INSURTECH AND LOOMING THREAT OF DISRUPTIVE INNOVATION IN INSURANCE

Strategy  and  Innovation  World  Forum,  London2nd February  2017

CONFIDENTIALITY LEVEL

Parul  Kaul-­GreenHead  of  M&A  and  Innovation,  AXA  UK

What this talk is about

what• Disruptive  Innovation  and  its  characteristics

why

• Why  Insurance  is  Disrupted• Why  Insurtech   is  Disruptee

how• AXA  semi  open  eco-­system  approach  to  disruption

Disruptive Innovation

A process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.

*Clayton Christensen, The Innovator’s Dilemma

q SMALLER TARGET MARKETq lower  tiers  of  customer  segments

q LOWER GROSS MARGINS q unattractive  to  incumbents

q SIMPLER PRODUCTS AND SERVICESq basic  featuresq fewer/no  bells  and  whistles

q opportunity  for  performance  improvement

Characteristics of disruptive businesses

4 |

Focus on initial stages

Disruptor Disruptee

Mobile  phones Fixed  line  technology

Personal  computersMainframe and  mini  computers

Online  and  Mobile  banking Traditional  Branch  banking

Peer  to  Peer  LendingRetail and  commercial  bank  Lending

Why Insurance

5 |

• Global industry of $ 4 trillion premium per year• complex-­ sophisticated  and  opaque  risk  pricing,  • capital  intensive  –relatively  long  payback  period,• highly  regulated-­ increasing  regulatory  burden

Significant opportunities for growth, globally

Shortfall  in  non-­life  insurance  premiums*  exceeds  US$150  billions

Mortality  protection  gap in  the  Asia  Pacific  region  US$58  trillion*

* Non Life Insurance estimates from Lloyds of London study of 42 sample countries*Life Insurance estimate from Swiss Re regional study

INTERNET OF THINGS

ARTIFICIAL INTELLIGENCE DISINTERMEDIATION

generate   large  amounts  of  data  that  result  in  more  accurate  risk  assessment  of  each  individual   policyholderreduce  information  asymmetry  and  drive  major  changes  in  insurers’  risk-­pricing  models

Translating   data  in  to  analytics  through  Inference,  pattern  recognition   and  logical  AIApplications   include  Virtual  Assistants  and  Bots  in  User  Acquisition  and  Claims  Journey,  Pattern   recognition   in  fraud  detection   and  claims  assessment

Peer  to  Peer  and  Blockchain  displace  the  trusted  third  party  element   required   risk  pooling   central  to  Insurance

Disruptive forces supporting Insurtech

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Rise and rise of Insurtech

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2011 2012 2013 2014 2015 2016

Amount $ bn Deals

Insurtech Amount Focus

$14M Home   insurance

$20M Lifecycle  software

$34M Home  &  renters

$14M AI  Software  forunderwriting

Insurtech Annual Financing trend Recent Insurtech deals

More than 1,500 Insurtech start-ups Using advances in technology and data analytics to transform the entire insurance value chain,

q from customer acquisition and product development q to underwriting andq claims management.

Source CB Insights Insurance Tech Insights, Jan 2017

AXA uses both external and internal innovation

ü Advancement  of  core  business  -­ BPR,  Product  development

ü Transformation through:§ BAU  Functions§ Start-­in-­Crowd  

sourcing  Internal  innovation

Internal  innovation

ü Business  model  innovation,  scouting,  culture,  pilot

External  innovation

ü €100m  InsurTech incubator

ü Strategic  partnership  business development

ü €235  M  venture  capital  fund

AXANEXT

AXA  Strategic  Ventures

Kamet

AXA  Partners

Thank You