The New Connected Claim Paradigm
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Matteo Carbone discusses the evolution of insurance companies towards an "InsurTech" model enabled by technology and data usage. He believes all insurance players will need to transform parts of their value chain using technology. Telematics is provided as an example of an InsurTech that can enhance insurers' core activities of assessing, managing and transferring risk. Some Italian insurers have leveraged telematics data successfully by offering discounts and additional services. This has led to acquiring lower risk customers and reducing claims costs through improved claims processes. Carbone advocates for insurers to create their own connected insurance platforms using data to deliver superior value propositions and share value with customers.
The New Connected Claim Paradigm
- 1. May 22th 2018 Reaching the New Connected Claims Paradigm Matteo Carbone Founder and Director, IoT Insurance Observatory @mcins_
- 2. 2 All the insurance players will be InsurTech It’s unthinkable for an insurance company today not to pose the question of how to evolve its own model by thinking of 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 of the achievement of their strategic goals
- 3. 3 InsurTech is the “superpower” fot the core insurer’s activities (to assess, manage and transfer risks) Telematics is the perfect InsurTech example
- 4. 4 Most of you think that UBI has failed in the US Leave-in Roll-over 8 M telematics policies at the end of ‘17 4.4 M cars connected with an Insurer in ‘17 (penetration 1.7%) I agree with you! More than 30% smartphone based Source: IoT Insurance Observatory After many years….
- 5. 5 I’ll show you some telematics secrets, but I have before to ask you for the next 17 minutes to forget everything you have heard about it before 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
- 6. 6 I love insurance Matteo Carbone Founder and Director of the IoT Insurance Observatory InsurTech Investor and co-founder of Archimede ($55M funding) +11 years strategic consulting (former Principal with Bain & co.) Keynote speaker and writer on insurance innovation Global InsurTech Influencer • This Insurance think tank has aggregated more than 40 international insurance groups, institutions and tech firms between Europe and North America • The initiative has three concrete outcomes: ‒ The most pragmatic multiclient research specialized in the insurance IoT domain ‒ One-to-one workshops dedicated to each member to discuss research outcomes ‒ Plenary symposiums with all the members together around the same table I’m helping incumbents to concretely address the IoT opportunity
- 7. 7 The most pragmatic multiclient research specialized in 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 I have created a think tank which provides the members access to the most relevant insurance IoT knowledge globally
- 8. 8 In 2017, I had more than 350 hours of discussions with the Observatory members around the globe Think Tanks One focused on the North American markets and one dedicated to the European markets 2 Organizations Involved hundreds of executives from almost 35 Insurance and Reinsurance Groups and 15 Tech players and Institutions 50 Plenary meetings 6 full days of keynote speeches, discussions, roundtable. A terrific networking opportunity 6 Hours of workshop More than 120 "one to one" workshops (meetings dedicated to each company which has joined the Observatory) >350 4 Business insurance areas addressed Unique research based on innovation thought leadership and insurance acumen on all insurance business lines
- 9. 9 In these years, I have worked with players accounting for 70% of international telematics volumes Today there are more than 13M cars connected with an insurer
- 10. 10 Some insurers on the Italian market have found an effective way to use telematics data and they have driven the market growth 2012 2017 ITALY US UK 7.1 M connected cars on ‘17 4.4 M connected cars on ‘17 1,1 M connected cars on ‘17 Source: IoT Insurance Observatory estimates Leave-in Roll-over
- 11. 11 What kind of product has generate this success? * Adjustment of the discount based on mileage at the renewal Blackbox to be installed on top of the battery for the entire year (self-installing) Auto liability insurance coverage with 20% up- front flat discount* Platform of services with a 50€ annual fee charged to the customer Telematics device Insurance coverage Services
- 12. 12 Traditional bottom line Service fees paid by the customer Hardware TSP Telematics costs Many insurers was able to leverage the telematics data to create value 50€ annual fee
- 13. 13 Enhanced the drivers’ journey and improved their customer experience with a suite of services, with a strong focus on “crash moment” Source: Connected Insurance Observatory NOT EXAUSTIVE Automatic assistance to the client on the premises in case of severe accident Simplified claim notification, including automatic form fill-in based on telematics data Claim certification at client’s disposal Short-time theft cover Parking localization Alert in case the vehicle is moved when the engine is off (e.g. tow-away) Car’s hearth rate monitoring 789101112 Antitheft service if the box is removed/uninstalled While Driving In case of crash When parked Weather alert based on geo-localization 2 Alert in case speed limits are exceeded 1 Highway/parking area tolling 3 Road or medical assistance via dedicated button 4 Client assistance and personalized case management in case of crash 5 6 13 Bodyguard for emergency outside the car when parked Stolen vehicle recovery Alert if the car is hit when parked 14 15 16
