The insurtech revolution. Hype, threat or opportunity for the actuary? Matthew Grant (Abernite + Instech London) 25 May 2018

Transcription

1 The insurtech revolution. Hype, threat or opportunity for the actuary? Matthew Grant (Abernite + Instech London) 25 May

2 In the next 40 minutes Insurtech what is it? Saving money Making money Learning more Questions 2

3 Matthew Grant 25 years in catastrophe modelling (earthquake, hurricanes, flood, life, terrorism, cyber) Board advisor and investor to companies providing early stage technology, data and analytics to insurers Partner at Instech London, bringing together start-ups, investors, insurers and professionals 3

4 What is Insurtech? 4

5 Fintech showed the way 1. Need for: better client engagement reduce the costs of doing business 2. Access to: larger volumes of data powerful analytical tools lower barriers to entry(?) 3. And for insurers specifically: new sources of premium revenue 5

6 Could insurance also be unbundled and disrupted? Source: CB Insights 6

7 A new community discovers insurance.. Designing Coding Selling Lean startup, new entrants Source: CB Insights Insurers with innovation units 7

8 Insurance start-ups attract funding Source: Willis Towers Watson 8

9 From a range of investors Source: CB insights Source: CB Insights 9

10 Insurtech is targeting the personality of the consumer.. Left Brain Life Commercial/Specialty Price with models Grow revenue Satisfy the regulator Save money Right Brain Personal Lines Health Make life easy Feel loved Have fun Save money 10

11 5 major categories of insurtech relative numbers* Regulated Entity Technology Provider Risk Takers Intermediaries Data/Analytics Platforms Claims *Best guess not based on actual date 11

12 Personal lines led the way for P & C Insuring stuff that matters Rewarding good behaviour, saving lives Network effect/hard to get insurance Customer focussed claims handling TROV On-demand insurance Telematics ~1 million cars BoughtbyMany 400,000 members RightIndem - simpler claims handling 12

13 What really (only) matters Make Money Expand existing lines Write new lines of business New regions Keep the regulator happy Solvency II/PRA Save Money Reduce frictional cost Avoid bad performing risks Reduce Claims Financial Disclosure GDPR 13

14 Saving money 14

15 Reducing frictional costs by collapsing the supply chain Policy Holder Broker Insurer Broker Reinsurer Capital Markets 100 premium New entrants, and established companies looking for ways to cut out other third parties Total only 60 left to pay claims 15

16 Reducing underwriting costs with robotic processing automation and AI Case study replaced 800 FTEs with 50 robots & saved 80% of costs Data from the web, drives automated underwriting 16

17 Reducing frictional costs with a new platform (eg blockchain) Industry initiative to introduce blockchain into insurance placement process Explicit partnerships, initiated by the insured 17

18 Better risk identification, selection and underwriting.. But more isn t always better 18

19 Making money 19

20 New Lines of business tangible vs intangible assets $5 20bn? $3bn Growing but still niche 2017 Cyber 2020? Assets at risk moving to networks at risk Big opportunity but hard to quantify In last 40 years shift from ~ 80% tangible assets to only 20% tangible assets today Supply Chain/CBI 20

21 New geographies and perils the protection gap Changes to NFIP flood programme US A major new class of risk moving out of government into private markets Continuing growth in Asia Property as a fast growing asset class 21

22 New distribution and risk metrics Africa Risk Capacity - Drought insurance Parametric indices provide cheap, accurate fast ways to settle claims BIMA mobile technology + agents 26 million customers 75% first time buyers New distribution approach 22

23 Will insurance disappear? 23

24 Disrupting the conventional business model Launched 2015 $180m funding Renters insurance Focus on consumer experience Targeting expense ratio <10% 24

25 Not new, but fast, fun and cheap Online bank and debit card Launched 2015 Crowdfunding $5m on Seedrs in m funding in April million customers Seedrs secondary market, trading at x3.7 times investment Now offering travel insurance 25

26 Unbundled and repackaged Bundled Insurance Every Care by Volvo subscription comes with a fully comprehensive insurance policy 26

27 Motivate, Reward, Reduce: Every day touch points 27

28 Coming next, the unbundling of the actuary.? Google key word frequency /05/ /05/ /05/ /05/ /05/2017 "data science" "actuary" 28

29 Learning More 29

30 Further Information 30

31 Instech London Insurers, start-ups, professional services and investors Monthly evening events in EC3, 8 speakers 3,500 Individual members (100+ actuaries) 120 presentations from start-ups and their partners in 2 years 40 Corporate members (inc. 2 actuarial firms) Matthew@Instech.London for guest ticket 31

32 Questions 32