Upload
buianh
View
215
Download
0
Embed Size (px)
Citation preview
What You Need to Know
Top 10 Trends in Property & Casualty Insurance 2018
Contents
Introduction 3
Trend 01: Connected Devices Help Insurers to Proactively Mitigate Risk and Provide Value-Added Services 5
Trend 02: New Business Models are Explored 7
Trend 03: Increase in Automation of Processes leveraging RPA and AI 9
Trend 04: Drones Take on an Important Role for Insurance Firms 12
Trend 05: Autonomous Vehicles are Poised to Disrupt Auto Insurance Business Model 14
Trend 06: Blockchain has the Potential to be a Game Changer 16
Trend 07: Traditional P&C Insurers Realize APIs’ Importance 18
Trend 08: More P&C Insurers Embrace Advanced Analytics 20
Trend 09: Collaboration with InsurTech Firms Heats Up 22
Trend 10: P&C Insurers Adopt a Cloud-Native Approach 24
References 26
About the Authors 27
1 Inthecontextofthisreport,‘InsurTech’referstothetechnology-basedcapabilitiesthathavespecificapplicationininsurance,whereas‘InsurTechfirms’referstonewfirmswithofferingsbasedonInsurTechcapabilities,thatarelessthanfiveyearsoldandhavearelativelysmallbutgrowingcustomerbase.
Introduction
Technologyisevolvingrapidlyanddisruptingthewaybusinessprocessesarehandled.Emergingtechnologiesaretransformingeveryaspectoftheinsurancebusiness and property and casualty insurers are adjusting by adapting InsurTech capabilities.1Asconsumersarebecomingincreasinglytechsavvy,theydemandseamlessaccesstopersonalizedofferingsviaachoiceofchannels.Moreover,insurersarefacingpressuretooptimizecostsandimproveoperationalefficiency.
Enhancedcustomerexperienceistoponmindforinsuranceexecutives.So,itisnotsurprisingthatpropertyandcasualtyinsurersareembracingacustomer-centricapproachandtransitioningtobusinessmodelsthatalloweasyaccesstoservices,similartothatofutilities.Additionally,insurersareusingconnecteddevicestocapturemoredataaboutcustomersandinsuredproperties,whichenablesthemtomitigateriskandprovidevalue-addedservices.
FirmsarealsoaddingdigitalproficienciesastheystrivetoautomateprocessesacrossthevaluechainusingArtificialIntelligence(AI)andRoboticProcessAutomation(RPA),andblockchain(distributedledger)technology.
Forinstance,dronescanenablefaster,moreefficientpropertyassessment,ApplicationProgrammingInterfaces(APIs)offerseamlessintegrationwithotherstakeholders,andblockchaintechnologyhasthepotentialtoeliminateerrorsanddetectfraudulentactivity.
Thesedigitalcapabilitieswillenableinsurancefirmstoeffectivelyreduceoperationalcostsandhumanerrors,improvespeedandaccuracy,andhelpprovideabettercustomerexperience.
Moreover,insurersareimplementingadvancedanalyticstoprovidepersonalizedofferingsandimproveunderwritingoperationswithbetterrisk-assessmentmodels.
Whilesometraditionalpropertyandcasualtyinsurersaredevelopingin-housesolutions,mostofthemarepreferringtocollaboratewithInsurTechfirmsforinculcatingdigitalandadvancedanalyticscapabilities.Also,forquickdeploymentandefficientmaintenanceofthenewsystems,theyarefocusingonacloud-nativeapproach.
Byadoptingemergingtechnologies,insurancefirmscanrealizebusinessbenefitssuchasincreasedrevenue,reducedrisk,improvedoperationalcosts,betterunderwritingmarginsthroughtighterpricingaccuracy,andtrimmedclaimsleakage(especiallyduringtimesofacatastrophe).Clearly,thesetechnologiesofferearlyadoptersacompetitiveadvantage.
3
The10technologicaltrendsidentifiedinthisreportaffectavarietyofP&Cbusinessgoals,asoutlinedinTable1.
Revenue Growth
Cost Optimization
Enhancing Customer Engagement
Risk Reduction
Improving Pricing Accuracy
Reducing Claims Leakage
Connected Devices for Mitigating Risk and Providing Value-Added Services
Low Medium High High Medium High
Insurers are Exploring New Business Models
High Low High High High High
Increase in Automation of Processes using RPA and AI
Medium High High Medium High High
Increasing usage of Drones for PropertyAssessment
Low High High Low High High
AutonomousVehiclesarepoisedto disrupt auto insurance business models
Low High Low High High High
InsurersareExperimentingwithBlockchainTechnology
Low High Low Medium Low High
DevelopingNewApplicationsLeveragingAPIs
Medium High High Low Medium Low
Leveraging Advanced Analytics forPricingAccuracyandEmergingRiskIdentification
High Medium High High High High
CollaborationwithInsurTechstoInculcateInsurTechCapabilities
Medium High High Low Medium Medium
Cloud-NativeApproachtoImplementNewTechnologies
Medium High Medium Low Low Low
Becausetheseemergingtechnologiesareinterconnected,implementationandeffectiveperformanceofonetechnologyoftenrequiressupportfromanotherrelatedtechnology.Forexample,connecteddevicesrequireadvancedanalyticstoprocessdatainreal-timeandAPIscanhelpwithseamlessintegration.Future-focusedinsurancefirmsareimplementingsynergisticInsurTechcapabilitiesto offercustomersconvenience,agility,andpersonalizationwhileensuringprofitablefirmgrowth.
