Insurance Opportunities in an IoT & Big Data-driven Marketplace Workshop A

Transcription

1 Insurance Opportunities in an IoT & Big Data-driven Marketplace Workshop A 4 th Latin American InsuranceTech Summit 2016 August 22, 2016 Joe Wodark Verisk Insurance Solutions Barry Rabkin Market Insight Group, Ltd.

2 Continual Waves of Technological Change 2

3 Workshop Sections Section 1: Introductions & Objectives Section 2: Technology Trends Section 3: IoT-enabled Insurance Opportunities Section 4: Making Sense of Big IoT Data Section 5: Actions to Take 3

4 Section 1: Introductions & Objectives Who are you? Please introduce yourself, your company, and your areas of responsibility What are your objectives for attending this conference and more specifically this workshop? 4

5 Section 2: Technology Trends Enduring principles of commerce What to expect in the 2020 marketplace (broad brushstrokes) Five major themes: 1. Mobility 2. Consumer media-casting 3. On-Demand Economy 4. Digital Gaia Emerges 5. Presence Amplified 5

6 Section 2: Technology Trends Enduring principles of commerce Customer experience reigns Darwinian dynamics persist Regulations lag market reality Concept of money is fungible 6

7 Section 2: Technology Trends : Broad Brushstrokes What to expect in the 2020 marketplace IPv6 Millennials 50% + of workforce Buy Buttons Throughout Social Media Mobile Payment Apps Connected Vehicles - yes Autonomous Vehicles (yes/no) billion + embedded objects Real-time streaming video Drones Private / Commercial / Farm Google Compare returns and turns into an Insurance Exchange Facebook Insurance Mart? Virtual Reality Limited commercial applications Augmented Reality Commercial / Farm Apps 7

8 Section 2: Technology Trends Five Major Themes Mobility Presence Amplified Consumer Media-casting Want Customer Experience Digital Gaia Emerges (IoT) On-Demand Economy 8

9 Section 2: Technology Trends Mobility: smartphone predictions by region Ericsson Mobility Report June

10 Section 2: Technology Trends Consumer media-casting 10

11 Section 2: Technology Trends On-Demand Economy: Unbundling Industries Aggregators are simultaneously bundling app-deployed demand and unbundling industries focused on specific customer needs. Transportation Lodging Groceries Eating????? What New Demand Aggregators Will Emerge? Entertainment Internet Trends 2015 Mary Meeker, May 27, 2015 KPBC Kleiner Perkins Caufield Byers 11

12 Section 2: Technology Trends Digital Gaia Emerges (IoT) We will discuss the IoT in more detail in the next section of the workshop Digital Gaia Tool Maker Work Live Jumping hundreds of thousands of years Play Communicator 12

13 Section 2: Technology Trends Presence Amplified Want 13

14 Section 3: IoT-enabled Insurance Opportunities IoT High-Level Discussion Reach of IP-enabled embedded objects Spheres of embedded IoT object functionality Select range of IoT capabilities Seven general insurance opportunities Five specific IoT insurance opportunities Challenges created by insurance clients using IoT Categories of initiatives for insurers 14

15 Section 3: IoT-enabled Insurance Opportunities IoT High-level Discussion Descriptions / definitions Principle: The IoT creates an IP-enabled environment that increasingly behaves like a natural ecosystem Consequences 1. Creates a new risk landscape 2. Offers insurers potential to create and generate revenue from value-add services 3. Creates a market ecosystem of (re)insurers, ICT vendors, system integrators, manufacturers, and service providers 4. Elevates importance of geospatial capabilities and data 15

16 Section 3: IoT-enabled Insurance Opportunities Reach of IP-Enabled Embedded Objects Government Enterprise Consumer Man-made artifacts Natural artifacts People Animals IP-enabled objects are and will be. embedded, attached, worn, and ingested 16

17 Section 3: IoT-enabled Insurance Opportunities Spheres of Embedded IoT Object Functionality Status of the roads and bridges the vehicle uses Infrastructure Adjacent Status of number and location of other vehicles Related Status of the vehicle Alert that one of one of the vehicle s tires is quickly getting low on air pressure Core Each sphere will contain one or more IP-enabled sensors encompassing a portfolio of awareness, functionality, rules, and data flows 17

18 Section 3: IoT-enabled Insurance Opportunities Select range of IoT capabilities Monitoring its own performance Sending data about its performance to other IoT objects Storing data within itself that it generates or receives Monitoring its need to be repaired / replaced Monitoring its location whether stationary or in motion Monitoring the weather around it / environmental conditions Receiving data from other IoT objects Modifying its behavior based on data (generated within or received from other IoT objects or other sources) Being aware of other IoT objects within a certain proximate range 18

