International Insurance Forum, 15 th February 2017, Vienna, Austria Claims Corporation Network Claims Management in the Digital Age InsurTech: Motor insurance digitalization in the CEE Cees Werff, President & CEO 15 February 2017
The Internet of Things has revolutionized many traditional markets 1 Travel Agencies Booking a ticket, a hotel, a car: it is all done online with complete price transparency 2 The Music Industry A local record store and CDs: music is readily available on all sorts of platforms 3 Newspaper and Print Media Used to be primary source of information, now truly yesterday s news 4 (Electronic) Retailers Online retailers have reshaped industry with low prices and free delivery 5 Taxi/Mobility market Trend in behaviour to preferring paying for usage over ownership (less emotion).and many more (postal service, movies etc.), but also automotive industry (e.g. connected cars) 2
. And The Digital Disruption Has Already Happened. World largest taxi company owns no taxi s (Uber) Largest accomodation providor owns no real estate (Airbnb) Largest phone companies own no telco infra (Skype, WeChat) World most valuable retailer has no inventory (Alibaba) Most populair media owner creates no content (Facebook) Fastest growing banks have no actual money (SocietyOne) World s largest movie house owns no cinemas (Netflix) Largest software vendors don t write the apps (Apple & Google) Best TPA s owns no vendor service network (CCN) 3
and auto transformation will profoundly impact insurance as well... Today 1 Car technology advances every day: Telematics enabled policies Software more advanced than air plane 2 Changing altitude: ride sharing is becoming increasingly conventional Tomorrow Importance digital services grows 3 significantly 4 Ride sharing has a rising impact on the automotive industry: estimated negative impact of 1% on unit sales in 2021 Future 5 Driverless cars will reduce the potential of traffic fatalities by 90% 6 Battery costs expected to decrease by 60% 7 Up to 30% additional automotive revenue is estimated to stem from data driven services and on-demand mobility (1) (1) Currently cars are parked 92% of their lifetime 4
making InsurTech a top priority on executive board agendas Technology Changes Consumer Changes Regulatory Changes New options for customer interaction New ways of assessing and managing risks & claims (Big Data, Internet of Things) Challenging IT Legacy systems Shift to online channels: orientation, comparison, review and actual purchasing Increased need for consumer-centric products Not willing to pay for face-to-face services Solvency II: requires substantial investment in improving systems Conduct of business: trend toward enhanced customer protection Data protection New players will take over: e.g. Lemonade How to keep digital generation satisfied? Outsourcing non-core activities to specialists 5
presenting an opportunity to lower benefits and claims paid Gross written premiums ( bn) Nominal growth (%) 2013 2014 2015 2014 2015 Non-life 338 339 346 0.3% 2.4% Motor 133 130 133-1.8% 2.2% Property 91 91 93 0.0% 1.9% General liability 33 34 36 1.6% 5.5% Accident 34 34 34-0.1% 2.1% Other non-life 47 50 50 6.0% 1.7% Density ( ) Nominal growth (%) 2013 2014 2015 2014 2015 Non-life 572 570 581 (0.3%) 1.9% Motor 225 220 223-2.2% 1.4% Property 154 153 156-0.6% 2.0% General liability 56 57 60 1.8% 5.3% Accident 56 57 60 1.8% 5.3% Other non-life 81 83 82 2.5% -1.2% Benefits and claims paid ( bn) Nominal growth (%) 2013 2014 2015 2014 2015 Non-life 211 222 233 5.2% 4.3% Motor 99 100 103 0.2% 3.1% Property 57 52 55-7.8% 4.4% Other non-life 55 70 75 27.5% 5.9% Non-life premiums have increased mostly driven by a surge of general liability premiums and the average amount per capita spent on insurance (density) has risen as well but benefits and claims paid outgrow both revenue metrics indicating lower profitability Digital Claims Management provides an opportunity for insurers to lower claims (preventive), and accompanying costs, and to serve customers more efficiently and satisfactorily Source: Insurance Europe 6
but current online experience and satisfaction are relatively low Insurance Lags Significantly in Customer Satisfaction With Online Experience Compared to Other Industries With Satisfaction of Online Offering of Insurers Decreasing Past the Acquisition Stage Average: ~7.3 4-25 -48-49 28 Net Promoter Score Challenges Legacy IT Systems Limit Agility Bias Toward Intermediated Distribution Limited Innovation Focus Pressure on Investment Capacity Source: BCG digital satisfaction survey (March 2013), Morgan Stanley / BCG Global Consumer Survey (2014), Morgan Stanley Research 7
whereby Millennials drive a change in customer preferences The Average Adult Population will Comprise of >40% of Millennials (1) in 2020 Driving Changes in the Key Contributors to Customer Satisfaction with Claims Experience in the Insurance Industry Millennials expectations have been set by companies outside the insurance industry (e.g. Netflix, Uber) and thus they expect personalized, convenient, transparent and rapid service (1) Born between 1980 and 2000 (Source: US Census Bureau, Accenture, EY) 8
but the industry is at the brink of a technology-driven change Internet of Things Ecosystems Disruptive threads Telematics Insurable risk pools Risk Selection Current Risk/Losses Risk Reduction Through Adoption of Smart Devices Future Potential Home Risks/Losses Cause of Claims Connected Devices Available Prevention Potential Home: Connected meters ~20 30% Water leakage Active leakage detection devices ~70% Fire Smart smoke detector ~70% 40 60% Reduced Risk in Home Theft Advanced alarm systems ~10 80% Motor: Poor driving Safer driving & fraud detection ~5% False Claims through Telematics ~10 20% 15 25% Reduced Risk in Motor Source: BCG digital satisfaction survey (March 2013), Morgan Stanley / BCG Global Consumer Survey (2014), Morgan Stanley Research 9