Source:CapgeminiFinancialServicesAnalysis,2017
Table1: Business Impact of the Top-10 Technology Trends in P&C Insurance
4 Top 10 Trends in Property & Casualty Insurance 20184
Background
• ConnecteddevicesofferbusinessvaluethatgoesbeyondoperationalcostsavingsandprovidesanopportunityforP&Cinsurerstodevelopinnovativesolutionsthatexplorereal-timedata
• Thus,thesedevicesaregainingpopularityamongP&Cinsurerstoleveragerelevantreal-timedataforimprovingcustomerengagement,mitigatingriskproactively, and providing value-added services
Key Drivers
• Multipleforecastspredictthattheconnecteddevicesmarketwillgrowheavilyinthenext4-5yearstobecomeamulti-billion-dollarindustry:
– Statistapredictsthatthetotalconnecteddevices(IoT)installedbasegloballywillincreasefrom20.4billiondevicesin2017to75.4billiondevicesin2025ataCAGRof17.8%duringthisperiod2
– According the World Insurance Report (WIR) 2016fromCapgeminiandEfma,morethanone-third(34.2%)ofcustomersthinktheywilladoptsmartecosystems,and32.4%oftheinsurerssurveyedsaytheywilladoptsmartecosystemsinthenextfiveyears3
• Insurersarelookingforwaystodifferentiatetheirofferingsfromthecompetition,avoidcommoditization,andbemorecustomer-centricintheirapproach:
– ConnecteddevicesenableP&Cinsurerstosupportquick,convenient,andpersonalizedinteractions,mitigaterisk,andprovidevalue-addedservicestocustomers
Trend Overview
• P&Cinsurersareseekingtobemorecustomer-centricandlookingforwaystoimprovecustomerengagementandexperiencebyleveragingconnecteddevices
• Throughconnectedtechnologiessuchashomesensorsandtelematicsdevices,P&Cinsurerscangetreal-timedataoncustomer’slossexposureandrespondwithtimelyinterventionsatanysignofdangerinadvancesothatpropertydamagecanbepreventedorminimized
• EarlyadoptersofconnecteddevicesintheP&Cinsuranceindustryhaveacompellingvaluepropositiontodemonstratethatdatafromconnecteddevicescanbeleveragedtogrownewbusiness,improveriskassessment,andproactivelyengagewithcustomersinlossmitigation:
– E.g.,AllianzhaspartneredwithPanasonictoprovidebetterservicetocustomers.Incaseofdangerinthecustomer’shome,Panasonicsensorssendalertstotheuser’smobiledevice,aswellastoAllianz.Allianzthendispatchesrepairteamstoquicklyaddresstheissueandmitigatedamage4
P&C insurers are leveraging connected devices for proactive risk mitigation and for providing value-added services to customers
Trend 01: Connected Devices Help Insurers to Proactively Mitigate Risk and Provide Value-Added Services
2 “InternetofThings(IoT)connecteddevicesinstalledbaseworldwidefrom2015to2025(inbillions)”,Statista,accessedOctober2017at https://www.statista.com/statistics/471264/iot-number-of-connected-devices-worldwide/
3 World Insurance Report 2016,Capgemini,2016,accessedOctober2017athttps://www.worldinsurancereport.com
4 Allianzwebsite,accessedOctober2017athttps://www.allianz.com
5
• Byleveragingconnecteddevices,P&Cinsurersincreaseriskassessmentprecisionandprovidevalue-addedservicestocustomers:
– E.g.,SecurityFirstInsurance’sSecurityFirstMobileapphelpscustomersplantheirroutineincaseofadverseweatherconditions.Theinteractivehurricanetrackingfeaturehelpscustomersplottheirpropertyaddressonthemapandcheckanactivestorm’sprojectedpath.ItalsosharesinformationonRedCrossshelters and evacuation routes5
• AnotherexampleofproactiveriskmitigationandincreasedcustomerengagementisthatofEsurance,whichlauncheditsDriveSafeteendriverprogramtohelpparentsmonitortheirteens’drivingbehaviorthroughatelematicsdevice.ThiscanbedonebysettingpreferencesontheirpersonalizedEsuranceDriveSafesitewheretheycanoptforcustomizedalertsforunsafedrivingbehaviorandreviewtripdetails6
Implications
• Withreal-timedatafromconnectedtechnologiesoncustomerriskexposure,P&Cinsurerscanrespondwithtimelyinterventionsatanysignofhazardorperilforriskreduction
• Withthehelpofsmarthomeecosystemsandtelematics,P&Cinsurersareprovidingvalue-addedservicesinmultipleareassuchashomemonitoringandassistance, driving assistance, and so on
• P&Cinsurerscarrysignificantbenefitsofprovidingvalue-addedservicestocustomerssuchascompetitivedifferentiation,increasedcustomerretention,additionalrevenuestreams,andlowerclaimcosts:
– Value-addedservicesbenefitP&Cinsurersasameansforcompetitivedifferentiation.Providinginnovativeandusefulservicescanhelpinsurersstandoutamongtheircompetitorsandrealizeincreaseincustomermindshare
– Asvalue-addedservicesenhancecustomerexperiencethroughrelevantandmeaningfulengagement,customerretentioncouldbeimprovedfortheinsurers
– Asmanyofthevalue-addedservicesaredirectedtowardproactiveriskmitigation,theycanalsohelplowertheoverallcostofclaimsforP&Cinsurersbyhelpingcustomersavoidrisksintheirdailylives
5 SecurityFirstwebsite,accessedOctober2017athttp://www.securityfirstflorida.com/resources-and-advice/security-first-mobile
6 Esurancewebsite,accessedOctober2017athttp://blog.esurance.com/introducing-esurance-drivesafe
Exhibit 1: Connected Devices in P&C Insurance
Source: Capgemini Financial Services Analysis, 2017
Connected Devices Customers
Smart Home Sensors(Ex: Leak Detectors,
Smoke Detectors)
Proactive Risk Mitigation
Value-added Services
Real-Time Customer Data
DataAnalytics
Customized Offerings
Sensors at Offices, Factories, and Worksites
Telematics Devices(Automobiles)
6 Top 10 Trends in Property & Casualty Insurance 2018
Trend 02: New Business Models are Explored
Background
• Technologicaladvancementisenablingtheintroductionandviabilityofnewinsurancebusinessmodels–suchasusage-based,on-demand,andpeer-to-peerinsurance–whicharetransformingthewaypeopleconsumeinsuranceofferings
• Thenewbusinessmodelsarefocusedonevolvingcustomerneeds,bridgingthegapsininsuranceofferings,andcateringtounexplored/underservedmarkets
• TraditionalP&Cinsurersseektointroducenewofferingsbasedonnewbusinessmodels,mostlybycollaboratingwithInsurTechfirms
Key Drivers
• Theadventofdynamicriskmodelingtechniques,drivenbyreal-timeaccesstocustomerdataviasocialmediaandIoT,andadvancementinanalyticscapabilitiesareenablingthenewbusinessmodels
• InsurTechfirmsthatprovideinnovativeofferingsbasedonthenewbusinessmodelsaredrivingtraditionalinsurancefirmstoexploresimilarproductsandservices leveraging digital technologies
• Customerdemandformoreflexibilityandeasieraccesswhileresearchingorbuyinginsurancecoverageisalsoencouragingthegrowthofnewbusinessmodels
Trend Overview
• The World Insurance Report(WIR)2017fromCapgeminiandEfmafoundthatusage-basedinsurance,on-demandinsurance,andall-in-oneriskpoliciesaremorerelevanttoP&Cinsurers(accordingtomorethan75.0%ofexecutivesinterviewed),followedbyflexiblecoverageoptions,microinsurance,andpeer-to-peerinsurance7
P&C firms are adopting new, more flexible business models with the potential to transform the way clients consume insurance offerings
Exhibit 2: New Business Models Relevant to P&C Insurers
Source: Capgemini Financial Services Analysis, 2017
New Business Models
