Thailand Non-Life Insurance Industry: Challenges & Reforms Dr. Apisit Anantanatarat Director and President 22 September 2017
Non-life Insurance Market in Thailand Source : OIC 2
Non-Life Insurance : Portfolio Mix 2016 3
Motor Insurance Portfolio 4
Non-life Insurance Business in Advanced Markets: 2016 Source: National Association of Insurance Commissioner, USA European Insurance and Reinsurance Federation General Insurance Association of Japan General Insurance Association of Singapore 5
Connectivity of All Tools and Devices Smart Car: Sensor to monitor driving style e.g. Telematics 6
Connectivity of All Tools and Devices Smart Car: Sensor to monitor driving style e.g. Telematics 7
Evolution of Autonomous cars or self-driving cars Source: KPMG White Paper, June 2017 8
Automatic Braking System Source : http://etsc.eu/eu-transport-ministers-back-ambitious-vehicle-safety-improvements/ - Sensor, Radar and Camera, automatically stops the car at a specified distance if no response from the driver - 95% of cars manufactured in the EU and USA from 2015 onwards install Automatic Braking System 9
Automatic Braking System - 75% of car collisions occur at speeds below 20 miles per hour (Thatcham) - In 2020, accidental rates in 14 most motor insurance premium countries would decrease by 4.3%, resulting in premium growth of 16.5%, compared to previous average growth of 20.8% (SwissRe) - In Japan, wildespread of Automatic Braking System leads to a premium cut; 7% for compulsory insurance and 10% for voluntary insurance Source : http://www.motortrend.co m/news/nhtsa-addsautomatic-braking-tosafety-assessmentprogram/ 10
Loss splits between personal auto, commercial auto, and products liability [CATEGOR Y NAME] [PERCENT AGE] 2017 [CATEGORY NAME] [PERCENTAG E] [CATEGOR Y NAME] [PERCENT AGE] 2050 FULLY AUTONOMOUS [CATEGORY NAME] [PERCENTA GE] Personal auto 22% 71% decrease ~$192 billion in losses ~$55 billion in losses Source : KPMG LLP actuarial analysis Product Liability 57% 11
Disruptive Transformation Digital IT Workforce Security
Disruptive Transformation Digital IT Workforce Security 13
Digital Transformation Framework Digitize the customer experience Digitize products & services Digitize the organization Digitize operations Source : https://www.cognizant.com/insightswhitepapers/a-framework-for-digital-business-transformation-codex-1048.pdf 14
Change in Form of Customer Journey DIGITAL Payment Preferences Friendly Non-Card Redeemed Product Customized Personalization Promotion Automate In time Process Simply Easy Face2Face Telemarketing Website Aggregators Application Source : https://www.nectarom.com/omni-channel-personalization-2016-trends/ https://www.linkedin.com/pulse/mapping-saas-buyers-journey-customer-trevor-hatfield 15
Disruptive Transformation Digital IT Workforce Security - Big Data - Artificial Intelligence - Machine Learning - Internet of Everything - Cloud 16
Application of Big Data & Machine Learning in Insurance Fraud Detection Renewal or Churn Detection Customer Segmentation Personalization Pricing Cross and Upselling 17
Smart Home In-House Functions Controlled via gadget Source : http://makewirelesshome.com/samsung-smartthings-hub-product-review/ 18
Smart Health Devices Wearable Devices Submitting Health Information to Insurers Example of health measurement features: - Steps, Calories and Distance - Stair counters - Heart rate - Cardio fitness level - Sleep tracking Source : https://www.macworld.com/article/3202696/wearables/howapple-s-wearable-tech-could-and-should-help-your-health.html 19
Smart Algorithm and Artificial Intelligence: AI Lapetus Solution AI Chronos analyzing facial characteristics, utilized to estimate applicant s health condition and life expectancy 20
Smart Algorithm and Artificial Intelligence: AI Source : https://www.youtube.com/watch?v=uwrpcnqu8p0 21
Smart Algorithm and Artificial Intelligence: AI Ping An insurance Intelligent Quick Claim Settlement recognize the type of car and degree of damage by reading photos of the scene, calculating the maintenance cost within a few seconds Source : https://www.macworld.com/article/3202696/wearables/how-apple-s-wearable-tech-could-and-should-help-your-health.html 22
