Insurance 2020 & Beyond

Transcription

1 Insurance 2020 & Beyond México November, 2015 By. Stephen T. O Hearn Leader of the Global Insurance Practice Transformación del Sector Asegurador, más allá de la Regulación

2 Research assessed 32 distinct drivers of change Customer Behaviors Social Networking Customer Expectations Risk Awareness Health Talent Drain Stakeholder Trust Social Corporate Social Responsibility Technology Information & Analytics Devices & Sensors Software & Applications Medical Advances Demographic Shifts Dynamics of the Middle Class New Family Structure Dependency Ratio Aging Environmental Climate Change & Catastrophes Sustainability Pollution Regulatory Reform Geo-political Risk Economic Urbanization New Growth Opportunities Fiscal Pressure Inflation/Deflation Risk Sharing & Transfer Social Security & Benefits Distributor Shift Partnerships Political Rise of State-Directed Capitalism Terrorism Tax Treatment Sharia Compliance (Takaful) 2

3 The implications of these trends are altering the way insurers compete Social The balance of power is shifting towards customers Technological Advances in software & hardware are transforming big data into actionable insights Environmental Increasing severity and frequency of catastrophic events are giving rise to more sophisticated risk models & risk transfer Economic The rise of economic and political power in emerging markets Political There is harmonization, standardization and globalization of the insurance market 3

4 The insurance industry is undergoing more upheaval than any other industry Changes in industry regulation 88% 66% Changes in customer behaviors 71% 61% Changes in distribution channels 69% 50% Increase in number of significant competitors traditional and new Changes in core technologies of production or service provision Source: 18th Annual Global CEO Survey 64% 61% 61% 47% Insurance All Industries Q: How disruptive do you think the following trends will be for your industry over the next five years? Respondents stating very or somewhat disruptive 4

5 Insurance executives are preparing to navigate a market filled with nearly an equal amount of opportunities and threats 59% of insurance CEOs believe there are more growth opportunities than there were three years ago 61% of insurance CEOs see more threats than they did in 2012 Source: 18th Annual Global CEO Survey Sources: 18th Annual Global CEO Survey 5

6 The Insurance 2020 Agenda The Backbook Innovation Growth 5 Urgent Priorities Regulation Culture/Behaviors 6

7 The Backbook Innovation Growth 5 Urgent Priorities Regulation Culture/Behaviors 7

8 The Backbook Distress caused by low interest rates A challenge for general insurers A crisis for life insurers 8

9 The Backbook Levers: Product strategies 9

10 The Backbook Average guaranteed rate of life insurance: 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% %-1% 1%-2% 2%-3% 3%-4% 4%-5% >5% 10

11 The Backbook Levers: Product strategies Conversion strategies Investment strategies M+A strategies Cost strategies 11

12 The Backbook CEO Survey: Which of the following restructuring activities do you plan to initiate in the coming 12 months? Global Outsource a business process or function Implement a cost reduction initiative 43% 59% 12

13 The Backbook Innovation Growth 5 Urgent Priorities Regulation Culture/Behaviors 13

14 Innovation Digital: a sharper focus on the customer 14

15 Innovation New and different types of expectations & behaviors are here to stay 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. 15

16 Innovation 6yr olds show the same confidence with technology as 45yr olds Digital Quotient 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. 16

17 Innovation Technology is enabling disruption of other industries Demographic shifts World s most valuable retailer has no stock World s largest accommodation provider owns no real estate World s most popular media owner creates no content World s largest taxi company has no cars 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. 17

18 Innovation 70% of Insurance CEO s see technology/customer behavior change as disruptive to their business model more than any other industry. Global CEO Survey January,

19 Innovation CEO Survey: How likely is it that your Insurance company will face competition from non-fs companies in next 3 years? Global Quite likely 39% Very likely 32% 19

20 Innovation New entrants gaining stronghold of large consumer groups ( ) the key to insurance is having lots of data about people s backgrounds and habits, which is perhaps the company s [Google] greatest strength. New York Times, Jan 18,

21 Innovation The ecommerce player Alibaba is transforming the Chinese market and innovating in financial services and insurance Three companies joined together to launch Alibaba Tencent Ping An...Zhong An - the first online insurance company in China 21

22 Innovation New entrants in the robo-advisor space are developing new models of assisted and automated omni-channel education and advice 22

