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Australia and New Zealand Insurers Go Beyond the Usual
Sponsored by
T H E F U T U R E I S D I G I T A L
IDC InfoBriefNOVEMBER 2017
Empowered Customers
Omni-channel User Experience
Platform-driven Ecosystem
Anytime, Anywhere Access
Usage-based Insurance
IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual2 Sponsored by
Empowered customers with
rising digital expectationsDigital is now table stakes for anyone to compete for
increasingly tech savvy customers.
40%
of customers are expected to walk away from a business that fails to deliver a good digital
experience1
Regulatory guidelines becoming pro-digital
From allowing open data, to new standards for digital services, to fostering higher trust amongst buyers. The Australian Securities
and Investments Commission (ASIC)
leads among the global regulators.2
to fast-track digitalisation and use of new
technologies such as robo-advisory.
ASIC sets the pace
The rise of startups
The value chain of insurance is
disaggregating, giving rise to opportunities for new third-party companies to take on activities such as
product development, pricing, customer insights, selling,
claims management, and so forth.
40%
of Australian CEOs concerned about new,
more agile competitors3. 5-fold increase in the number of fintechs in
Australia4: 100+ in 2014 to 500+ in 2017.
Integrating insurance into
consumers’ lifestyle
Aside from the traditional “loss
prevention” value proposition, insurers are introducing new
products to meet consumers’ digital
lifestyle – helping them to enjoy life (work, amusement, and relationships) as
they please.
Upsurge of new insurance
offerings
From 2017–2020, 5-Year CAGR:
5% Travel insurance (Australia) 5
5% Health insurance (Australia) 6
10% Mobile insurance (worldwide) 7
Toward a consumption-based model
The nature of insurance is changing. The
old-school, cookie-cutter approach of
selling occasional and transactional products are giving way to new
distribution models and self-service platforms as customers want to buy,
and not be sold to.
Sales enabled by IoT
By 2019, a higher percentage of insurance
products sold in APeJ will be usage-based enabled by the Internet of Things
(IoT). 5-year CAGR8: 25% Vehicle insurance;
5% Home insurance
5 K E Y D R I V E R S T O W A R D A D I G I T A L F U T U R E
The Fast Changing Insurance Landscape
1. “Digital Australia: State of the nation”, 2017 Edition, EY Sweeney report2. IDC Research, ASIC website3. IDC Research, C-Suite Barometer Survey 2017, Australia - FSI4. IDC research and Australian Fintech Landscape, KPMG, 2017
5. Travel insurance: Investor Presentation, Zurich Insurance Group, Dec 20166. Health Insurance: IDC research & estimates7. Mobile Insurance: SNS Research estimates , Sep 20178. IDC FutureScape: Worldwide Financial Services 2017 Predictions — APEJ Implications
Sources:
IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual 3Sponsored by
Confronting a Lagging Legacy5 T R A I T S T O T H R I V E I N T H E D I G I T A L F U T U R E
Sources: 1 “Digital Australia: State of the Nation”, EY Report; 2 “World Insurance Report 2016”, Capgemini report; 3 IDC Research, IDC C-Suite Barometer 2017, EY APAC CRO Survey 2016; 4 IDC Research & estimations, OECD Insurance Statistics 2015-16; 5 IDC Worldwide Semiannual Public Cloud Services Spending Guide, 2016H2; 6 IDC Research & estimations, published case studies
Meeting customers’ digital expectationsAustralian customers rank the insurance sector as fifth lowest in digital experience against 24 other sectors.1 Greater than 50% of Australian customers are willing to use digital channels (phone, mobile apps, Internet).2
So how can Australian and New Zealand insurers respond to the fast-changing demands of the industry? IDC identifies five key digital transformation (DX) traits needed to overcome long-standing challenges
TRAITS OF TRANSFORMED ENTERPRISES
Proactively manage risks and achieve compliance 15-20% of IT budget is spent on governance, risk and compliance (GRC) requirements by APAC insurance industry3; majority of CROs still continue to spend significant time and resources on just meeting regulatory requirements.
Staying nimble and efficient Current core platforms are holding insurers back. Operating expense ratio for Australian insurance industry is estimated to be higher than similar developed countries like US, UK (14% against 11% in US and 7% in UK).4 Modernisation can save up to 30-40% of the IT operational costs.
Gearing for a consumption-based model Insurers’ current time to market is too slow. It takes 12 -18 months to develop a new product, whereas the global average is between 6-12 months6. Legacy systems impede product development.