7World Insurance Report 2017,Capgemini,2017,accessedOctober2017athttps://www.worldinsurancereport.com/
7
• Usage-Basedinsurancecanincentivizelessriskybehaviorandmitigatemoralhazardproblems.Insurancefirmscanalsoleveragetheinfrastructureforprovidingvalue-addedservicestoreduceclaimsincidents:
– Forexample,Nationwideisrunningapay-as-you-driveinsuranceprogramnamedSmartRide,whereuserscangetupto40%reductiononpremiumsforsafedrivingbehaviorandgetpersonalizedinputsformakingsaferdriving decisions8
• On-Demandinsuranceofferscustomerstheflexibilitytoactivateaninsurancecoverageas-and-whentheyrequire.Astheon-boardingandclaimsprocessingisquickandhassle-free,thisbusinessmodelisexpectedtobringmorepeopleunderinsurancecoverage:
– Forexample,TokioMarineallowscustomerstobuyshort-terminsurancepoliciesthatcovertravelandsportingactivities.Customerscaninstantlypurchasepolicesbycompletinganapplicationformandpayingthroughamobileapp9
• Insteadofhavingvariouspoliciestocovermultiplerisks,oneall-riskpolicycancoveralltherisksofacustomerinonepolicy:
– Thiswillmakeiteasierforcustomerstomanagetheirpolicydetails – Insurerstoocanbenefitthroughlowermarketingandadministrativecosts
• Byprovidinginsurancepolicieswithlowerpremiums,microinsurancepoliciesaimtobringeconomicallyweakersectionsunderinsurancecoverage:
– Forexample,AllianzAfricaoffersstandardandsimplemicroinsurancepoliciesandithasinsuredmorethan600,000peopleinAfrica10
• Peer-to-peerinsuranceenablesagroupofpeopletoinsurethemselvesbypoolingpremiums,andthegroupmemberscanreceiveaportionofthepremiumbackifthetotalvalueofclaimsislesserthanthepremiumsreceived.Membersofthegrouparealsoinvolvedincriticaldecisionsincludingclaimsadjudication:
– Forexample,InsurTechfirmbesureprovidesaplatformwherepeoplewithsimilarinsuranceneedsaregroupedinapool.Membersofthepooltakecareofclaimssettlementprocess11
Implications
• Asgapsininsuranceofferingsareaddressed,newbusinessmodelswillgeneratenewrevenuestreamsfortheinsurers
• Insurerscanenhancecustomerexperienceasinsuranceofferingscanbeaccessedseamlessly,likeautilityservice
• Businessmodelssuchasusage-basedinsurancewillhelpinsurerstoperformbetterriskassessmentandpricetheproductsmoreaccurately
• Sinceclaimsarereviewedbyaclosedgroupofpeersinpeer-to-peerinsurancemodel,thelossescanbepredictedaccurately,thusreducingclaimsleakage
• Newbusinessmodelswillhavecostimplicationsthatcanbemitigatedbyemergingtechnologiessuchasblockchainandautomationtools
8 “NationwidePromotesSafeDrivingThroughUsage-BasedInsuranceProgram”,BodyShopBusiness,accessedOctober2017at http://www.bodyshopbusiness.com/nationwide-promoting-safe-driving-usage-based-insurance-program/
9 “TokioMarinepartnerswithNTTDoCoMotoofferOneTimeInsurance”,TheDigitalInsurer,accessedOctober2017at https://www.the-digital-insurer.com/dia/tokio-marine-partners-with-ntt-docomo-to-offer-one-time-insurance/
10Allianzwebsite,accessedOctober2017at http://www.allianz-africa.com/africa/index.php?option=com_content&view=article&id=7%3Amicro-assurance&catid=3%3Aproduits&lang=en
11besurewebsite,accessedOctober2017athttps://besure.com/
8 Top 10 Trends in Property & Casualty Insurance 2018
Trend 03: Increase in Automation of Processes leveraging RPA and AI
Background
• IntheP&Cinsuranceindustry,thescaleandimpactofautomationhaveincreaseddrasticallyinrecentyearswiththeadventofRoboticProcessAutomation(RPA)andArtificialIntelligence(AI).TheefficiencyofunderwritingandclaimsprocessingcanbeimprovedbyimplementingRPAandAI
• According to the World Insurance Report(WIR)2017,RPAandAIareconsideredimportantby63.2%and69.0%ofthesurveyedinsurersrespectively,andmorethan80.0%oftheexecutivessurveyedindicatedthatinsurersareeitheralreadyinvestingorplanningtoinvestduringthenextthreeyearsinRPAandAI12
Key Drivers
• Newchannelsforcollectingcustomerdata,advanceddataprocessingcapabilities,andimprovementsinartificialintelligencealgorithmsarepoweringtheautomationagenda
• Costoptimizationandimprovedoperationalefficiencyarekeystrategicprioritiesbeingusedmoreandmoretojustifythecaseforautomation
• Quick,error-free,andpersonalizedcustomerserviceisexpectedtoremaincompetitiveandcanbeachievedviaautomation
Trend Overview
• InP&Cinsurance,RPAandAIarefindingapplicationsacrossthevaluechaintosignificantlyexpediteprocessesandalsoexplorenewmodelsofengagement
• P&Cinsurersareusingbotstoautomateprocessessuchaspolicyservicingandclaimsmanagementandthusprovidingmuchfasterandmorepersonalizedservicetocustomers:
– Inthefrontoffice,chatbotscanbeusedtointeractwithcustomerstogainabetterunderstandingoftheirneedssothatthecustomercanbeprovidedpersonalizedquotes:
� Forexample,SPIXIIisanautomatedinsuranceagentthatcustomerscaninteractwith,throughanativemobileapporothermessengerplatforms,tobuytherightcoveragefortheirrequirements13
– Inpolicyholderservicing,chatbotscanbeusedtomanagesimplerqueriesmorecost-effectivelyandspeedily:
� Forexample,Geico’svirtualassistantKateanswerscustomerqueriesabouttheirpoliciesandpayments14
P&C insurers are increasingly automating processes across the value chain by leveraging technologies such as RPA and AI
12World Insurance Report2017,Capgemini,2017accessedOctober2017athttps://www.worldinsurancereport.com/
13 “SPIXII:Makinginsurancesimple,accessibleandpersonalforeveryone”,RogerPeverelli,ReggydeFeniks,DigitalInsuranceAgenda,May4,2017,accessed October2017athttp://www.digitalinsuranceagenda.com/102/spixii-making-insurance-simple-accessible-and-personal-for-everyone/
14 “MoveOverAdjustersandUnderwriters,theBotsAreComing”,DeniseJohnson,ClaimsJournal,June6,2017,accessedOctober2017at https://www.claimsjournal.com/news/international/2017/06/06/278804.htm
9
– Inclaimsmanagement,botscanbeusedtoassessandpayoutsmallerclaims,whichiscostefficientandcanalsoconsiderablyenhancecustomerexperienceatavitaltouchpoint:
� E.g.,Lemonade’sinsuranceclaimsbot,A.I.Jim,setarecordbyassessingandpayingoutapropertyclaiminonly3seconds15
• RPAandAIcanalsoactasthesupportingtoolsforinsurerstoexplorenewofferings: – AutomationwillbeacrucialcomponentintheshiftofP&Cinsurerstowardrisk-mitigationmodelsthatmonitorreal-timedataviaconnecteddevicesandnotifycustomersofimpendingdanger
– Useofintelligentautomationandconnecteddevicescanalsoenableinsurerstoexploreparametricformsofinsuranceinmoreproductlines
• P&Cinsurerscanhavesignificantcostsavingsandachieveoperationalefficiencybyimplementingautomation:
– Insurerscanimprovetheirprocessqualityandregulatorycompliancebyautomatingtheprocess
– Automationsolutionsarehighlyscalable,andtheycanbeimplementedinphaseswithoutdisruptingnormaloperations
– RPAcanbeimplementedforprocesseshandlingstructureddata.Itcanbedeployedinashorterperiodandprovidehigherreturnoninvestments:
� Forexample,aleadinginsurerautomatedthepolicyrenewalprocessusingRPAandrealized30%-40%increaseinefficiencyandaround50%reductionofFTEs.Thefirmwasalsoabletoincreasethecustomersatisfactionwithfasterresponsetimes16