23 Innovation B2C experience are driving B2B expectations B2C B2B Streamlined Shopping Anywhere Access Information Transparency Sharing & Coordination Social Enablement & Connection Multi-channel Support Productivity & Savings 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. 23

24 Innovation Models to take ideas forward Innovation Hub Company SMEs internally interate new ideas Incubator Company expert panel hears pitches and invests and experiments Insurer as Venture Capitalist Company funding of externally sourced ideas and experimentation Outlet for Venture Capitalists Company experimentation of Venture Capitalist funded ideas 24

25 Innovation Data Analytics: Was a system challenge now a race for talent 25

26 Innovation One Company s 4 behavioral segments 1. Sustainers 2. Builders 3. Strugglers 4. Consolidators Older, Financially Comfortable, Trust Advisors to Make Decisions Younger, Confident, Prefers Direct Channel Middle Aged, Worried, Relies on Advisor Approaching Retirement, Financially Confident, Active Decisionmakers Age: 55+ Income: $130k Savings: $370k Age: < 40 Income: $130k Savings: $280k Age:40 54 Income: $100k Savings: $160k Age:45 64 Income: $120k Savings: $280k 26

27 Innovation The market potential for their chosen focus Total $$ Potential - DD Tapped & Untapped Market 27

28 Innovation Data Analytics is transitioning the insurer from a reactive claims payer to a preventative risk advisor 28

29 Innovation 67% Of consumers would be willing to have a sensor attached to their home or car if doing so would lower their premiums 29

30 Innovation Sensors are also allowing insurers to monitor health, deliver personalized underwriting and change customer behavior 30

31 Innovation Control the Data Trust the Data 31

32 Innovation Andreesen Horowitz shares the 16 tech trends it s most excited about: Virtual Reality Sensorification of the Enterprise Machine Learning + Big Data The Full-Stack Start-up Containers Digital Health Online Marketplaces Security Bitcoin (and Blockchain) Cloud-Client Computing Crowd Funding Internet of Things Source: Online Video Failure DevOps Insurance Relationship Management Risk Management 32

33 Innovation Leading 2020 CEO s: Out front, not delegating. Articulating a clear strategy. Digitally literate. Endorsing experimenting. 33

34 You don t need a digital strategy You need a business strategy fit for the digital age 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. 34

35 A new kind of digital insurer PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. Image credit Jessie 35 Edwards

36 The Backbook Innovation Growth 5 Urgent Priorities Regulation Culture/Behaviors 36

37 Growth CEO Survey: How confident are you about your Company s prospects for growth? Global Very Confident 44% Somewhat Confident 41% 37

38 Growth Excess capital creating M+A fever? Growth 67% of CEO`s see distribution tie ups as a significant opportunity 38

39 Growth CEO Survey: Plan to enter into a new strategic alliance or joint venture? Reasons for entry: Yes Global 45% Access to customers 66% Strengthen brand 33% Increase innovation 31% 39

40 Growth Emerging Markets Invest for future At what cost? Growth Western focus: Seniors Retirement income Long term care 40

41 Change, Growth Change in population by age group, , globally 90% 80% 83% 70% 60% 50% 40% 30% 20% 20% 10% 7% 0%

42 The Backbook Innovation Growth 5 Urgent Priorities Regulation Culture/Behaviors 42

43 Regulation 91% of insurance CEOs see over regulation as a threat to their 2020 growth prospects, more than any other sector Sources: 18th Annual Global CEO Survey 43

44 Regulation Capital Is the path clearer or murkier? Conduct Corporate Taxes Accounting Intervention into distribution: truly changing the business model, with the potential to reestablish credibility and confidence in the long term Directives on personal taxation BEPS Corporate taxes: the number 2 worry in both CEO surveys behind overregulation IFRS 4/9 requiring finance transformation Insurance Modernization: a holistic vision of systems, processes, data requiring a greater alignment of risk, actuarial, and finance 44

45 The Backbook Innovation Growth 5 Urgent Priorities Regulation Culture/Behaviors 45

46 Culture/Behaviors With an ambition to speed decision making processes, Insurance Companies are focused on creating a culture of responsibility. Culture how people act when no one is watching 46

47 It s what you do that counts. Not what you say page PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. Image credit theperformancetheatre.com 47

48 Thank you for having me! This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers AG, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it All rights reserved. In this document, refers to PricewaterhouseCoopers AG which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.