4 P's of Insurtech - Matteo Carbone
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The document discusses the evolution of insurtech and its impact on the insurance industry, emphasizing the importance of technology and data in transforming insurance models. Matteo Carbone outlines the initiatives of the Connected Insurance Observatory, which aims to facilitate collaboration among insurance entities and highlight the significance of telematics in improving customer experience and profitability. Key insights include the necessity for personalized insurance offerings and the role of artificial intelligence in enhancing client engagement and operational efficiency.
4 P's of Insurtech - Matteo Carbone
- 1. April 26th 2017 4 Ps of Insurtech Matteo Carbone Founder and Director, Connected Insurance Observatory @mcins_
- 2. 2 About me Matteo Carbone Founder and Director of the Connected Insurance Observatory +11 years strategic consulting (former Principal with Bain & co.) Keynote speaker and writer on insurance innovation Global InsurTech Influencer (1° InsurTech Influencer by InsurtechNews, Top 5 InsTech Influencer by InstechLondon, Top 3 InsurTech Influencer by Right Relevance; Top 5 IoT Influencer by Postscapes, Top 25 Disruptors in the Insurance Industry by Vertafore) • The Insurance think tank started in Europe on 2016 aggregating almost 30 international insurance groups, institutions and tech firm • The initiative delivers three concrete outcomes: ‒ the most pragmatic multiclient research specialized on the insurance IoT domain ‒ one-to-one workshops dedicated to each member to discuss the research outcomes ‒ plenary symposiums with all the members together around the same table
- 3. 3 The current participants to the European Connected Insurance Observatory 2017 edition AIBA Zurich Allianz Worldwide Partners Swiss Re Munich Re RGA SCOR Reale Group Chubb Cardif AVIPOP (AVIVA) IMA Assistance Cattolica Assicurazioni Guidewire Octo Telematics Vodafone Aubay Sysdata InsurtechNews Do Different Portolano Insurers Re-Insurers Techs Others HelvetiaChiara Assicurazioni Sara Assicurazioni UnipolSai Groupama AXA Cloudera
- 4. 4 Why did we come here? Insurance is about to protecting the way people lives Insurance have been since 1347 a contract where someone promises to indemnify another against loss or damage from am uncertain event as long as premium is paid to obtain this coverage It’s unthinkable for an insurance company today not to pose the question of how to evolve its own model by thinking which modules within their value chain should be transformed or reinvented via technology and data usage I believe all the players in the insurance arena will be InsurTech, meaning organizations where technology will prevail as the key enabler for the achievement of strategic goals Insurtech can make the insurance sector stronger and in that way more able to achieve its strategic goal: to protect the way people lives!
- 5. 5InsurTech map (1200 startups, 17,5 B$ funding) Software is eating the insurance business P2P Internet of things
- 6. The innovation process is not simple and linear
- 7. 7 Strategy first! •Strategic focus, prioritization •Appropriate allocation of resources •Change mindset, culture of learning, risk-taking and innovation •Organizational relevance, proximity to CEO •Execution, mobilize for success •Strategic focus, prioritization My way to evaluate an insurtech initiative Insurance perspective
- 8. 8 Let’s starting with an example of insurtech initiative focused on productivity Insurance perspective
- 9. 9 I’ll show you one approach based on Artificial Intelligence Machines with a «human intelligence» enabling the systems to perceive, decide, act, learn and adapt in order to maximize their chance of success at some goals Natural language processing Robotics Machine learning Speech recognition ComputervisionINPUT OUTPUT ARTIFICIAL INTELLIGENCE (algorithms) Expert system Insurance perspective
- 10. 10 The insurance customer is interested to receive personalized insurance offers 0 10 20 30 40% Share of customer interested to personalized insurance offer based on the telematics device's data Spain France UK US Austria Italy Germany Source: Connected Insurance Observatory, SSI Insurance perspective
- 11. 11 Would you like to protect your luggage? Be present where and when it matters most is relevant Insurance perspective
- 12. 12 The Neosurance is a Virtual Insurance Agent DISCLAIMER I’M AN INVESTOR OF NEOSURANCE Neosurance’s AI understand context, preferences and personality type of the customer so every insurance proposal is personally tailored real time “segment one” marketing approach! …to the right person Insurance perspective
- 13. 13 Insurance purchase is not exciting, insurance is sold not bought When not compulsory, you have to stimulate the need! Insurance perspective
