether on
roads or rails, in the air or on water. Just to
give an example of the role of insurance, see
what is established under Article 1 of Italian
law 221/2015 (the so-called “Green Act”) con-
cerning “Measures aimed at raising awareness
among owners of pollutant cargo transported
by sea.” Under the law, if a ship is determined
inadequate to haul the quality and quantity of
the polluted load, its owner must stipulate an
ad hoc insurance policy that covers any po-
tential risks. The captain is required to keep a
copy of the policy with the ship’s documents
for presentation to maritime authorities con-
ducting compliance checks. This is a clear
example of how insurers can use more devel-
oped technology to increase the level of com-
pliance with environmental regulations.
Personal properties—home insurance
This is not about imagining futuristic cities, but
redesigning existing cities. In a social context
where the population is not growing but is
getting older, to allow urban areas to expand
and unnecessarily consume virgin soil is not
the right thing to do. What should be done
is to use new materials and technologies to
enhance existing assets and improve their re-
silience to climate change. That means using
less concrete and more silicon, which impacts
design, installation, maintenance and use of
technology that effectively reduces manage-
ment costs.

What is needed are serious and pervasive pub-
lic policies of intervention on real estate: when
skiing, nobody wears only a tank top, because
body heat will quickly diffuse away with the risk
of rapid death from exposure. The same should
apply to buildings: you should take action on
“external housing quality” to ensure that the en-
ergy is retained within the home. Such a step
can cut energy costs 70% to 90%.
Using newer, more energy-efficient materials,
including fire-resistant and non-conducting
materials, decreases related insurance risks,
and gives birth, at the same time, to new
needs which are still not well defined from the
point of view of the insurance risk (e.g., the
ability to accumulate the self-produced energy
by storing it in more modern batteries).
According to Italy’s National Institute of Statis-
tics (Istat), almost 40% of the Italian population
is single and there is an increase in co-hous-
ing, with a change in family housing habits
such that more people are living in apartment
buildings and in communities. The demand for
insurance products should increase, linked to
the use of goods and technologies to produce
renewable energies that cover the entire “cycle
of use” up to their disposal.
The tendency for the insurance industry would
be to manage its real estate assets in an in-
novative way, making full use of the enormous
availability of data resulting from automation
and providing alternative services for singles or
older people not necessarily already in need of
care, but in need of shared life and facilities.
All this indirectly produces the birth of a prod-
uct that does not meet the strict definition of
insurance, but that is directly connected to it,
and that is also favored by the simplification,
acceleration and rationalization resulting from
technology (e.g., services to provide for select-
ed caregivers to fulfill daily needs and so on).
It would be possible to deploy accessory ser-
vices (such as a plumber, metal worker, car-
penter, construction worker or electrician) on
demand, or by means of alerts issued by a
computer system that can also be linked to
family habits (consumption and “smart” refrig-
erators). Chips could be used in pet insurance
with considerable benefits in terms of expo-
sure to risks.
Technology will become increasingly rele-
vant to insurance-risk prevention. Examples
include gas leak detection, theft prevention,
conversion of old systems in time to avoid ser-
vice-supply disruption, integration of intelligent
electrical systems with self-coordinating appli-
ances; reduction of magnetic fields in rooms;
isolation and automatic protection during
lightning storms, and so on. At the same time,
such technology improves energy-efficien-
cy and benefits the environment by reducing
energy consumption and conserving water.
There are applications on the market that save
considerable time detecting faults in the water
supply network by using satellites. Technology
can also help reduce the costs for the commu-
nity, for example in the investigation of crimes
or in the interventions of maintenance of com-
mon goods with obvious benefits in terms of
insurance.
For example, it will become much easier to
take action on the waste cycle, which will im-
pact the taxation of services as well (see social
impact bond in Naples).
In many cases, technology promotes common
services and can also be used to develop new
forms of real estate management. Some credit
institutions, for example, have contracted their
properties out to social cooperatives to create
forms of social housing where “aware families”
that have low incomes can obtain a reduction
in condo fees if they perform common func-
tions useful to the management of the proper-
ty, exchanging their professional skills for lower
ordinary and extraordinary maintenance costs.
Professional liability insurance:
In this field as well, people are cutting costs
by using home automation and computer