– However,forprocesseshandlingunstructureddata,AIsolutionsareimplemented: � Forexample,InsurTechfirmTycheleveragesAIforimprovingitsclaimlikelihoodmodelbyaccessingdatafromvarioussources.Thiswillenableinsurerstoimproverisk-assessmentaccuracyduringunderwriting,whichcanpositivelyaffectprofitability17
Exhibit 3: Key Benefits of Automation
Source: Capgemini Financial Services Analysis, 2017
Benefits ofAutomation
New Business Models
15 “LemonadeReportsInsuranceClaimPaidin3SecondswithNoPaperwork”,AnthonyR.O’Donnell,InsuranceInnovationReporter,January5,2017,accessed October2017athttp://iireporter.com/lemonade-reports-insurance-claim-paid-in-3-seconds-with-no-paperwork/
16 “RoboticProcessAutomationinInsurance”,Capgemini,April2017,accessedOctober2017at https://www.capgemini.com/wp-content/uploads/2017/07/robotic-process-automation-in-insurance-whitepaper.pdf
17 “TheImpactofArtificialIntelligenceontheInsuranceValueChain”,MaxKraus,Logiq3,May29,2017,accessedOctober2017at http://www.logiq3.com/blog/artificial-intelligence-insurance-value-chain-part-1
10 Top 10 Trends in Property & Casualty Insurance 2018
Implications
• Personalizedunderwritingandinstantclaims-processing(achievedviaRPAandAI)canenhancecustomerexperience
• Thereductionofhumanlaborandfasterprocessingtimescanoptimizecostandoperationalefficiencies
• Operationalefficiencyandtheabilitytoprovidepersonalizedserviceswillbolsterfirms’marketcompetitiveness
• Byautomatingback-endsystems,insurerscanimplementnewbusinessmodelssuchason-demandinsurance
• Automationmakesitpossibleandaffordabletobringpreviously-outsourcedprocessesbackin-house
11
Trend 04: Drones Take on an Important Role for Insurance Firms
Background
• Manualinspectionofroofsisrisky,andduringcatastrophicevents,roofinspectionsbecomeanevenmoresignificantchallenge
• Droneswithsophisticatedcamerascancapturehigh-resolutionimagesoftheproperty,andthesephotoscanfacilitateremotepropertyassessment.Hence,theuseofdronesisgraduallyrisingforpropertyassessmentbyP&Cinsurers
Key Drivers
• Customersexpectaquickerresolutionofclaims(especiallyafterCATevents)• Manualclaimsinspectiontakeslotoftimeandinvolveshighcostasitcanbe
handled only by experts• Droneandimagingtechnologyadvancementshelpinsurerstoobtainhigh-definitionimagesthatfacilitateremoteandaccuratepropertyestimations
Trend Overview
• TheFederalAviationAdministrationoftheU.S.estimatesthatthesalesofcommercialdroneswillincreasedrasticallytoreach2.7millionin202018 and insuranceindustryisoneoftheearliestadoptersofdronesforcommercialusage
• Globally,traditionalinsurancefirmsarealsoincreasinglyexploringanddeployingdronesforpropertyassessment:
– Forexample,intheUnitedStates,toassessthedamagesduetohurricaneHarvey,leadinginsurancefirmsincludingAllstate,Farmers,andStateFarmdeployed drones19
– ToevaluateearthquakedamagesinEcuador,QBEleverageddronesandsettled90%oflarge-lossclaimswithin90days20
– InAustralia,IAGuseddronestodeterminedamagescausedtohomesbybushfires21
• ThereareseveralInsurTechfirmswhoarespecializinginoperatingdronesandanalyzingtheimages.Traditionalfirmsarecollaboratingwiththemforscalinguptheirpropertyassessmentcapabilities:
Drones are increasingly used by P&C insurers to improve the accuracy and speed of underwriting and claims processing
18“FAAReleases2016to2036AerospaceForecast”,FederalAviationAdministration,March24,2016,accessedOctober2017at https://www.faa.gov/news/updates/?newsId=85227&cid=TW414
19“Harveyofferspreviewofhowdronescouldbeusedtospeeduprebuilding”,MelissaRepko,DallasNews,September&,2017,accessedOctober2017at https://www.dallasnews.com/business/technology/2017/09/07/harvey-offers-preview-drones-used-speed-rebuilding
20“QBEdeploysdronestoassessinsuranceclaims”,AllieCoyne,itnews,February27,2017,accessedOctober2017at https://www.itnews.com.au/news/qbe-deploys-drones-to-assess-insurance-claims-452739
21“HowDrones&UAVsAreChangingTheInsuranceIndustry”,ChristineThelander,Canstar,April26,2017,accessedOctober2017at https://www.canstar.com.au/home-insurance/home-and-contents-insurance/the-future-of-insurance-claims-is-drones/
12 Top 10 Trends in Property & Casualty Insurance 2018
– Forexample,InsurTechfirmBetterviewofferssolutionsforanalyzingtheroof,estimatingclaimsofroofdamages,thermalscansfordeterminingriskstopropertyduetotrappedmoistureoroverheatingelectricalwiring,andpredictingwildfirerisks22
• Somefirmsalsoprovideon-demanddroneservicestoclaimsadjusters: – E.g.,DropInInc.hasanUber-likenetworkofdroneoperators,andinsuranceadjusterscanaccesstheirservicesforcapturingtheimagesorvideoofthesite under investigation23
• However,droneoperatorsmustcomplywithregulations,whichvariesacrossgeographies:
– TheUSAhasrelaxedtherules,exemptingdroneoperatorsfrommedicalexaminationsandliabilityinsuranceanddronescanflyupto400feetabovegroundlevel(AGL)24
– IntheUK,droneoperatorsshouldhaveliabilityinsuranceanddronesarenotallowedtoflywithin50metersnearbuildings,andforcongestedspaces,itis150meters25
– InGermany,droneoperatorscanflydroneslessthantake-offmassof5KGbelow100metersAGL26
Implications
• Dronescanimprovepropertyassessmentaccuracy,whichwillhelpinsurersadjustpricingaccuracyandreduceclaimsleakage
• Usingdrones,insurancecompaniescanresolveclaimsquickly,whichwillenhancethecustomerexperience
• Theinspectioninfrastructurecanbescaledupinashorterspanoftimetohandlemoresignificantnumberofpropertiesandcostincurredforpropertyassessmentwillbelesserthanmanualinspection
• Combinedwithadvancedimageanddataprocessingcapabilities,dronescanalsofacilitateautomationofpropertyassessmentforclaims,minimizingtheneedforamanualadjuster
• Regulatoryconstraints,privacyconcerns,andlimitedavailabilityoftrainedstaffaresomekeychallengesinwidespreadadoptionofdrones
Exhibit 4: Key Benefits of Using Drones
Source: Capgemini Financial Services Analysis, 2017
Benefits of Drones
Scalability
Automationof PropertyAssessment
EnsuresSafety
CostOptimization
Enhanced Customer
Experience
ImprovedSpeed and Accuracy
22Betterviewcompanywebsite,accessedOctober2017athttps://www.betterview.net/what-we-offer/
23“Uber-LikeVideoServiceDropInLetsAdjustersAssessDamagefromTheirDesks”,AndrewG.Simpson,InsuranceJournal,September2,2016, accessedOctober2017athttp://www.insurancejournal.com/news/national/2016/09/02/425370.htm
24GlobalDroneRegulationsDatabase,accessedOctober2017athttps://www.droneregulations.info
25Ibid
26 Ibid
13
Trend 05: Autonomous Vehicles are Poised to Disrupt Auto Insurance Business Model
Background
• Around94%ofvehiclecrashescanbeattributedtohumanerrors27, and self-drivingsoftwarewilldecreasetheriskofaccidentsbyeliminatingaccidentscausedbyrule-breaking,lapsesinhumanjudgment,orfatigue
• Apartfromincreasedroadsafety,autonomousvehiclesalsoofferhigherfuelefficiencyandcanreduceroadcongestionbyabout25%28
• Theadventofautonomousvehicleshasnumerousimplicationsforautoinsurers,withthepotentialtoredefinetheautoinsurancebusiness