- 14. 14 Software is eating the world… The insurance sector will also face the challenge of less human interactions Average daily activity with the smartphone: • 1,3 – 3,8 hours • 75 - 135 sessions • 2,617 - 5,427 clicks More than 50% of us use the smartphone while talking with friends or having dinner at restaurant Almost 50% of us sleep near our phone Source: Time, dscout Insurance perspective
- 15. 15 …and the attention is falling The average attention span of a goldfish is 9 seconds The average human attention span on 2000 was 12 seconds The average human attention span on 2013 was 8 seconds Source: Statistic Brain Insurance perspective
- 16. 16 I’m forecasting the rise of the protection gap due this context (less human interactions and falling attention span) Neosurance’s massive transformative purpose is to close the future protection gap I invested on them for the productivity potential of their business model Incremental changes not able to avoid the rise of the protection gap On line insurance sales Comparison web-sites On-demand insurance apps Push insurance sales (AI+Smarphone) Neosurance’s Virtual Insurance Agent Insurance perspective
- 17. 17 The second example is an approach addressing profitability, proximity and persistency Insurance perspective
- 18. 18 I’ll talk to you about telematics, but I have before to ask you for the next 15 minutes to forget all you have heard about it since today Because telematics is an extremely powerful technology able to transform your journey… …but you have seen it used only to go to the market at the end of the street Insurance perspective
- 19. 19 Telematics, what am I talking about? Telematics device Blackbox to be installed on top to the battery for all the year (self-installing) Insurance coverage Auto liability insurance coverage with 25% up-front flat discount Services Bundle of services with an annual fee charged to the customer (50€) This is the typical product on the Italian market Insurance perspective
- 20. 20 The business case for the client 3% 3% 48% 40% 34% 35% 13% 17% 3% 5% <200€ 200-400€ 400-600€ 600-900€ >900€ Insurance market Telematis policies Auto insurance premium paid 1250 € - 312 € 938 € 50 € 988 € Discount Discounted price Final Price Client feeStarting price - 75 € 225 € 50 € 275 € Discount Discounted price Final Price Client feeStarting price 300 € Insurance perspective
- 21. 21 2012 2014 2016 3.6 mln of cars with an insurance black-box fitted-in Source: Connected Insurance Observatory >6.3 mln of cars with an insurance black-box fitted-in 1.3 mln of cars with an insurance black-box fitted-in The Italian telematics market are scaling: you can find here the larger number worldwide of cars connected with an insurer The penetration was 19% in the last quarter of 2016 The bigger auto insurance player has a penetration >35% on its book Insurance perspective
- 22. 22 Profitability: the insurer’s business case ITALIAN MARKET Traditional bottom line Risk self selection Insurance perspective
- 23. 23 Profitability: Telematics on the Italian market have an impressive self selection effect (acquisition of low risk clients) MTPL claims frequency -20% Market average (20%) Claims frequency (district average) Black box effect on claims frequency (risk adjusted) Source: ANIA (2014 data), Connected Insurance Observatory MULTIVARIATE ANALYSIS BASED ON 87% OF THE MARKET Black box impact by district RISK SELECTION Market average -20% 3.0 6.0 6.5%Market average 4,8% 4.5 Insurance perspective
- 24. 24 ITALIAN MARKET Traditional bottom line Risk self selection Claims cost reduction Profitability: the insurer’s business case Insurance perspective
- 25. 25 +100% Insurer's body shops usage +5% speed settlement -11% material damage costs Source: Connected Insurance Observatory Profitability: material benefits achieved by the best practices using the telematics data on the claim handling process -18% body injuries incidence ITALIAN TELEMATICS BEST PRACTICES LOSS CONTROL MTPL average claim cost -7% Insurance perspective
- 26. 26 ITALIAN MARKET Traditional bottom line Risk self selection Claims cost reduction Service fees paid by the customer Bottom line with telematics Hardware TSP Telematics costs Discount to costumer Benefits retrocession More than 60% of the Italian to the client) More than 60% of the Italian telematics volumes have an yearly service fees to the customers (50-100€ charged to the client) Intermediary additional remuneration Profitability: the insurer’s business case Insurance perspective
