Digital Distribution trends
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The document discusses digital distribution trends in the insurance industry, highlighting key opportunities and technology's role in transformation. It emphasizes that distribution remains paramount, data is crucial, and the industry landscape is unevenly balanced between incumbents and digital newcomers. Several success stories and innovative business models in Asia are presented, underscoring the potential for digital disruption in insurance.
Digital Distribution trends
- 1. Hugh Terry, The Digital Insurer InsurTech Asia, April 27th 2017, Singapore DIGITAL DISTRIBUTION TRENDS
- 2. Discussion agenda 1 Distribution in Context 2 Digital Distribution – some success stories 4 2 Standout distribution opportunities in Asia 3
- 3. 3 3 Presentation: 3 Key messages 3 1. Distribution / customer access remains king 2. Data is gold for insurance distributors 3. It is an open field – but not a level field…
- 4. 44 About The Digital Insurer Library In Action Newswire Knowledge & Insights – Community – Global Outlook & Team Join nearly 20,000 others @ the-digital-insurer.com
- 5. 5 5 What does The Digital Insurer do? 5 We are fully vested into all things digital insurance • Media & thought leadership • Information services • Advisory • Actively building new digital businesses
- 6. Discussion agenda 1 Distribution in Context 2 Digital Distribution – some success stories 4 6 5 distribution opportunities in Asia 3
- 7. Distribution in a strategic context 7 1
- 8. Three digital “Mega” trends : forces beyond our control 2 Technology is cheaper and easier to implement than ever – it is the fulcrum to meet consumer needs, reduce operating costs and to change your culture 1 8 Data matters– we are collecting more and more data that can be used to create winning business models 3 Changing consumer behaviour – they are more demanding and looking for a different experience
- 9. 9 9 Digital Disruption – the gold mine analogy 9 Miners & Pickaxes
- 10. 10 10 Digital Disruption 10 Miners + Pickaxes (distribution “value driver”) (New Tech “ enablers”) Digital Business Models ….Both generating and using lots of data ‘gold’ The Prospector’s dilemma – as soon as the “seam” is proven prices rise very quickly
- 11. 11 11 Analogy : How far could bank disruption go? 11 FT HEADLINE: “MCKINSEY WARNS BANKS FACE WIPEOUT IN SOME FINANCIAL SERVICES” Source: Financial Times, 30th September 2015 -‐ quoting from McKinsey annual global banking review Origination & sales activities US$1.7 trillion revenue 22% ROE Balance sheet provision US$2.1 trillion revenue 6% ROE “A high stakes struggle… either banks fight for the customer relationship, or they learn to live without it and become a lean provider of white-‐labelled balance sheet capacity.” V’s No surprises: under attack from digital disruptors e.g. predicting profits from car loans and credit card loans to fall by 60%
- 12. 12 12 InsurTech: distribution plays also proving popular with start-‐ups 12Source: MckInsey April 2017 : http://www.mckinsey.com/industries/financial-‐services/our-‐insights/time-‐for-‐insurance-‐companies-‐to-‐face-‐digital-‐reality • Distribution focus for >35% of start-‐ups
- 13. 8 Digital distribution models: breaking down the value chain 13 Acquire New Customers Selling to Customers Servicing Customers Taking Product Risk 2. Bancassurance InsurerBank 1. Traditional Agency Insurer 3. Digital / Direct Insurer 5. Digital Managing Agents Single Insurer 4. Price Comparison Sites Multiple Insurers 6. Digital Broker Multiple Insurers 7. Digital Affinity Multiple ProvidersAffinity Partner 8. Eco-‐systems Insurer(s) 13 the insurer Maybe the insurer NOT the insurer Owned by
- 14. 14 14 Opportunity & Challenge 14 Across Asia 80-‐90% of Insurance is face-‐to-‐face via agents, brokers or banks
- 15. 15 15 Disruption in the insurance industry: “ Trading Places” 15 Insurers buy aggregators Insurers buy TPA’s Retailer invest in aggregators Tech companies startup insurers Reinsurers invest in insurers Airlines, Telco and Tech co’s setup insurers