Key Drivers
• Auto tech funding is on an increasing trajectory,29andexpertsestimatethatby2020therewillbe10millionself-drivingvehiclesontheroad30
• Increasingcapabilitiesofdevices,technologies,algorithms,andprocessingspeedareaidingdevelopmentofautonomousvehicles
Trend Overview
• Moreavailabledatafromconnecteddevicesinautonomousvehicleswillincreasetransparencyandreduceriskinautoinsuranceprocessessuchasproductdevelopment,underwriting,andclaimsprocessing
• Theshifttoanecosystemofself-drivingvehicleswillchangethenatureandownershipofrisk:
– Withincreasingadoptionofautonomousvehicles,thecauseofaccidentswillgraduallyshiftfromhumanerrortofailureofmechanicalpart,device,orcontrolsystems
– Thereductionofriskarisingduetohumanerrorswillshiftriskfromvehicleownerstovehiclemanufacturers
• Thechangingnatureofrisk,itstransparency,andownership,willchangethebusinessmodelofautoinsurancefirms:
– Theoverallreductioninriskexposureofthecustomerwillgraduallyreducethemarketfortraditionalpersonalautoinsuranceproductsastheriskwillchangeintocommercialproductliability31
Autonomous vehicles are poised to shake up the business model of auto insurance industry by reducing the probability of accidents to a greater extent
27“4BenefitsofAutonomousVehiclesYouMayNotHaveConsidered”,JessieRobinson,Fleetio,April25,2017,accessedOctober2017at https://www.fleetio.com/blog/4-benefits-of-autonomous-vehicles
28Ibid
29“AutoTechStartupFinancingTops$1BillionIn2016”,CBInsights,January12,2017,accessedOctober2017at https://www.cbinsights.com/research/auto-tech-startups-2016-recap/
30“10millionself-drivingcarswillbeontheroadby2020”,BIIntelligence,June15,2016,accessedOctober2017at http://www.businessinsider.com/report-10-million-self-driving-cars-will-be-on-the-road-by-2020-2015-5-6?IR=T
31“World Insurance Report 2016,Capgemini,2016,accessedOctober2017athttps://www.worldinsurancereport.com/
14 Top 10 Trends in Property & Casualty Insurance 2018
– Autoinsurerswillalsolikelyfaceissuesindeterminingtheliabilityofanaccidentbetweenthepossiblecausessuchasthevehiclemanufacturer,thesensormanufacturer,ortheautonomoussystem
� Datafromconnecteddevicesandsensorswillbecriticalinsuchacaseforfindingthecauseofaccident
– Theroleofregulatorswillalsodefinedevelopmentsinthisspace.Forinstance,TheDepartmentforTransport,UKiscomingupwithnewtwo-in-oneinsuranceproductplansforautonomouscars,coveringthedriverwhentheyaredrivingandthecarwhenitisinautonomousmode32
Implications
• Real-timedatafromconnecteddevicesinself-drivingvehicleswilldelivercriticalinsightstoimproveunderwritingprofitabilityandreduceclaimsleakage
• ThechangingnatureofriskmayaltertraditionalP&Cbusinessmodelsandregulatorswillbecriticalindefiningthepathforward
• Autoinsurerswillneedcomprehensivestrategiestoprepareforthedisruptionscausedbyautonomousvehicles
Exhibit 5: Autonomous Vehicles Can Disrupt Auto Insurance Business Model
Source: Capgemini Financial Services Analysis, 2017
Increase in Risk Transparency Transfer Risk Ownership
Change in Nature of Risk
Disruption of Auto Insurance Business Model
Enhanced Data
Availability
Reduction in Variables
Affecting Risk
Real-Time Risk
Assessment
Reduction in Risk Exposureof Customer
Shifting of Risk Liability to
Manufacturer
32“Driverlesscarownerswillneed‘two-in-one’insurancepoliciesundernewGovernmentplans”,KatieMorley,TheTelegraph,February9,2017,accessed October2017athttp://www.telegraph.co.uk/news/2017/02/09/driverless-car-owners-will-need-two-in-one-insurance-policies/
15
Trend 06: Blockchain has the Potential to be a Game Changer
Background
• P&Cinsurersarehandlingmultiplepoliciesforcustomers,andthevolumeofdatageneratedbycustomersisincreasingexponentially.Forsharingandcombiningdataobtainedfromvarioussourcesandtohaveaneasyandcontrolledaccesstothedata,insurershavealreadystartedexperimentingwithblockchaintechnology
• According to the World Insurance Report(WIR)2017,blockchainmaygraduallygaintraction,with59.1%oftheexecutivessurveyedagreeingthatinsurersarealreadyexperimentingandwillbeinvestinginnextthreeyearsinthistechnology33
Key Drivers
• Withhugevolumesofdatageneratedforeachcustomerandthedatahavingtobeprocessedinreal-time/nearreal-timebymultipledepartments,thereisabusinessneedforeasyandsecuretransferofdataacrosstheorganizationandwithmultiplestakeholders
• Thereisaneedforauto-initiationofinsuranceclaimsandquickerclaimsprocessingforbettercustomerexperience
• Newbusinessmodels,especiallythosethathandlehighvolumesandlowmargins,needaninfrastructurethatoptimizesoperationalcosts
Trend Overview
• SeveralP&CinsurersareexperimentingwithblockchaintechnologyorcollaboratingwithInsurTechfirmstocreateprototypesrelatedtoinsuranceofferings:
– SompoJapanNipponkoaHoldingsiscollaboratingwithInsurTechfirmSoramitsutodevelopaprototypeofacatastropheinsuranceplatform34
– TheindustrywideBlockchainInsuranceIndustryInitiative(B3i)explorespotentialblockchainapplicationsininsuranceandasofOctober2017,itissupportedby38insurance/reinsurancecompaniesincludingAIG,Allianz,Chubb,LibertyMutual,SwissRe,TokyoMarine,andZurich:
� B3ilaunchedabetaversionofblockchain-basedsolutionforthere/insuranceindustrythatisexpectedtobedeployedin201835
– Ruschlikon,anindustrywideinitiativeleveragingblockchainforinsuranceclaims,isfocusingonincreasingthespeedofclaimsprocessingby30%,leveragingblockchaintechnology36
Blockchain technology has the potential to be a key game changer in the insurance industry
33 World Insurance Report2017,Capgemini,2017,accessedOctober2017athttps://www.worldinsurancereport.com/
34“P&CInsurerTrialsBlockchainforCatastropheCoverage”,StanHiggins,coindesk,September26,2016,accessedOctober2017at https://www.coindesk.com/pc-insurer-trials-blockchain-catastrophe-coverage/
35“B3iexpandswithnewmembersjoiningitsprototypeMarketTestingphase”,B3i,October2,2017accessedonOctober2017at http://b3i.tech/single-news-reader/press-release-3.html
36“Ruschlikon–Blockchainconsortiumaimstospeedclaimsprocessingby30%”,TheDigitalInsurer,accessedOctober2017at https://www.the-digital-insurer.com/dia/ruschlikon-an-industry-wide-effort-to-implement-acord-global-reinsurance-and-large-commercial-grlc-messaging-standards/
16 Top 10 Trends in Property & Casualty Insurance 2018
• Blockchaincanbeupdatedbymultiplepartiesatthesametimewithoutalteringtheexistingdata.Therefore,customerdatacapturedfromvarioussourcescanseamlesslyandsecurelybeaccessedbyseveralparticipants:
– Customeridentitiescanbesharedamongorganizationsforbetteridentitymanagement
– Capturedcustomerdatacanbeusedinmultipleapplicationsincludingcoreprocessessuchasunderwritingandclaimsprocessing
– Claimsprocessingdetailscanbestoredinblockchainandsharedwithintheorganization/acrossorganizationstoreducefraudassociatedwithmultipleclaimsforasingleincident