applications that push energy consumption
down while enhancing risk prevention in the
areas of liability, property, fire, theft, and so on.
This opens up interesting possibilities to make
concrete improvements in management of the
waste cycle, which is a clear benefit to every-
one. Specialized environmental consulting and
the engagement of the insurer on the compa-
ny that he intends to buy becomes strategic
not only from the perspective of risk preven-
tion but also cost-reduction for the company
itself. The implementation and/or improvement
of environmental certifications and their ongo-
ing monitoring also brings significant insurance
benefits. The growing importance of these fac-
tors is highlighted in the recent Italian legisla-
tion on public procurement, where we find, as
a criterion for selecting the winner of the ten-
der, the fact that this proves to have a posi-
tive impact on the environment and on society
in the realization of the commissioned work.
These factors are greatly relevant to insurance.
New insurance products can be created by
exploiting the potential of C.I. at every step,
from quality control in production to product
distribution and beyond. Remote-controlled
vehicles offer new insurance-market opportu-
nities. The same is true of roadside assistance
services; interactive GPS maps; theft-preven-
tion devices; special offers from the hospital-
ity industry; and device-enabled connection
with other multi-modal services. Further mar-
ket openings include verification of food per-
ishability; consistency of warehoused goods;
expiration dates; data protection; and the pre-
vention of cybercrimes.
Increasingly efficient, user-friendly digital tech-
nology and Connected Insurance is finding a
happy point of synthesis in a growing list of mar-
ket opportunities that expands into consumer
goods, convention planning, personal services,
sustainable mobility and corporate wellness
where shrinking company’s carbon footprint,
creating obvious tax benefits and environment.

2525
The Connected Insurance represents a new
paradigm for the insurance business.
This new approach is based on the use of
telematic detectors to collect and transmit
data about the state of an insured risk and
about the use of big data to transform rough
data in information that can be immediately
processed along the insurance value chain.
The insurance industry is experiencing a great
transformation and the Connected Insurance
represents one of the main change factors,
thanks to the potential advantage that it will
bring to productivity at top line levels, to the
profitability of the business and to the solidity
of the portfolio.
In addition, let’s not forget the resulting greater
closeness to clients for an industry that is used
to have a few touch points in particularly sen-
sitive phases (acquisition and claim).
The Insurance is not just technique, technolo-
gy and regulations. It’s an essential part in the
development of national economy and wel-
fare: risk management, protection, mutuality
and national insurance are pillars on which the
progress of civilized societies is based.
The professional, the artisan, the head of the
family, the SMEs can have many insurance
products to protect themselves from the ev-
eryday hidden risks, to increase their level of
security and protection, to plan serenely the
future of their family and enterprise, to improve
their life quality and their business.
In this context, the insurance companies – by
using data from the detectors – can perform a
new virtuous role for society by providing, first
of all, more active prevention from all risks that
could happen, and, secondly – when preven-
tion is not sufficient - well-timed intervention,
also guaranteeing proactivity, useful to limit the
damage and facilitate the recovery.
In the end, let’s not forget that, by increasing
the sustainability of its business models, the
insurance industry will be able to generate im-
portant positive externalities: respect for the
environment and for future generations, better
health conditions and, at the same time, less
health care costs due to accidents. These are
just few examples of how the insurance indus-
try can give its contribution for a better world.
Dario Focarelli
5. CONCLUSIONS
05. CONCLUSIONS

Connected and Sustainable Insurance

Connected and Sustainable Insurance

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (11)

Ähnlich wie Connected and Sustainable Insurance

Ähnlich wie Connected and Sustainable Insurance (20)

Mehr von Matteo Carbone

Mehr von Matteo Carbone (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Connected and Sustainable Insurance