- 16. The Opportunity Agenda in Asia: “Now” Opportunities driven from the current paradigm 16 Product Narrowly defined view of product Distribution Too much face-‐to-‐ face Customer Experience Not good enough Certainly Not “Omni” Digital will redefine our industry . It is early days.. Digital enables Distribution, Product and Customer Experience innovation
- 17. 17 Convenient & Supportive Simple to use and supportive throughout the customer’s life 2. Value Added Services (with partners) Personalized and catered to the customer’s habits and lifestyles. Integrated with other value added services. Leveraging the power of “free” 1. Reducing customers Risks Solutions that make our customers safer / healthier – and also reduce their costs of insurance How Quick will it be before insurance risk is a sub-‐component in a larger service offering? Ø Looking through the jargon there is a fundamental change in product design in the insurance industry Product design: trending to “Eco-‐system Proposition”
- 18. Consumers: ahead of the industry? Chart Source : Noble Oak Australia , Consumer Survey 2016 18
- 19. 19 19 Insurance as a complement: but not complimentary 19 Reminder : Insurance is nearly always a secondary purchase Insurers will generate sustainable profits by finding privileged distribution channels –e.g. selling drinks in a restaurant or at a hawker centre in Singapore There is a role for free services – to get closer to the source of demand for insurance
- 20. Digital Distribution – Some success stories 20 2
- 21. Digital Distribution Models @ Price Comparison 2121 Price Comparison Eco-‐Systems Digital Affinity 21 21 21 Digital Brokers Face –to -‐face Direct
- 22. Aggregators: Bank Bazaar 22 Key points • Full service aggregator – banking , life and P&C • “Search for free” • Amazon Ventures invested US$60 million Q. How will Amazon expand into financial services? D P C
- 23. Aggregators: Go Bear 23 Key points • “Meta Search” Aggregator – delivers leads to insurers and banks • Aegon is a shareholder • Expanding across South East Asia . Life and Health offering in early stage (Singapore in 2017) D P C South East Asia
- 24. Aggregators: Life Broker 24 Key points • Full service aggregator – policy purchase from Life Broker possible • Owned by Dai-‐ichi Life (TAL) – Purchased from broking company who established it D P C
- 25. Digital Distribution Models @ Digital Brokers 2525 Price Comparison Eco-‐Systems Digital Affinity Digital Brokers 25 25 25
- 26. 26 26 Bought By Many – long tail insurance opportunity 26 2 6 Volume per category Insurance Categories Mainstream ‘head’ Served by price- comparison websites and insurers direct ‘Long Tail’ of Insurance Demand Traditionally served by small face-to-face brokers Target for Bought by Many “Car Insurance” “Home Insurance” “Pet Insurance for French Bulldog” “Travel Insurance with Diabetes Type 2” “Young Driver car insurance” Volume per category of insurance demand 2 6 ~40% of insurance premiums are in the “long- tail” but niche consumer needs are neglected by price-comparison websites PingAn partnership on We Chat
- 27. Key points Digital Broker Model: Connexions Asia (CXA) 27 Broker + wellness platform Well financed Expanding out of Singapore 27 27 27 Q.Employee Benefit Broker as the healthcare eco-‐system owner / lead enabler? D P C
- 28. Digital Distribution Models @Digital Affinity 2828 Price Comparison / Digital Brokers Digital Affinity Price Comparison Eco-‐Systems Digital Brokers 28 28 28
- 29. Digital Affinity Model: BIMA 29 Accessing airtime as the method of payment Low cost fulfillment and ease of access Penetrating new markets Mobile Microinsurance 292929 Q. Many Insurers don’t have D2C mobile platforms with payment connectivity. Opportunity? D P C Africa, Asia & LatAm
- 30. 30 30 Digital Affinity model: Microensure 3030 Q. Is Micro insurance going to be an effective customer acquisition strategy? Insurance & Finance AXA owns 46% More than 20 million customers Mobile Microinsurance Africa, Asia & LatAm D P C
- 31. Distribution models @Digital Eco-‐systems 3131 Price Comparison Eco-‐Systems Digital Affinity Digital Brokers 31 31 31