19 Section 3: IoT-enabled Insurance Opportunities Seven general insurance opportunities Insurers have opportunities to integrate IoT objects together with insurance coverage or provide stand-alone services with partners that don t require clients to purchase insurance. Illustrative partnership opportunities for insurers include IoT in the seven areas of: 1. Usage based insurance (UBI) 2. Drones 3. Wearables 4. Boiler & Machinery 5. Durable goods 6. Weather 7. Farm animals 19

20 Data-driven strategies by stages of the insurance value chain Marketing Underwriting Pricing Claims Connected Home Home maintenance and connectivity incentives Automated repair dispatch services Applications that make piece of mind, top of mind Behavior and occupancy monitoring Home maintenance monitoring Home connectivity verification Home-usage rating plans and scoring models Sensor-enabled loss prevention and mitigation Data-defined risk segments Sensor-initiated claim reporting/ and triaging Contents validation Video-verified claim loss facts Increased subrogation opportunities Connected Vehicles Automated repair dispatch services Real-time driving behavior feedback and teen driving alerts Vehicle performance monitoring Driving location verification Fleet management Driving-usage rating plans and scoring models Sensor-initiated claim reporting/ and triaging Stolen vehicle tracking Video-verified claim loss facts Connected Businesses Equipment warranty tracking Behavior and occupancy monitoring Equipment condition and business process monitoring Shipping container tracking Sensor-enabled loss prevention and mitigation Sensor-initiated claim reporting Contents validation Video-verified claim facts Connected Consumers Healthy living incentives and rewards Aging-in-home assurance monitoring Health risk monitoring Automated biometric health screening Activity-based rating plans and scoring models Personal property validation and tracking Connected Cities Health inspection predictive models protection) Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential Catastrophic risk modeling Public-safety resiliency scoring (beyond fire Sensor-initiated claim reporting Video-verified claim loss facts 20

21 Section 3: IoT-enabled Insurance Opportunities Challenges created by clients using IoT IoT object fails to work at all or work correctly Data holes in IoT ecosystem Lack of agreement about data standards Inability to integrate data between IoT objects or between IoT data and insurance market-facing or business operational systems Lack of agreement about data ownership Lack of security concerning data flows to/from IoT objects and/or insurance market-facing or business operational systems Loss of privacy (i.e. Cyber-hacking, destruction of IoT object) 21

22 Section 3: IoT-enabled Insurance Opportunities Four categories of insurance initiatives Assess Best areas in client s value chains for them to apply IoT Monitor IoT applications in real-time or near real-time for clients Audit Audit services clients already using / planning to use IoT Create Value-add services that may be tied to insurance coverage OR stand-alone from insurance coverage 22

23 Section 4: Making Sense of (Big) IoT Data 1 Demystifying Internet of Things Data 2 Current Challenges with Big Data 3 IoT-Specific Challenges emerge 4 Generating Actionable Insights Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential 23

24 Velocity Veracity Defining Big Data The broad range of new and massive data types that have appeared over the last decade or so. Tom Davenport, Big Work Verisk Insurance Solutions ISO AIR Worldwide Xactware 2016 Insurance Services Office, Inc. All rights reserved. The ability of society to harness information in novel ways to produce useful insights or goods and services of significant value and things one can do at a large scale that cannot be done at a smaller one, to extract new insights or create new forms of value.. Viktor Mayer-Schönberger and Kenneth Cukier Volume Data of a very large size, typically to the extent that its manipulation and management present significant logistical challenges. Oxford English Dictionary Datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze -- McKinsey An all-encompassing term for any collection of data sets so large and complex that it becomes difficult to process using on-hand data management tools or traditional data processing applications. Wikipedia Source: 12 Big Data Definitions: What s Yours? Variety 24

25 The Pool of Big Data for Insurance Types of third-party data used Aerial Psychographic Imagery Retail Business Social media Consumer Topographic Econometric Vehicle Financial Telematics GIS Weather Government Insurance score or raw credit attributes Geo-demographical data Competitive pricing data Catastrophe models data Weather data 80% 67% 53% 46% 42% 3rd party telematics data Other 9% 5% Source: ISO and Earnix 2013 Insurance Predictive Modeling Survey Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential 25

26 Data Challenges by Company Size Data is a challenge for everybody, but large and small insurers have different challenges. Larger insurers are most concerned with data quality. Smaller insurers don t have enough observations. 100% 90% 80% 70% 60% 50% 40% 30% 20% 3% 30% 7% 18% 42% 13% 57% 6% 6% Other Data is not clean, tough to use Data is not current Not enough variability in the data Not enough observations 10% 17% 0% <$1B >$1B Verisk Insurance Solutions ISO AIR Worldwide Xactware 2016 Insurance Services Office, Inc. All rights reserved. Numbers may not add up to 100% due to rounding Source: ISO and Earnix 2013 Insurance Predictive Modeling Survey