Meeting consumers’ digital lifestyle needs Reduced ability to enable lifestyle facilitation, including new types of personalised insurance experiences and products, as IT still maintains significant control and is not agile enough to make necessary changes. Regional insurers are already showing signs of readiness to partner with startup companies for better personalisation of insurance products. Spending on public-cloud for SaaS/IaaS/PaaS will exceed CAGR of 25% by 20215.
Greater agility to respond to new rules, standards, and guidelines set by the regulator – and repurposing this capability for business.
Embrace as-a-service models via the cloud.
Adopt open platforms-of-platforms, allowing multiple participants to connect to it, interact with each other and exchange value.
Gain faster speed to market with product development platforms.
Have full omni-channel capabilities that make data and capability available through multiple devices and applications.
IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual4 Sponsored by
Digital Transformation Leaders in the MakingL E A D I N G L I F E I N S U R A N C E C O M P A N I E S R E T H I N K T H E I R C U S T O M E R S ’ N E E D S
T A I P E I , S I N G A P O R E
Redefined the customer journey with Allianz Discover. The interactive, tablet-based digital sales tool enables customers to understand their lifestyle needs at a glance, plan for their financial and life protection goals, and discuss customised solutions with their advisers.
Allianz
S I N G A P O R E
LumenLabs, MetLife’s innovation unit, has partnered startups to explore the use of technologies such as robotic process automation (RPA), cognitive bots, and cutting-edge analytics. The goal is to drastically improve speed to market and achieve regulatory reporting compliance for high-volume processes.
MetLife
S I N G A P O R E
AXA Pay-As-You-Grab is a usage-based motor insurance policy for private hire car drivers, whose premiums start at a very low base (70% of traditional commercial insurance) and increase on the basis of miles driven, measured via the Grab app.
AXA
A U S T R A L I A
AIA Vitality is a wellness programme that encourages customers to make healthier choices by adding up the benefits. The subscription to the program can be integrated with other AIA Australian insurance products. Customers enjoy benefits such as annual cashback offers, discounts on gym memberships and health screening packages, as well as free additional coverage or premium discounts on insurance products as one becomes healthier.
AIA
A U S T R A L I A
QBE deployed a new platform as part of their digital transformation journey. Among the key functionalities: core processing, data and analytics, and digital engagement products aimed at improving customer service as well as gaining greater agility in product design and pricing.
QBE
IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual 5Sponsored by
Digital transformation of insurance organisations requires a platform that is able to support them with the right systems and capabilities. IDC Financial Insights identifies 15 capabilities to help Australian and New Zealand insurers deliver a compelling digital insurance model.
PLATFORM OF PLATFORMS
Digital Insurance Platform of the FutureA L I G N I N G T O S E R V E T H E E M P O W E R E D C U S T O M E R
OMNI-CHANNEL
Increases both the number and type of customer touchpoints
Makes data, applications and functionalities consistently available across all customer touchpoints and channels
Has the capabilities to take on new channel types, and interaction types – voice, IoT, robo-advisory
Supports API-enabled services
1
2
3
4
AS-A-SERVICE Allows access to current technology capabilities without high capital investments
Supports pay-per-use models of consumption
Provides scalability upwards and outwards
Provides 24/7 operations and managed services support
5
6
7
8
FLEXIBILITY, AGILITY AND AUDITABILITY
Delivers speed and agility in business functions while insurers focus on core competencies. Unlike monolithic legacy systems, platform solutions help develop ecosystems for systems of engagement (particularly channel systems) and systems of record
9
PRODUCT DEVELOPMENT CAPABILITY
Enables risk pricing to shift from mass-segmentation to tailored solutions for smaller customer segments (even a customer segment of one)
Supports industrialised product rules and configuration management externalised from core engine
Provides rapid product development and testing frameworks
Leverages new data sources and use of advanced analytics for better product development
10
11
12
13
Provides a plug-and-play business model that allows multiple participants (producers and consumers) to connect and interact to create and exchange value
Supports API-enabled business processes that allow trusted third-party partners (fintechs, business partners, IT service providers) to participate in key parts of the insurance service lifecycle (e.g., policy administration, claims, and billing).
14
15
IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual6 Sponsored by
Digital Insurance as-a-ServiceB E N E F I T S O F D X C T E C H N O L O G Y ’ S S T R A T E G Y
Fundamental to DXC Technology’s strategy for insurance is commitment to lead the industry’s digital transformation. Insurers are in a race against time, as their competitors and new market entrants are raising the bar quickly. The breadth of DXC’s capabilities, now combined with DIaaS, uniquely position DXC technology to curate and implement an insurance ecosystem which will satisfy the digitally savvy consumer.”
Michael NearyGeneral Manager
Insurance IndustryDXC Technology
Australia and New Zealand
Increase reach to
customers
DXC’s Omni-channel Digital
Consumer Engagement
Platform enables client
interactions, any way, at any time.
