FinTech: Infection or Injection for Insurers? Sara Goldberg, November 2016

Transcription

1 FinTech: Infection or Injection for Insurers? Sara Goldberg, November 2016

2 Outline What is the world of FinTech Landscape of Insurtech so far Focus on distribution, big data Startup examples Future possibilities and risks unknowns in life & health insurance Fintech Sara Goldberg November

3 The world of #FinTech Number of Fintech startups by industry Insurance, 25 Online ID, 6 Bitcoin/blockchain, 9 Financing, 133 Resource planning, 18 Payment transactions, 46 Investments, 46 Real estate, 79 arkow Consulting as published in Versicherungsmonitor:Dossier, June 2016, Die Unruhe vor dem Strum Fintech Sara Goldberg November

4 The world of #FinTech Some of these startups goals: Good use of big data (marketing decisions) Ease of purchase, simplicity and (partly) transparency for customer User experience, easy [claims] handling Removing middle man or introducing new middle man Independence from traditional platforms (blockchain technology) Value proposition in insurance startups no different Insurtech funding has grown from $800mil in 2014 to $2.6bil in 2015 Barkow Consulting as published in Versicherungsmonitor:Dossier, June 2016, Die Unruhe vor dem Strum Fintech Sara Goldberg November

5 Current focus in Insurtech Big data and modern infrastructure Data-collecting apps, wearable devices Analytics for better UW/pricing, marketing, fraud detection Putting bureaucracy either to bed or behind the scenes Claims and accounts processing, customer service Distribution using tech to reach consumers that traditional insurers miss Both aggregating and disaggregating is happening Sustained contact with purchasers of insurance Product development Push towards simplicity & transparency, not more gimmicks Internet of things P2P applications Blockchain & smart contracts Fintech Sara Goldberg November

6 A few names in Insurtech Oscar InsurETH InGuard Metromile Community Life Qumram Zhong An Ping An TongJuBao Coverfox Ladder Life Lemonade Policy Genius Guevara Cover Dynamis Friendsurance Knip Zenefits Clark JD.com Taobao Bought by Many Sureify Atidot Teambrella Fintech Sara Goldberg November

7 Oscar Health insurance has been ranked the worst industry for customer service in US enter Oscar Goal was to revolutionize health care Valued at $2.7bil after last round of capital (including Google); 125,000 members Focus on marketing and user experience: Telehealth, connecting policyholders and doctors via App. 9 minute response time for doctors, and Oscar find 91% of cases resolved with the first virtual appointment Can view medical history, prescriptions online Connect to Misfit tracker for discounts to gyms Offerings not unique but accessible and well marketed Not immune to traditional problems: Lost $83mil in New York, Texas, and California in 1H 2016 Tightening its provider network in New York and closing operations in New Jersey, Texas due to looser network; cutting jobs in New York crainsnewyork.com/article/ /health_care/ /hip-health-insurer-oscar-cuts-jobs-in-nyc-to-move-them-to-arizona Teladoc.com blog, 12/24/15 Fintech Sara Goldberg November

8 What do millenials want? 70% of millenials would rather do business with google, facebook, amazon than with a traditional FI Least likely generation to be engaged with insurer More than twice as likely to buy insurance online (as opposed to through agent) Yet they are the least satisfied of all generations to be satisfied with their online user experience! Data security is critical Mission driven, not just cheapest quote Ease in changing coverage or finding answers online Speed, transparency. Enter Lemonade: User experience + big data + virtual agents Chief Behavioral Economist is Dan Ariely (Duke University) Homeowners and renters P2P insurance Secured $13million in capital in Dec Fintech Sara Goldberg November

9 P2P Aims to save money through reduced overhead costs, increase transparency, reduce inefficiencies, and especially to reduce the inherent conflict between insurance carriers and their policyholders at the time of a claim - Wikipedia Fintech Sara Goldberg November

10 Ping An By launching a long term personal accident product via Intelligent Mobile APP, Ping An Life managed to achieve record high sales volume Launched in July 2016, with simplified underwriting, guaranteed rates 10

11 Emerging regulation online sales Taiwan 保險業經營電子商務自律規範 China 互联网保险业务监管暂行办法 Similar regulations on Company Facts, Product Features, Methods of Payment, Protection on Consumer Personal Information, Transaction Security, Hardware Security, Network Security, Staff Management, Emergency Procedure, Consumer Registration and Third Party Management More Detailed Regulations on Payment Authentication and Protection, Transaction Storage and Backup, Security Audit and Crime Report Special Regulations on No cash refund promotions to policyholders Connecting point of servers being physically within PRC