• Forprofitableandsustainableoperations,on-demandbusinessmodelsrequirequickaccesstodata,andmicroinsurancerequirescostoptimization.Blockchaincanensuredataavailabilitywhilereducingoperationalcoststoalargeextent
• Moreover,DecentralizedAutonomousOrganizations(DAOs)canaideffectivepolicymanagementwhileSmartContractscansupportautomaticpolicy execution
Exhibit 6: Key Benefits of Blockchain Technology
Source: Capgemini Financial Services Analysis, 2017
01
02
03
05
04
Identity Management
Seamless Access of Data
Fraud Management
New Products and Services
Secured Transactions
Key BenefitsBlockchain
Implications
• Customerdetailsrequiredfor“KnowYourCustomer”(KYC)processcanbesharedeasilyamongfirms,whichenablesquickcustomeronboardingandinstantpolicyissuancetoenhancecustomerexperience
• Duringclaimsincidentssuchasfireincidentsandvehicleaccidents,blockchainbasedsmartcontractscanexecuteautomaticallywithinputsreceivedfromconnecteddevices.Thiscanleadtoadrasticreductioninoperationalcosts
• BlockchaininP&Cinsurancecanpotentiallyensuretransparencyintransactions
17
Trend 07: Traditional P&C Insurers Realize APIs’ Importance
Background
• ApplicationProgrammingInterface(API)enablessharingofdatabetweensystemsinadefinedmanner,therebysimplifyingandstreamliningthedevelopmentandintegrationofsystems
• APIsfuelspartnerships,fast-tracksinnovationsandhelpsitsprovidersachievebroaderaudiencebyallowingeasyandefficientsharingofinformation
Key Drivers
• P&Cinsurersneedtointegratedatafromvarioussourcesandthirdparties,includingconnecteddevices,forgeneratingmorecompellinginsights
• APIscanenablefasterpaceofinnovationfortraditionalinsurers,helpingthemtocapitalizeonthedigitaladvances
Trend Overview
• TheadvancementintechnologiesandtherecentsurgeinusageofconnecteddeviceshasopenedupnewavenuesforP&Cinsurers
• InsurersareusingAPIstointegratedatafrommultiplesourcesforderivingvaluableinsightsandcreatingcompellingofferingsforcustomers:
– Forexample,Allstatehascreatedits‘GoodHome’toolbyutilizingproprietaryclaimsdata,GoogleMapsAPIs,weatherAPI,andpublicdata37:
� Userscanlookattheirhouse,visualizesignificantrisksintheirarea,andreceivetechniquestomitigatesuchrisksthroughthistool
� GoodHomeenabledAllstatetoimprovecustomerengagementsandbuildbettercustomerrelationships,andtheinsurerfoundthatauserofthistoolismorelikelytorequestforaninsurancequotethananon-userbyover350%38
• APIsarealsoenablinginsurerstointegrateintotheconnecteddevicesecosystemandprovidevalue-addedservicestothecustomers:
– Forexample,Nationwide’susage-basedautoinsuranceprogram,SmartRide,usesIMS’sconnectedcarplatform39:� APIsareusedtoretrievevehicleinformationandthedriver’sbehavioraldatafromtheonboarddiagnosticsdevice
� TheinsurerhasaSmartRidewebportalaswellasamobileappwheretheenrolleduserscanviewtheirdrivingtrends,receivepersonalizedfeedback,andviewtheirtripsonmaps40 41
APIs enable traditional insurers to develop new applications at a faster pace and facilitate seamless integration with other stakeholders
37AllstateGoodHomewebsite,accessedOctober2017athttps://goodlife.allstate.com/goodhome/
38“AllstatehelpspeopleuncoverriskstotheirhomesusingGoogleMaps”,ElizabethSchreier,GoogleCloudBlog,March10,2015,accessedOctober2017at https://cloud.googleblog.com/2015/03/Allstate-helps-people-uncover-risks-to-their-homes-using-Google-Maps.html
39“CustomerCaseStudy:Nationwide”,IMS,accessedOctober2017athttps://www.intellimec.com/telematics-insurance-case-study
40NationwideSmartRideWebsite,accessedOctober2017athttps://www.nationwide.com/smartride.jsp
41NationwideSmartRideAppon–Android’sGooglePlayStoreandApple’sAppStore,accessedOctober2017
18 Top 10 Trends in Property & Casualty Insurance 2018
• InsurersareopeningAPIdeveloperportalsfordatascientistsandappdeveloperstorevupthepaceofexperimentationandinnovation:
– Forexample,anewopenAPIdeveloperportalbyLibertyMutualInsurance’sSolariaLabscombinesproprietaryinsuranceknowledgewithpublicdata,suchasautotheftandparkingcitations,tohelpscientistsanddeveloperscreate user safety apps42
– AnotherexampleincludesInsurHack,aninsurancesoftwaredevelopmentchallengeorganizedbyZurichInsuranceGroup,whereparticipatingteamscanaccesssimulatedcustomerdataviaAPIstoworkontheirideaandcreateaworkingprototype43
Implications
• APIswillhelpinsurersprovidecustomerswithinnovativepersonalizedofferingstoimprovetheiroverallexperience
• Third-Partycollaborationswillhelpstreamlineservicesandexpandoverallcustomerreach,openinguppossibilitiesfortop-linerevenuegrowth
• Fast-PaceinnovationwillallowP&Cinsurerstoalignwithcustomerdemandsforadvanced technologies
Exhibit 7: Usage of APIs in P&C Insurance
Source: Capgemini Financial Services Analysis, 2017
Connected Devices – Telematics and Smart Homes
Developing Innovative Applications
Collaborating with Third Parties
APIs in P&C Insurance
42“LibertyMutualInsurance’sSolariaLabsUnveilsNewDeveloperPortal”,LibertyMutual,January4,2017,accessedOctober2017at https://www.libertymutualgroup.com/about-lm/news/news-release-archive/articles/solaria-labs-unveils-new-developer-portal
43 ZurichInsurHackWebsite,accessedOctober2017athttps://www.zurich.de/de-de/insurhack
19
Trend 08: More P&C Insurers Embrace Advanced Analytics
Background
• AdvancedanalyticstoolsenableP&Cinsurerstoeffectivelyleverageinternalandexternaldatatocarve-outgranularinsightsthatallowthemtotailorservicesbasedonacustomer’ssituation,behavior,preferences,andriskprofile
• AdvancedanalyticsofferthepromiseofcreatingnewtoolsdesignedtogenerateinsightandforesightbyallowingP&Cinsurerstotestalternativescenariosandtoextendaccomplishedthinkingonplausibleevents
• Thus,P&Cinsurerscanidentifynewrisksandaccuratelydevelopunderwritingstrategies,pavingthepathfornewlinesofbusinessandrevenuesources
Key Drivers
• Advancesincomputingtechnology(e.g.,processingstructuredandunstructureddatatogether)andaninfluxofdatafromvarioussourcesaredrivingP&Cinsurerstoadoptadvancedanalyticstools
• Novelbusinessactivities,emergingtechnologies,andthesharingeconomyareincitingnewriskssuchascybercrimeanddigitalidentitytheft
• CustomersareexpectingAmazon-likeexperiencefromP&Cinsurancewhenitcomestospeed,convenience,personalization,andprice
Trend Overview
• Withdatamoreavailablethaneverbeforeandwithadvancementsinanalyticalcapabilities,P&Cinsurerscannowdriveprofitablegrowthbyaccuratelypricingriskandbyidentifyingnewriskfactors:
– Withintegrated,up-to-date,andorganizeddata,analyticswillhelpP&Cinsurersassessrisksacrossthefirmandthemarket:
� Forexample,WillisTowersWatsonemployspredictiveanalyticssoftwaretomodelcomplexcustomerbehaviourwhichenablesthefirmtoenhanceitspricingaccuracy.Thesoftwarealsoreducesthedecisioncycletimessignificantly44
– AdvancedanalyticsallowP&Cinsurerstoprotectthefirmfromevolvingriskexposures,optimizebusinessstrategies,andidentifynewgrowthopportunities
– Withanalytics,autoinsurerscanadjustpolicypricesdynamically,monitorpricesforspecialsegmentsonprice-comparisonwebsitesandadjustfeeseachnightuntiltheyreachtheirtargetedsaturationforthesegment