Reduce IT
spend
By at least 11%, based on IDC
Financial Insights benchmarks of financial institutions
moving from CAPEX to OPEX
models.
Gain agility
Ability to be implemented in
4-6 months.
Launch products quickly
Shorten product development
from months to weeks.
Gain access to new revenue
sources
By adopting lifestyle
integration via open API-
enabled services.
Future-proof systems
An evergreen IT landscape keeps
applications, infrastructure,
operations always up to
date.
Support regional
compliance
Meet regulatory requirements shared across
clients.
Data analytics for actionable
insights
To better understand
risk and create personalised
customer offerings.
D X C D I G I T A L I N S U R A N C E
a s - a - S E R V I C E ( D I a a S )
DIGITAL PRODUCTS
Product development capability
Speed to market
Easy to understand
Configurable rules engine
CUSTOMER EXPECTATIONS
Omni-channel
Informative
Intuitive
Conversational
REGULATORY COMPLIANCE
Flexibility, agility and auditability
Compliance change costs shared
Reducing legacy risk
Real-time reporting
PLATFORM OF PLATFORMSLinking capabilities
across platforms
API-enabled interactions, loosely coupled
Sharing economy
AS-A-SERVICEConsumption-based pricing
Fully integrated components
Localised templates
Fully managed service
IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual 7Sponsored by
A N Y C H A N N E L A N Y W H E R E , A N Y T I M E , A N Y O N EMap out your strategy and go-to-market in such a way that your clients can access your insurance services 24 hours a day via their preferred method.
S TAY C O M P L I A N T A N D P R E V E N T S E C U R I T Y AT TA C K SThese include security for new channel types, analytics for claims and policies, identity and access management, and Web application protection.
M A N A G I N G Y O U R P R O D U C T L I F E C Y C L ELook for API management tools that enable you to capitalise on the open API market.
A S - A - S E R V I C EWork with technology partners who can provide end-to-end or modular policy administration as well as a pay-per-use platform that offers digital platform integration that your clients are looking for.
Self-Discovery QuestionsScaling according to the needs of the business • What is your time to market to launch a new insurance product? • Do you know your costs across your company to launch a new insurance product? • What is your strategy for launching new products faster and more cost-effectively? • Are you willing to trial new products and innovative business ideas?
Regulatory and compliance • Are the new governance and compliance requirements putting a strain on resources and taking time away from projects that offer greater innovation potential to the business? • What portion of your budget is used to address regulatory and compliance requirements?
Becoming open to open insurance • How are you preparing for more open integration with partners, start-ups, other data sources? • How much visibility should you allow and yet maintain high security without impacting innovation? • How do you reduce the cost of insurance products and services in the process? • How do you stay compliant and maintain your speed-to-market and competitive advantage as open insurance services evolve?
Essential Guidance
Digital Insurance as-a-Service promises to fast-track the transformation of insurers to be more agile, market-responsive, and open to a broader set of services that expands the value proposition of insurance. DXC Technology brings this vision to reality with its industry expertise and services capabilities.”
Michael AranetaAssociate Vice President
IDC Financial Insights
IDC InfoBrief: The Future is Digital Australia and New Zealand Insurers Go Beyond the Usual8 Sponsored by
Digital Insurance Platform The Secure Foundation for Today’s Rapidly Evolving Market
P E R S O N A E X P E R I E N C E
Policyholder | Broker | Advisor | Underwriter | CSR | Adjuster | Digital Marketer | Ecosystem
Cloud Network Service Management Security Operations Audit DR/BC
Insurance Components • Policy & Product• Billing• Claims • Reinsurance
Data & Analytics• Cognitive/ML• Analytics & Reporting• Analytics Platform• Data Platform
Ecosystem Providers• Platform Services• Technology Services• Business Services
D I G I T A L I N S U R A N C E F R A M E W O R K
UI/UX Security Microservices API Management Integration Mobility BPM
Product > Marketing > Distribution > Servicing > Billing > Claims
A C C E L E R A T E D I M P L E M E N T A T I O N
Typical customer implementation for digital insurance At least 2.5 years
Typical core insurance
DXC R&D investments since 2016
2016 Today
• Regional platform development• Integration to industry applications• Development of product templates• CX/UX journey templates• API enablement• Insurtech ecosystem
Your new digital insurance platform
4-6 months
Accelerated Implementation
for Digital Insurance
Launch
Adopt these out of the box to:• Configure products• Confirm CX/UX journeys• Connect APIs• Validate processes• Other integrations
(payment gateways)• Configure reports• Testing
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