- 14. 14 Traditional bottom line Risk self selection Service fees paid by the customer Hardware TSP Telematics costs Many insurers was able to leverage the telematics data to create value Even if two customers seem to be equal based on their characteristics. The one who accepts the telematics value proposition is less risky
- 15. 15 Self-selected risks due to product features This auto telematics value proposition focused on crash monitoring shows a terrific effect on the acquisition of low risk clients Market average (20%) Claims frequency (district average) Black box effect on claims frequency (risk adjusted) Black box impact by district Market average -20% 3.0 6.0 6.5%Market average 4,8% 4.5 REAL CASE
- 16. 16 Traditional bottom line Risk self selection Claims cost reduction Service fees paid by the customer Hardware TSP Telematics costs Many insurers was able to leverage the telematics data to create value
- 17. 17 As you know, claim cost is the big elephant in the room Insurer’s preferred body shop usage +100% Sources: IoT Insurance Observatory best practices Settlement speed +5% Material damage costs -11% Body injury incidence -18% REAL CASES
- 18. 18 How does their connected claims paradigm look? Fact-based Digital Real-time
- 19. 19 Telematics data is the foundation of the new claim process 10:40 05/22 10:43 10:47 11:40 13:00 05/23 … Automatic assistance First contact with the client, start of claim management and responsibility definition Adjuster operation in the more convenient preferred body shop (geo-located) Prompt definition of the exposure Digital customer interactions and claim tracking Eventual medial visits ILLUSTRATIVE … Adjudication and negotiation leveraging the objective information obtained form the telematics data Settlement and payment$$$
- 20. 20 Enhanced the effectiveness of the claim evaluation and the efficiency of the claim process Who here, thinks that this is a tool which will bring benefits to your claim handlers’ activities? Please raise your hand Photo credit: UnipolSai REAL CASE
- 21. 21 Each architecture element must be coherent to create this value •User experience - Customer user experience - Connected Insurance ecosystem - Based on data collected, offering of additional value-added services to the customer • Insurance smart actions - Insurer's "on air" actions such as billing, claims management, cross selling •Insurance advance analytics - Insurer's "batch" knowledge creation (risk models, claims knowledge, …) based on the data analysis •Data analysis/preparation for insurance needs - Normalization, analysis, interpretation of collected telematics raw data for insurance purposes •IoT data collection and data sources management . - Collection of recorded data from front-end device and transmission of raw data to cloud •Sensors design/ manufacturing - Manufacturing of various front-end devices and apps 6 5b5b 4 3 2 1 5a5a INSURANCE IOT ARCHITECTURE User experience (UX) Sensors design/ manufacturing IoT data collection and data sources management . Data analysis/ preparation for insurance needs 3 6 2 1 Insurance Advance analytics 4 Connected insurance ecosystem (VAS) 5b Insurance smart actions 5a
- 22. 22 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 the costumer Value sharing Many insurers was able to leverage the telematics data to create value Discount is a way to share with customers part of the value created in order to increase the attractiveness ot the value propositions 20% up-front flat discount
- 23. 23 I believe (some) insurers will succeed in the connected car war and they will stay relevant in the life of their clients Each of you can be one of these successful insurers! They will orchestrate their own connected insurance platform using data to create value and share this value with the customer to deliver superior value propositions The way they will create value is by activating many different use cases on the entire insurance value chain Value sharing Connected insurance pardigm
- 24. 24 I’m supporting this evolution through the Observatory Objectives Scouting and rationalizing qualitative/quantitative knowledge on Insurance IoT Sharing a critical point of view of key trends and spreading innovation culture Encouraging members to discuss experiences and exchange ideas about innovation The scope 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 Health and life Industrial risks and workers’ comp Auto… Home and commercial property
- 25. 25 I’m proud when I see members of the Observatory who move to the execution phase
- 26. 26 One member of the European Observatory has changed its telematics offer aligning the product to the best practices Dic '15 Dic '16 Dic '17 75% of the new auto insurance business has been telematics based Penetration on their own auto insurance book is almost at 30% Telematics portfolio have grown 4X in 24 months
- 27. 27 I’m extremely proud to serve these 18 Prestigious Organizations with the North American IoT insurance Observatory To join the Observatory feel free to write to matteo.carbone@iotinsobs.com