P&C insurers are increasingly leveraging advanced analytics to price risks accurately and identify emerging risks for more fine-tuned underwriting
44WillisTowersWatsonenhancesitspredictivemodellingsoftware”,PaoloTaruc,InsuranceBusinessAsia,October25,2017,accessedOctober2017at http://www.insurancebusinessmag.com/asia/news/breaking-news/willis-towers-watson-enhances-its-predictive-modelling-software-82884.aspx
20 Top 10 Trends in Property & Casualty Insurance 2018
– E.g.,MetLifeAuto&Homelaunchedanonlineplatformthroughwhichpoliciesmaybepurchasedinminutesbecausedataandanalyticsareleveragedtoassesspricingandriskinrealtime:45
� Theentireprocess,frompolicypurchasetopremiumpaymenttoclaims,ispaperlessandthewebsiteisdesignedwithsimplifieddigitalprocessestoimprovethecustomerexperience
• OneofthebiggestchallengesforP&Cinsurersincludesemergingriskssuchascyber-security.Today,thenewdatasourcescombinedwithadvancedanalyticaltools,suchaspredictiveanalytics,areofferingnewsolutionstonotonlyidentifytheemergingrisksbutalsotocreatenewserviceofferingsaroundthem: – ForExample,AllianzGlobalCorporate&Specialty(AGCS)haspartneredwithZeguro,asoftwarecompanyhavingexpertiseincyber-security,tostreamlinecyber-securityandriskmanagementforsmalltomedium-sizedbusinesses(SMBs):46
� ZegurowillserveasavirtualChiefInformationSecurityOfficer(CISO)forAllianz’scyberinsurancecustomersandmanagesthefirm’scyberexposureanddecreasestheoverallriskoffinanciallossfollowingacyberattack
Exhibit 8: Benefits of Analytics in P&C Insurance Industry
Source: Capgemini Financial Services Analysis, 2017
Benefits of Analytics in
P&C Insurance Industry
AdvancedAnalytical
Technologies
New DataSources
AccurateRisk
Assessment
IdentifyingEmerging
Risks
PersonalizedCustomerOfferings
AddressingIntensifyingCompetition
Implications
• AnalyticsandriskmodelingofferP&Cinsurersaquickwaytoconsistentlyandaccuratelypriceandreducerisks
• Byleveraginganalytics,P&Cinsurerscanofferhighlypersonalizedproductsandcustomizedservicestoenhancecustomerexperience
• Withadvancedanalytics,insurerscandevelopalistofemergingrisks,anddevelopaswellasimplementunderwritingstrategiesaccordinglytoenhancefirmcompetitiveness
45“MetLifeAuto&Home®Introduces100%DigitalProductsonGuidewirePlatform”,October04,2017,accessedOctober2017at http://www.businesswire.com/news/home/20171004006344/en/MetLife-Auto-Home%C2%AE-Introduces-100-Digital-Products
46“Who’susingwhatinP&Cinsurance”,PropertyCasualty360,October09,2017,accessedOctober2017at http://www.propertycasualty360.com/2017/10/09/whos-using-what-in-pc-insurance-oct-9-2017?t=agency-technology?ref=channel-news
21
Trend 09: Collaboration with InsurTech Firms Heats Up
Background
• IncreasingnumberofInsurTechfirmsareprovidinginnovativeofferingsinP&Cspace,includingauto,homeowners,andcyberinsurance,withglobalinvestmentsinP&CInsurTechspacehavingcrossed$2billionasof201647
• ThegrowthofInsurTechfirmsandtheinnovativeofferingsisstimulatingtraditionalP&CinsurancefirmstoacquireInsurTechcapabilities.SeveralP&CinsurersarealreadycollaboratingwithInsurTechfirmsviapartnerships,accelerators/incubators,VCfunds,orbyacquiringsomeofthesestart-ups
Key Drivers
• Thereisanincreasingdemandforinnovativeproductsandservicesfromcustomers,particularlyGen-Yormillennials
• Thecostofestablishingandmaintaininganin-houseR&Dcenterishigh,anditusuallytakessometimetoestablishatechcultureinthefirm.CollaboratingwithInsurTechfirmscanprovidemuchfasterresultstotraditionalinsurers
• Ontheotherhand,InsurTechfirmsalsoneedtocollaboratewithtraditionalinsurancefirmsforcustomerbase,funding,andbusinessknow-how
Trend Overview
• Toimplementinnovations,traditionalinsurerspreferassociatingwithInsurTechfirmsratherthandevelopingin-housecapabilities:
– According to the World Insurance Report(WIR)2017,52.9%ofinterviewedinsuranceexecutiveswantedtopartnerwithInsurTechfirmstoleveragedigitaltechnologies,comparedwith35.6%executivesfavoringin-housedevelopment48
• InsurTechcompaniesoperateacrosstheP&Cinsurancevaluechainincludingfront-endservicessuchaspolicycomparison,policyapplication,orrenewalsandback-endservicessuchasunderwritingandclaimsprocessing:
– Addedtothat,theyprovideuniqueservicesthathelptraditionalinsurancefirmstoenhancetheircustomerexperienceanddataprocessingcapabilities
• PartneringwithInsurTechfirmswillenabletraditionalinsurancefirmstoacquireInsurTechcapabilitiesmorequickly,asitrequiresminimalchangesininfrastructuretointroducenewofferings:
– Forexample,AllianzhaspartneredwiththeInsurTechfirmVisicoverforprovidingaircraftinsurance.ThepartnershipwillenableAllianztoservecustomersviadigitaldistributionchannels49
More and more, traditional P&C insurers are collaborating with InsurTech firms and investing in emerging technologies
47“BrokerSoftware,DigitalDistribution,AndMore:ActivityBoomsInProperty&CasualtyInsurtech”,CBInsights,December13,2016,accessedOctober2017at https://www.cbinsights.com/research/property-casualty-insurance-tech/
48World Insurance Report2017,Capgemini,2017,accessedOctober2017athttps://www.worldinsurancereport.com/
49“AllianzGlobalCorporate&SpecialtyAnnouncesOnlineAircraftInsurancePartnershipwithVisicover”,Allianz,July18,2017,accessedOctober2017at http://www.agcs.allianz.com/global-offices/united-kingdom/news-press-uk/allianz-global-corporate-specialty-announces-online-aircraft-insurance- partnership-with-visicover/
22 Top 10 Trends in Property & Casualty Insurance 2018
• Bytakingpartinaccelerators/incubatorsforInsurTechfirms,traditionalinsurerscanstayclosetolatesttrendsininnovationbycloselyworkingwithstart-ups,andthisapproachalsoallowstheinsurerstoidentifypotentialpartners:
– Forexample,leadingP&CinsurersincludingZurich,Farmers,andUSAAarepartneringwithPlugandPlayaccelerator,whichoperatesin22globallocations50
• SometraditionalinsurancecompaniesinvestinInsurTechfirmsviainvestmentarmsthatprovidereturnsoninvestmentalongwithinsightsonlatesttrendsininnovation:
– Forexample,XLInnovate,investmentarmofXLCatlin,hasinvestedinseveralInsurTechfirmsincludingLemonadeandSliceLabs51
• TraditionalP&CinsurerscanalsoacquireInsurTechfirmstobolstertheircompetitivemarketadvantage
• Establishedfirmsalsofollowamixofapproachesdependingontheirinnovationobjectivesandbusinessgoals.The World Insurance Report2017foundthat37.9%ofsurveyedinsurersvotedinfavorofamixofthevariousapproaches.52
Implications
• Customerexperiencecanbeenhancedwithvalue-addedservicesandofferingsbasedonnewbusinessmodels
• Innovativeproductsandservicescanensureprofitabilitybygeneratingnewrevenuestreamsandreducingoperationalcosts
• BycollaboratingwithInsurTechfirms,traditionalfinancialservicesfirmscaninculcateinnovationintheirofferingsinamoreflexibleandcost-effectivemannerascomparedtoin-houseinnovation.Collaborationisawin-winsituationforbothInsurTechfirmsandtraditionalinsurers,asbothhavecomplementarystrengths