12 Bitcoin I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party. Double-spending is prevented with a peer-to-peer network. No mint or other trusted parties. Participants can be anonymous. New coins are made from proof-of-work. The proof-of-work for new coin generation also powers the network to prevent double-spending. Satoshi Nakamoto Fintech Sara Goldberg November

13 Addresses & Transactions (The basics) Bitcoin stored value is in the output of previous transaction One type of output is address is hash of public key Only someone who has the private key can spend You need to sign a transaction with the private key to spend the money Transaction is valid if the signature and hash of the public key with that signature matches the address Fintech Sara Goldberg November

14 Ethereum / Ether Like Bitcoin But contains wider ability to programme SmartContracts The Ethereum system has been described by the New York Times as "a single shared computer that is run by the network of users and on which resources are parceled out and paid for by Ether. Fintech Sara Goldberg November

15 Bitcoin Transactions nodes per population (1mil) nodes per GDP ($1tril) # nodes world United States Germany France Netherlands Canada United Kingdom China Russia Sweden Switzerland Australia Ireland Japan Spain Ukraine South Korea Italy Poland Norway Lithuania Yet over 90% of transactions and 70% of mining from China In Insurtech world, activity seems to be more evenly spread concentrations of startups in central Europe and California, many thinking globally Analysis of Fintech Sara Goldberg November

16 Bitcoin is Doing for Money What Did for Snail Mail Lack of trust in financial services Need for anonymity Slightly complicated and tricky at present Inferior to money/banking in many respects Cheaper It s less about what but how in 1994? Why bother?, It s so finicky?, How do I know someone s ?, One small mistake and I send my mail to the wrong person? Snail mail in 2016? How do I do that?, Where do I get a stamp?, Where s the post office?, How do I know it s received?? Fintech Sara Goldberg November

17 Blockchain: the good and bad Take any kind of thing like that that involves money or value or trust, in today's economy. Then say OK, what would happen if you didn't need all of that? Marc Andreessen, Founder of Netscape. The running joke in crypto-space is that any effort to control blockchain technology would negate any benefits of having it one in the first place Dan Robles, Fintech Sara Goldberg November

18 Blockchain possible uses Distributed Ledger Currencies Back-end clearing / settlement (e.g. inter-bank chains) Reinsurance Smart Assets Asset registries Deeds office Internet of things Smart Contracts / Legal Notary Self-executing contracts Contracts with asset transfers Identity management Sanctions checks Fintech Sara Goldberg November

19 Future Possibilities: Blockchain in insurance & smart contracts Dynamis: Also P2P, but one step further: smart contracts on the blockchain Launch scheduled for 1Q 2016 Fintech Sara Goldberg November

20 Future Possibilities: Blockchain in insurance & smart contracts So far only tested for simple, short-term binary risks InsurETH: programmed over a weekend as test case for flight cancellation on Ethereum Teambrella just launched minimum viable product (collision + pet) on Bitcoin Fintech Sara Goldberg November

21 Snapshot: Future possibilities and risks Distribution: massive opportunity for new applications and partnering or going direct. Will traditional insurers hands be tied (much like retail branches of banking), or can they meet their customers online anyway? Now my dad uses Uber Blockchain technology and smart contracts With scaling comes regulation (solvency, data privacy), litigation risk -> AirBnB regulatory hurdles Fintech Sara Goldberg November

22 Snapshot: Future possibilities and risks Opportunity to partner or buy up insurtech startups, but remember: run by millenials, mission driven, not necessarily up for sale! Good news: fast trumps margin! Life insurance will no longer be a logo, rating, and a price Product differentiation is being redefined: away from conversion privileges and to user experience Innovation less tested in long term life and health insurance: the world is yours! Fintech Sara Goldberg November

23 Thank you! Sara Goldberg Regional Chief Actuary, North East Asia Visit genre.com for more info.

24 Proprietary Notice The material contained in this presentation has been prepared solely for informational purposes by Gen Re. The material is based on sources believed to be reliable and/or from proprietary data developed by Gen Re, but we do not represent as to its accuracy or its completeness. The content of this presentation is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Fintech Sara Goldberg November