27 Data Preparation Needs Data extraction and preparation time Preparing data for analysis is a major bottleneck and drain on resources for most insurers. 28% 37% 54% of insurers typically spend more than 3 months to prepare their data for a project. 18% 17% Less than 1 month 1 2 months 3 6 months More than 6 months Verisk Insurance Solutions ISO AIR Worldwide Xactware 2016 Insurance Services Office, Inc. All rights reserved. Source: ISO and Earnix 2013 Insurance Predictive Modeling Survey

28 Internet of Things: A New Source Automakers Telemetry data Odometer Readings Window sticker data Insurer Smart Home/ Buildings Providers Usage data Moisture sensor data Occupancy pattern data Energy signature data Insurer Security Companies Alarm subscription status Connectivity to central station Arming pattern data & Insurer Industial Equipment Manufacturers Factory equipment condition/ lifespan data Normalized Data Predictive Analytics Insurer Wearable Manufacturers Biometric data Location data Insurer Smart Cities Traffic pattern data Environmental data Verisk Insurance Solutions ISO AIR Worldwide Xactware 2016 Insurance Services Office, Inc. All rights reserved. 28

29 Deep Dive: Types of Sensor Data Usage Usage Patterns of energy and water consumption Water running when no occupants are present Which spaces are used, when, and for how long? Occupants Occupants: number, frequency of access Number of connected devices Contents Movement of contents in and out of the property Major appliance/machinery location Sprinkler system detection Structural Roof age and condition; material; weight load Wind speed and barometric pressure Gas leak detection Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential Insurance Services Office, Inc.,

30 The Challenges with IoT Data Predicting market leaders Venture capital is available for this market, and start-ups pop up daily. A complex connected ecosystem Identifying sources of data can be difficult when multiple players are involved: hardware manufacturers, platform owners, etc. Variety of devices Technology is changing the way we live our lives. Analysts estimate 50 billion devices will be connected to the Internet by Big data Depending on the volume, variety, and velocity of data, insurers could expect over 10MB of data per household per day. Unwieldy and unstructured Understanding data from multiple sensors and how it correlates to future loss is a moving target that requires expertise.? Source: Cisco Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential 30

31 The Need for Actionable Insights How can insurers capitalize on the growth of the Internet of Things? Start by collecting data. Challenge: Individual partnerships are likely to result in insufficient data to generate actionable insights. Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential 31

32 Many-to-many problem IoT Solution Providers: Unproven value of insurance industry vertical Limited bandwidth to span relationships with multiple insurers Only engaged with a fraction of insurance industry, leaving much of the market untapped Cost-prohibitive to create integration with numerous individual insurers Lacks insurance analytics expertise Insurers: Fragmented market technology winners TBD Data is unfamiliar, unstructured, and inconsistent, making insight creation difficult, lengthy, and costly Inability to systematically validate existence of technology and audit discount eligibility Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential 32

33 An IoT data exchange for insurers IoT Solution Providers: Provides forum for mass adoption and monetization of data across entire insurance industry Provides opportunity for cost-effective integration to insurance industry Increases ease of insurance discount application, resulting in increased consumer adoption of tech Third-Party Intermediary: Independent party, experienced with insurance data analytics facilitating exchange Builds/manages the integration between the many IoT solution providers and insurers Standardizes/normalizes data for input into insurer workflows Experienced with state-by-state insurance regulations Insurers: Access to more data from more companies Data is provided in normalized, consumable format for accelerated analysis Minimizes IT costs associated with building several independent integrations with IoT solution providers Focus more time on generating insights and less time on brokering new relationships Identify and capture new customer segments Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential 33

34 Forces impacting consumer adoption and willingness to share data Privacy Value Proposition Transparency Willingness to adopt technology and share data Security Portability of Information Ease of Use Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential 34

35 Section 5: Actions to Take as a Digital Insurer How are insurers responding to the IoT opportunity? Case study discussions 35

36 How are insurers responding to the IoT opportunity? Observers Taking a wait-and-see approach Early adopters Offering marketing discounts Launching small-scale research programs Forming partnerships to offer mutual discounts on insurance and smart tech Innovators 5% working on usagebased rating plans* Investing in start-ups Patenting technology *2014 Verisk/Earnix study Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential Insurance Services Office, Inc.,