- 27. 27 Proximity: some insurers have already reinvented the driver’s customer journey leveraging on the telematics data Source: Connected Insurance Observatory Weather alert based on geo-localization 5 Antitheft service if the box registers a different-than- usual driving style 3 "Live" concierge supporting navigation 1 Alert if the vehicle exits a "safe area" (or enters an "unsafe area") of the city, defined by the client (e.g. parental control options) 4 Alert in case speed limits are exceeded 2 While driving In case of crash When parked Road or medical assistance via dedicated button 8 Simplified claim notification, including automatic form fill-in based on telematics data Claim certification at client's disposal 11 12 Highway/ parking area tolling 6 Automatic assistance to the client on the premises in case of severe accident 10 Parking localiza- tion Alert if the car is hit when parked Antitheft service if the box is removed/ uninstalled Alert in case the vehicle is moved when the engine is off (e.g. tow-away) 15 16 19 Stolen veicle recovery 21 Street sweeping alerts 13 Short- time theft cover Damages Photo Claims feature 14 17 Alert if the car is hit when parked 18 Bodyguard for emergency outside the car when parked 20 Client assistance and personalized case management in case of crash 9 NOT EXAUSTIVE Fuel gas predictor 7
- 28. 28 Persistency: the telematics portfolio shows a lower churn rate 0% 2% 4% 6% 8% 10% 12% 14% 16% No telematics Telematics Source: Ivass (2016 data), Connected Insurance Observatory MTPL churn rate -25% Churn rate LOYALTY Insurance perspective
- 29. 29 “What is the ROI of the use case?" "Does the approach make sense?" “What is the best way to do it at my company?" • First pilots focused on one use case Incubation phase Growth phase Maturity phase Exploration phase Learning phase Source: Connected Insurance Observatory 2014 • First pilots • Roll out by few pioneers • Pilot phases by greatest part of players by using a "me-too" approach • Only few top players understand telematics full potential (UW, claims, VAS), define their own approach (e.g. big data) and push the selling phase • Commercial offer differentiation • Telematics potential fully understood and increased commercial push by all players • Differentiating solutions / providers over top players • Telematics approach is the standard for the insurance business • Relationship consolidation between top players and providers, best practices cross- country diffusion 20122000 Today Also when it works well, it will not happen overnight
- 30. 30 The Connected Insurance Observatory is focusing all the Insurance IoT use cases The Insurance IoT Health… Industrial risksMotor… but also Home… Life… Any insurance solution based on sensors for collecting data on the state of an insured risk and telematics for remote transmission and management of the data collected Connected Insurance
- 31. 31 The Connected Insurance Observatory started in March the North American operations The two Observatories together will create an impressive opportunity to cross-fertilize the insurance innovation thoughts across geographies More than 25 members have joined the 2017 edition 8 members have already joined
- 32. 32 Observatory's goal Acrivities The Observatory provides to the participants the best knowledge available worldwide on Connected Insurance Scouting and structuring quali/quantitative knowledge on Connected Insurance Sharing a critical point of view of key trends and spreading innovation culture Encouraging stakeholders discuss experiences and exchange ideas about innovation 1. Collection of evidences concerning connected insurance approaches 2. Researches on consumer expectation and on distribution of connected insurance products 3.Best practice analysis with market benchmark and international innovation scouting 4. Three annual collegial events in order to share with Observatory's Stakeholders ideas and experiences on connected insurance 5. 1to1 deep dive meetings (workshops) with each Insurance Company to present and discuss the Observatory's research
- 33. 33 Ten months dedicated to study and discuss the Connected Insurance opportunity Mar Apr May Jun Jul Aug Sep Oct Nov Dic Research One to one workshops June 16 (first collegial meeting) Research One to one workshops October 2 (Second collegial meeting) Research One to one workshops One day event (collegial meeting) We are starting the one to one meeting and continuing in parallel the onboarding of the members
- 34. 34 Anne Melissa Dowling Former Director, Illinois Department of Insurance A senior and world-renowned Advisory Committee supports the activities of the North American Connected Insurance Observatory Steve Anderson President, The Anderson Network Mike Scrudato SVP Strategic Innovation Leader, Munich Re America Paul Carroll CEO, Insurance Thought Leadership Ujjval Patel Vice President - Research & Strategy ACORD Antonio Derossi Managing Partner Insurance at Propeller Venture Capital
- 35. Feel free to contact me to join the journey of the North American Connected Insurance Observatory Matteo.carbone@connectedinsuranceobservatory.com +393346220378