impacting the entire insurance value chain Product and Underwriting Sales and Distribution Policy Administration and Servicing Claims Management Combined Ratio (%) Better price policies through Big Data Enhance sales through marketing and digital online front-end processes Improve fraud through Big Data -1.5pp 99% 78-82% -6.7pp Optimise products and underwriting processes through automation -7.1pp Support online sales through digitally enabled distribution team Optimise policy administration and servicing processes through automation Optimise process through automation -1.2pp Reduce reserves needed to cover claims volatility through Big Data -0.1pp +1.1pp -1.1pp -0.1pp Run modern IT systems and infrastructure -0.7pp Optimise support functions through right sizing and automation -1.2pp with an important role for claims management in achieving the potential cost savings by adopting technology Non Claims Expenses Claims Expenses Source: BCG digital satisfaction survey (March 2013), Morgan Stanley / BCG Global Consumer Survey (2014), Morgan Stanley Research 10
but Claims Administration is largely based on the old paper world Claim Notification Damage Evaluation Settlement Closing & Recourse 1 Notification 4 Authorisation 5 Settlement of Claim 6 Billing & Payment 2 Claim Opening 3 Estimation 7 Recourse The current claims process is not lean and does not appeal to the digital customer 11
while technically digital solutions are already available. Verisk Analytics General Collaboration Policyholder Self-Serve Video Collaboration Contractor Collaboration Contents Collaboration 1 2 3 Policy holder reports FNOL Desk adjuster collaborates with policyholder using ClaimXperience Adjuster triages the claim with an appropriate response 1 Take picture & Upload request Fixico 2 Receive quotes (within 24h) 3 Compare & Choose repair shop and many more smartphone and e-solutions for insurance products are being launched The claims industry lacks a platform that connects the different innovations already available 12
CCN provides overall solution for claims administration. Claims Support Fast, Easy & Simple Insurance Customers Claims Force One (NTT DATA) Claims Management System Insurance Companies Agents Loss Adjusters Investigators / Stakeholders Contractors / Repair Professionals Digitalisation of entire process + real-time access for all parties involved in the process A transparent and efficient platform to manage your claims administration 13
Claims management in the Digital Age. A platform that connects strong International Partners. 14
more Innovative Digital InsurTech solutions on the horizon. Road Mobility Service Smart Home Service Natural Catastrophe Usage Based Insurance solutions to support Driver Behaviour Policyholder will be supported locally Repair process through partnership program Policyholder choose partnership program over cash settlement Supplier receives list of required supplies Supplier outsource repairs to trusted contractors Use of drones in case of Earthquakes, floods & landslides Fast, Accurate, Save Ambulance drones to safe lives Inspection, survey, monitoring 15
and IoT developments will impact insurance spheres significantly Fotric 123 Bitdefender BOX Shadecraft Sunflower Cloud-based thermal imaging camera Provides early fire detection by monitoring indoor temperature Its night vision recording feature also helps in adding to home security Internet security solution Protects customers home network and connected devices (incl. e.g. thermostat and baby monitor) from cyberattacks by scanning for malicious activity Solar powered, autonomous robotic shade that tracks sunlight while acting as a speaker system Includes integrated camera for security Also tied to other smart devices Airthings Wave Amazon Echo Google Home Detects levels of radon via temperature and humidity sensors Intelligent Personal Assistant Able to provide people with more than 300 insurance terms and their definitions Intelligent Personal Assistant Can potentially gather data Source: IoT devices provide better measurement and insights allowing better risk assessment and Publicly available information tailored product offering as well as digital age service experience 16
and provides the opportunity for you to join the digital revolution The Facts CCN Contact Details 2 billion people are using a smartphone with internet connection. By the end of this decade, this will be 4 billion CLAIMS CORPORATION NETWORK Between 09 and 13 the mobile industry invested $ 1,800 billion in improving global telecom infrastructure The download speed has increased 12,000x, while sending data still costs a few cents per megabyte CEES WERFF An average citizen uses his/her smartphone for two to four hours during each day. Teenager even substantially higher +31 (0)6 1030 4927 C.WERFF@CLAIMSCORPNETWORK.COM NACHTWACHTLAAN 20 Apple App Store and Google Play Store (OS on 82% of all smartphones) offer > 3 million apps 1058 EA AMSTERDAM WWW.CLAIMSCORPNETWORK.COM Digital innovation happens fast, make sure you are not too late! 17
Volvo integrates safety features that affect the insurance market Safety assistance technology Road assist technology Liability in autonomous mode Volvo will accept full liability whenever our cars are operating in autonomous mode Håkan Samuelsson CEO Volvo Cars Fully operational technology decreases chances of impact and impact severity Will decrease the number of road-side accidents significantly Will improve road safety Continuous car condition and safety status monitoring Immediate post-crash reporting to centralised road assist centre Integration of this technology requires full service centres to assist drivers Car manufacturers will force a change in the automotive value chain due to increasing high levels of integrated services Car manufacturers will accept liabilities and will enter insurance market ( Trojan Horse ) 18
Future of Claims Management... TRANSFORM OPERATIONS TO MEET FUTURE NEEDS WELCOME IN THE 4 TH. INDUSTRIAL REVOLUTION! 19
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