Disruptive Transformation Digital IT Workforce Security - Automation - Webbot - Chatbot - Robotic 23
Smart Algorithm and Artificial Intelligence: AI - Less vital role of insurance agent and call center - AI, Webbot, Chatbot can handle each customer specifically - More Job cuts - Zurich Insurance lay off 8,000 employees by 2018, mostly in claims and policy production functions - Fukoku Life Insurance cut staff by 30% following implementation of AI in handling claims Source : http://www.zdnet.com/article/no-ai-isnt-going-tosteal-your-job-but-it-will-change-it-and-heres-how/ 24
Robotic Doctor - Replace or work with human doctors more effectively - Mostly deployed in surgery - 55% of Asian consumers are pleased to be treated by a robotic doctor if it can reduce medical cost (Cigna insurance) Da Vinci Robodoctor, used for complex operations in cardiac, colorectal, gynecologic, thoracic, urologic, and head and neck surgeries 25
Smart Algorithm and Artificial Intelligence: AI Source : https://www.youtube.com/watch?v=nejmbmiis3q 26
Disruptive Transformation Digital IT Workforce Security 27
Cyber Attack Source : https://blog.checkpoint.com/2017/05/14/wannacry-paid-time-off/ - Cyber crimes caused 450 billion dollars worth of damages globally in 2016, anticipated to reach 3,000 billion dollars by 2020 (Interpol) - In Thailand, number of cybercrime case was 3,797 in 2016, compared to 1,745 in 2013 (The Electronic Transactions Development Agency) 28
Threats of Cyber Attack - Threats for Insurers - Insurance businesses : the second most attacked industry by hackers, behind only banking - Claims history and other health data : most targeted by cyber-crime - Opportunities for Insurers - Cyber Insurance : the highest growing product line, 20% rose in 2016 (KPMG) 29
Other Challenges & Reforms
Popularity of Parametric Insurance - Accuracy index triggers due to advanced technology e.g. satellite, meteorological information technology - No claims survey, faster payout - Able to cover non-physical damages e.g. brand image, reputation, mental illness - Taiwan Fish farmers insurance, from rain above 480 mm. for 2 consecutive days - Kenya Livestock Insurance, if low quantity of grass in the area - Hong Kong Typhoon Warning Insurance, if a level 8 storm or above hits the area. 31
Risks Transferred from Government to Insurance Sector - Government use Insurance Sector to relieve financial burdens - Subsidizing insurance premiums instead of paying compensation - India expanding subsidies in crop insurance, 400% increase in premiums from last year. - China initiating crop insurance in 13 provinces - Malaysia drafting a bill forcing employers to buy unemployment insurance for their employees. - The Philippines Passing a bill to ensure that properties and government assets will be sufficiently insured 32
Sharing Economy - Allocate personal assets for commercial purposes occasionally - Driven by social networks and start-ups acting as intermediaries - sharing assets: Car, Accommodation, Parking Space, Garage, Home Office Space - insurance policy: United Specialty Insurance launched Home Sharing policy covering - Liability to guests - Loss of profits resulting from damage caused by guests 33
Single and Aging Society - Thai ages above 50 & single have been increasing, especially women - Single women have high purchasing power and more concerns of risks e.g. serious illness medical bills, unemployment, road accidents % of those aged above 50 not yet married Year Men Women 1990 1.9 3.2 2000 2.5 4.6 2010 6.3 7.0 2015 4.3 7.2 Source : National Statistic Office 34
Less Important Role of Traditional Insurer / Reinsurer - Insuretech Start-ups tend to place risks on institutional investors - Investors place more interest to Insurance-Linked Securities (ILS) - Alternative capital accounted for 18% of global reinsurance capacity in 2016, up from 14% in 2015 - Natural catastrophe reinsurance, alternative capital rises to 50% Source : https://www.icicilombard.com/motor-insurance/car-insurance 35
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