Source: Capgemini Financial Services Analysis, 2017
Exhibit 9: Traditional Insurance Firms and InsurTechs – Various Collaboration Approaches
VCInvestment
Mix of Approaches
Partnerships
Accelerators/ Incubators
Acquisition
50PlugandPlaywebsite,accessedOctober2017athttp://plugandplaytechcenter.com/
51 “BrokerSoftware,DigitalDistribution,AndMore:ActivityBoomsInProperty&CasualtyInsurtech”,CBInsights,December13,2016,accessedOctober2017at https://www.cbinsights.com/research/property-casualty-insurance-tech/
52World Insurance Report2017,Capgemini,2017,accessedOctober2017athttps://www.worldinsurancereport.com/
23
Trend 10: P&C Insurers Adopt a Cloud-Native Approach
Background
• Cloud-nativeapplications,designedspecificallyforcloud,arebuiltandrunusingPlatform-as-a-Service(PaaS)model
• Insurersarealreadycreating16%oftheirnewapplicationsusingacloud-native approach53
Key Drivers
• Insurersneedtoachievefastertime-to-marketandadjustquicklytoshiftingmarketconditionssuchascustomerdemand,technologicaldevelopments,regulatoryreforms,andacompetitiveenvironment
• ReducingITcostsisthemostimportantpriorityofbusinessmanagers,54 and theflexibilityofferedbythecloudcanhelpinsurersreduceITcostsrelatedtoapplicationdevelopmentanddeployment
Trend Overview
• Microservicesarchitectureinacloud-nativeapplicationallowsdesign,testing,deploying,orreplacingselectiveservicesinanapplicationwithoutimpactingotherservices,thussupportingcontinuousdevelopmentanddelivery:
– P&Cinsurerscanutilizecloud-nativemethodstoimprovetheirresponsetomarketrequirements
P&C insurers take to the cloud in efforts to adopt new technologies and deploy customer-centric innovations
Exhibit 10: Benefits of Cloud Native Applications for P&C Insurers
Source: Capgemini Financial Services Analysis, 2017
Better Agility
Lower ApplicationDevelopment Cost
Improved Scalability
Increased Flexibility
Benefits
53“CloudNativeComesofAge”,Capgemini,accessedOctober2017athttps://www.capgemini.com/service/cloud-native/
54 Ibid
24 Top 10 Trends in Property & Casualty Insurance 2018
– E.g.,LibertyMutualisusingcloud-nativeandagilemethodstoquicklydeliverinnovativeproducts:
� TheP&Cinsurerdevelopedanddeployedacloud-nativeportalwithinsixmonthsforunderwritersintheaccidentandhealthinsurancespaceinAustralia55
� Theinsurertookonly28daystolaunchaMinimumViableProduct(MVP),allowinguserstobuymotorcycleinsuranceviaanapp56
• Cloud-Nativeapplicationsenablesmoothhorizontalscalingaccordingtothedemand:
– Applicationscanmovefromtestingphasetomarketdeploymentinminimaltime,extendingbetterflexibilitytotheinsurers:
� Forexample,Allstate’sCompoZedLabs,usingPivotalCloudFoundryforcreatingcloud-nativeapplications,empowersthedeveloperstocreateanMVP,testitquickly,andifsuccessful,scaleitupinaveryshorterperiodoftime57
– InternetofThings(IoT)projectscanalsoleveragecloud-nativemethodstoachieve better scalability, reliability, and business agility58
� InthecontextofP&Cinsurance,thismeansthatcloud-nativeapproachcanempowerinsurerstobettermanagetheconnecteddevicessuchastelematicsorsmarthomesystems
Implications
• Cloud-Nativeapproachwillreducecostandtimeduringdevelopmentanddeploymentofnewapplications
• Fasterdevelopmentcycleswillallowinsurerstorespondquicklyandmorefrequentlytomarketrequirements,whichwillenhancetheircompetitiveposition
• Cloud-Nativeapplications,withtheirabilitytorunonanycloudwithoutmodification,willprovidegreaterflexibilitytoinsurers
55“LibertyMutualDeliversanInsuranceAppin6MonthswithCloudFoundry”,AlesiaBulanok,Altoros,July6,2017,accessedOctober2017at https://www.altoros.com/blog/liberty-mutual-delivers-an-insurance-app-in-6-months-with-cloud-foundry/
56Ibid
57“HowInsuranceGiantAllstateIsUsingCloudTechtoBuildNewBusinesses”,BarbDarrow,Fortune,June19,2017,accessedOctober2017at http://fortune.com/2017/06/19/allstate-insurance-cloud/
58“Cloud-NativeArchitectureandtheInternetofThings”,OpenConnectivityFoundation,June8,2017,accessedOctober2017at https://openconnectivity.org/wp-content/uploads/2016/03/OCF_Cloud-Native-IoT-White-Paper.pdf
25
1. World Insurance Report 2017,Capgemini,2017,accessedOctober2017at https://www.worldinsurancereport.com/
2. World Insurance Report 2016,Capgemini,2016,accessedOctober2017at https://www.worldinsurancereport.com/
3. World FinTech Report2017,Capgemini,2016,accessedOctober2017at https://www.capgemini.com/service/introducing-the-world-fintech-report-2017/
4. “BrokerSoftware,DigitalDistribution,AndMore:ActivityBoomsInProperty&CasualtyInsurtech,”CBInsights,December13,2016,accessedOctober2017athttps://www.cbinsights.com/research/property-casualty-insurance-tech/
5. “TheInsuranceIndustry’sGameOfDrones,”CraigCasazza,Forbes,April24,2017,accessedOctober2017at https://www.forbes.com/sites/ccasazza/2017/04/24/the-insurance-industrys- game-of-drones/#66b5e71c7225
6. “Blockchainininsurance:promiseforthefuture,”MarkBreading,PropertyandCasualty3600,December2,2016,accessedOctober2017at http://www.propertycasualty360.com/2016/12/02/blockchain-in-insurance- promise-for-the-future?slreturn=1509006971
7. “10MillionSelf-DrivingCarsWillHitTheRoadBy2020--Here’sHowToProfit”,OlivierGarret,Forbes,March3,2017,accessedOctober2017at https://www.forbes.com/sites/oliviergarret/2017/03/03/10-million-self-driving-cars-will-hit-the-road-by-2020-heres-how-to-profit/
References
26 Top 10 Trends in Property & Casualty Insurance 2018
Kumaresan AisaseniorconsultantwiththeMarketIntelligenceTeaminCapgeminiFinancialServicesSBUwithmorethanfiveyearsoftechnologyconsultingandstrategicanalysisexperienceintheITandinsurancesectors.
Saurav SwarajisaseniorconsultantwiththeMarketIntelligenceTeaminCapgeminiFinancialServicesSBUwithmorethanthreeyearsofconsultingandstrategicanalysisexperienceacrossmultiplesectorsincludinginsurance.
Raghunandan KothamasuisaseniorconsultantwiththeMarketIntelligenceTeaminCapgeminiFinancialServicesSBUwithmorethanfouryearsofconsultingandstrategicanalysisexperienceintheinsuranceindustry.
TheauthorswouldliketothankIan Campos, Gunnar Tacke, James Kruger, Karin Schweigko ler, Nathan Root, Ramesh Darbha, Satish Weber, Seth Rachlin, Silvia Milian Bon, William Sullivan, Vikash Singh, Krithika Venkataraman and Tamara Berry fromCapgeminifortheircontributionstothispaper.
About the Authors
27
About Capgemini
A global leader in consulting, technology services and digital transformation, Capgemini is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms.
Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural company of 200,000 team members in over 40 countries. The Group reported 2016 global revenues of EUR 12.5 billion.
Visit us at
www.capgemini.com
Learn more about us at:
The information contained in this document is proprietary. ©2017 Capgemini. All rights reserved. Rightshore® is a trademark belonging to Capgemini.
www.capgemini.com/insurance oremail:[email protected]