- 32. 32 32 32 https://vimeo.com/192190135 Organize & track everything about the things you own!! Automatically adds the things you’re buying! Principle Value’s ● It’s On Demand. ● You can insure single items ● Customers are not locked -‐in to contracts ● Disintermediation (a reduction in talking to human customer services) ● Upload items to the mobile app. ● Choose level of cover & insure it by swiping right. ● Pay daily rates for as many items you want to protect. ● Swipe Left to stop your cover, at anytime with no opt-‐out penalties. Covered against Accidental Damage, Loss & Theft. Q. Will Trov succeed in creating an eco-‐system ”inventory of things”? Inventory of things Eco-‐system: TROV
- 33. 33 >70 million registered users >1,000 full time doctors Access to 50,000 contracted doctors and 5,000 specialists 7/24/365 access including video consultant Online to Offline platform (O2O) Find a Doctor • May 2016 : US$500 million series A funding • Goal of creating largest “closed” healthcare eco-‐system • = “ Internet healthcare 2.0” D P C Eco-‐system model: Good Doctor (Ping An)
- 34. Digital eco-‐system potential: ACORNS 34 Round up your credit card transactions Robo investment into ETF’s (5 risk adjusted funds) 0.25% fee / US$1 per month (<US$5K) 850,000+ users US$150 million invested Mobile Micro-‐investment D P C 34 34 34 34 34 34 Q. Insurance Distribution opportunity? Opportunity to unbundle the endowment in Asia?
- 35. 35 35 Digital Ecosystem model: ZhongAn 3535 > 1 billion policies ! Big, big data play All in 3 years Innovative product design IPO in 2017 possible Last valuation US$8 billion Digital Affinity Started in November 2013… First online insurance seller in China Advanced cloud computing system Selling its #1 product through C2C Taobao Major shareholders are Alibaba, Tencent and Ping AnD P C
- 36. Key messages & 5 opportunities in Asia 36 3
- 37. 37 37 Presentation: 3 Key messages 37 1. Distribution / customer access remains king 2. Data is gold for insurance distributors 3. It is an open field – but not a level field…
- 38. 38 38 “winner takes most” : also true in insurance 38Source: MckInsey April 2017 : http://www.mckinsey.com/industries/financial-‐services/our-‐insights/time-‐for-‐insurance-‐companies-‐to-‐face-‐digital-‐reality Lessons learnt • Aim to be first • Achieve scale quickly The un-‐level playing field…. Companies with digital connectivity and strong brands are well placed
- 39. 39 39 The distribution playing field is not level… 39 1. Incumbents – really difficult to build on legacy 2. Typical startup – limited access to clients, Regulatory challenges, capital constrained 3. Digital Brands with large client-‐base – sweet spot for distribution partnership or green field – key enabler
- 40. 5 standout distribution opportunities in Asia 40 5. Digital bancasssurance: “BFF” with banks 4. Digital First Life insurance models to disrupt agency 3. Healthcare eco-‐system 2. Small Business Opportunities 1. “Digital Brand” Partnerships
- 41. 41 41 Thanks ! 41 Wishing you good speed on your own digital adventures! hugh.terry@the-‐digital-‐insurer.com www.the-‐digital-‐insurer.com
- 42. 42 42 TDI Is well established 42
- 43. 43 43 The Digital Insurer Global Leadership Team 43 •Hugh is the founder of The Digital Insurer and is passionate about the use of digital thinking and technology to transform the insurance industry Hugh Terry •Les is responsible for TDI in Europe. He is able to draw on over 30 years' experience in the insurance industry with leading insurers and brokers as both a senior executive and consultant. Les Wong •Andrew is responsible for TDI in Africa. He is convinced that digitally based business models are a prerequisite to making insurance benefits accessible to all Andrew de Kock •Rick is a thought leader within the global InsurTech startup community. Rick contributes regular articles on InsurTech and is chairman of the Digital Insurer Rick Huckstep •Andrew is responsible for TDI in AUS and NZ. He is our resident global telematics expert and is always at the forefront of technological innovation Andrew Dart •As COO Malini is responsible for content delivery and key client relationships for TDI. She is fascinated by the potential of technology to transform & disrupt insurance. Malini Thakerar •Tom is responsible for developing TDI in North America. He has a wealth of consulting experience and is also the editor of the Digital Insurance Library section. Tom Bobrowski