37 Case Study Discussions Auto Telematics: Progressive Snapshot Connected Home: Liberty Mutual Insurance and Vivint, Inc Wearables: John Hancock and Fitbit Verisk Insurance Solutions ISO AIR Worldwide Xactware Proprietary and Confidential 37

38 ? 38

39 About Market Insight Group, Ltd. 39

40 Market Insight Group, Ltd. Market Insight Group, Ltd. is an insurance analyst firm conducting objective business-focused three-to-five year future-forward independent, objective analysis of the implications of technology on insurance customers, channels, and carriers driven by three interdependent themes: Experience Economy Mobile, Digital Marketplace Connected Society Market Insight Group, Ltd. is based in the Boston, Mass area. Click or contact Barry Rabkin at or +1 (508) for a discussion of how we can help your firm with our research or custom consulting. 40

41 Select Market Insight Group Reports Noteworthy Vidyard: The Video Intelligence Platform July, 2016 Insurance Product Development: Always Juggling Stakeholder Needs June, 2016 Instanda: Quickening the Insurance Product Development & Launch Process June, 2016 The Video Imperative to Improve Insurance Customer Experience, May, 2016 Eight Video Solutions to Improve Insurance Customer Experience May, 2016 Insurance Industry Collaboration 2020: A Look Ahead March, 2016 (Sponsored by Interactive Intelligence available for free) The IoT Creates New Insurance Product and Service Opportunities, October 2015 Click to to see the 2016 Market Insight Group research agenda 41

42 Select Market Insight Group Reports Mobility Weavers: The Rise of Insurance Mobility Solution Vendors, May 2015 Adaptability The Insurance Customer Experience Imperative in an Online Digital Mobile Society, March 2015 (Sponsored by Applied Systems available for free) The Role of Mobility in Transforming Insurance Sales and Service, March Insurance Trends: Insurers Must Run Faster Than the Red Queen, November 2014 Taking the Pulse of P&C Insurers Use of Geospatial Capabilities, October 2014 Click to to see the 2016 Market Insight Group research agenda 42

43 About Barry Rabkin Barry Rabkin is the president of Market Insight Group, Ltd. Over the course of 40+ years of experience working in, consulting to, or being an analyst of the insurance industry, I have focused on the business implications of customer and market-facing technology. Since becoming an insurance analyst in the late 1990s, I have led insurance research advisory services for technology analyst firms in the US (The META Group, IDC s Financial Insights) and UK (Ovum). During that time period, I also worked for Advisen doing the daily Front Page News and writing reports about various management liability lines of business. I re-launched Market Insight Group, Ltd. in July Contact me to purchase single copy reports or engage my company to do custom analysis for thought-leadership reports: barry.rabkin@marketinsightgroup.com or

44 Who Is Verisk? Leading responsible data analytics company in pursuit of our customers most strategic opportunities Provider of predictive analytics and decision support solutions to customers in specific vertical markets Market Leader in Multiple Verticals Insurance Healthcar e Financial Services Natural Resources Global company with offices and customers in nearly 80 countries around the world Member of the S&P 500 Index Insight via Proprietary/ Unstructured Data Analytics Framework Digital Platform Global IT/Data Center Infrastructure Part of the NASDAQ-100 Index Innovator ranked 18th on the Forbes World s Most Innovative Companies list One of America s Best Large Employers as ranked by Forbes Socially responsible company serving the long-term interests of our stakeholders Verisk Insurance Solutions ISO AIR Worldwide Xactware 2016 Insurance Services Office, Inc. All rights reserved. 2

45 Our Brands Property/Casualty Energy and Specialized Markets Financial Services Verisk Insurance Solutions ISO AIR Worldwide Xactware 2016 Insurance Services Office, Inc. All rights reserved. 12

46 Our Unique and Valuable Data Assets 19B M+ 1B+ 5M 100 More than 19 billion records in commercial and personal lines More than 1,800 insurers provide data Almost 3 billion records processed each year 35 years of VIN auto information Detailed information on more than 3.7 million commercial buildings and 6.3 million businesses Insurance fraud claims database with more than 1 billion claims Used by >90% of the P&C industry Approximately 5 million annual claim assignments for property losses Used by 22 of the top 25 insurers Models covering natural hazards in 100 countries 1 in M+ 1.6B 10PB 55M+ Verisk Health technology solutions presently affecting 1 in 3 American lives More than 4.75 million safety data sheets (SDSs) covering hazardous chemicals in the supply chain Depersonalized information on 1.6 billion credit and debit card accounts Data centers holding about 10 petabytes 10,000,000 gigabytes of data More than 55 million energy data points in the global upstream oil and gas industry Verisk Insurance Solutions ISO AIR Worldwide Xactware 2016 Insurance Services Office, Inc. All rights reserved. 14