Customer Centricity Conference New needs, new data Duncan Anderson September 2016 2016 Willis Towers Watson. All rights reserved.
New needs and new data 2
New needs New needs and new data New data So? 3
Driverless cars 4
Driverless cars 5
Driverless cars 6
Levels of vehicle automation (NHTSA) 4 Full self-driving Driverless cars 3 Limited self-driving 2 Combined function technologies 1 Function-specific driver assisted technologies 0 No automation 7
Driverless cars 8
Driverless cars 9
Driverless cars Insurance risk Other parties now involved OEMs Traditional suppliers New suppliers eg Software providers (Cyber crime) Map providers Telecoms Infrastructure The algorithm of death 10
Insurance risk Driverless cars Risk will shift from personal to "product" Fragmentation of risk New insurance needs Reduction in risk Personal motor risk down by 1-3% pa over next few years? Frequency effect offset by increased cost of repairs Short term: vehicle option data important 11
Self-selection Pricing Retention Behaviour change $800 Driverless cars Telematics $1,000 $1,000 $1,000 $1,000 20+% Average discounts: 12% - 25% Maximum discounts: 30% - 50% 10x Differential in loss ratio from TW DriveAbility score 40% Improvement in retention cited by Progressive http://media.corporate-ir.net/media_files/irol/81/81824/clip-415391-dl_auden.mp3 30+% Reduction in claims costs Young driver: 30% - 40% Commercial fleet : 54% - 93% 12
Current Risks Cause of Claim Connected Devices Prevention Potential Driverless cars Telematics Electrical Water Damage Water Leakage Fire Connected Meters Connected Electronic Manometers (pressure) Active Leakage Detections Devices Smoke Detectors CO 2 Detectors ~20% - 30% ~70% ~70% 40-60% Reduced Risk Electrical Home devices Theft IP DIY Alarm Systems10-80% Advanced Alarm Systems 40-60% Water Damage 13
Global bookings revenue in billions $26.12 (Projected) $10.84 Driverless cars $0.69 $2.91 Telematics 2013 2014 2015 2016 Home devices Sharing economy Taxi 14
Driverless cars Telematics Home devices Sharing economy Taxi Car rental 15
Driverless cars Telematics Home devices Sharing economy Taxi Car rental 16
Driverless cars Telematics Home devices Sharing economy Taxi Car rental Hitchiking 17
Driverless cars Telematics Home devices Sharing economy Taxi Car rental Hitchiking 18
25 Bla bla car members, millions (Source: Wall Street Journal) 20 15 Driverless cars 10 Taxi Home devices Sharing economy Car rental Telematics Hitchiking 5 0 2011 2012 2013 2014 2015 2016 Value ~$1.6bn 30 million members 22 countries >10 million travellers per quarter >2 million trips available in the future at any given time >3 billion miles shared Average car occupancy 1.6 2.8 19
Driverless cars Telematics Home devices Taxi Sharing economy Car rental Hitchiking Slugging Washington DC, San Francisco Multiple occupancy vehicle lanes ~ 10,000 routinely share 20
Driverless cars Telematics Home devices Sharing economy Consumer expectations 21
Fragmentation of risk Deflationary pressure Distribution changes 22
Fragmentation of risk Deflationary pressure Distribution changes 23
Fragmentation of risk Deflationary pressure Distribution changes 24
So Package more - insure all a customer's (fragmented) needs? Up game in customer analytics Ease of purchase - few (or no) questions asked Enhance engagement Fragmentation of risk For which, more data helps Deflationary pressure Distribution changes 25
New needs New needs and new data New data So? 26
Basics Cross-holdings Retail partners Standard factors Enrichment Banking partners 27
Basics Ambient location 28
iphone: Basics Ambient location Settings > Privacy > Location Services > System Services > Frequent Locations 29
Apple Conference Basics Guinness Brewery Hotel Ambient location Nice restaurant 30
Apple Google Basics Ambient location 31
Apple Google App providers Basics Ambient location 32
Apple Google App providers Basics Ambient location 33
Apple Google App providers Basics Ambient location 34
Apple Google App providers Telecom providers Basics Ambient location 35
TSPs Apple Google App providers Telecom providers Basics Ambient location 36
Apple Google App providers Telecom providers OEMs TSPs Basics Ambient location 37
TSPs Apple Google App providers Telecom providers OEMs Airlines Basics Ambient location 38
TSPs Apple Google Banks App providers Telecom providers OEMs Airlines Basics Ambient location 39
TSPs Apple Google Banks App providers Telecom providers Wearable providers OEMs Airlines Basics Ambient location 40
Apple Google TSPs Banks Traffic cameras App providers Telecom providers Wearable providers OEMs Airlines Basics Ambient location 41
Apple Google TSPs Banks Traffic cameras App providers Telecom providers Wearable providers OEMs Airlines Basics Wifi Ambient location 42
Apple Google TSPs Banks Traffic cameras App providers Telecom providers Wearable providers OEMs Airlines Basics Wifi Ambient location Other 43
Basics App providers Apple Google Telecom providers TSPs Banks Wearable providers Traffic cameras Home sensors Wifi OEMs Airlines Ambient location Other 44
Basics Apple Google TSPs Banks Traffic cameras Home sensors Wifi App providers OEMs Telecom providers Airlines Wearable providers Media companies Ambient location Other 45
Number of units installed (billion) Basics Apple Google TSPs Banks Traffic cameras Home sensors Wifi App providers OEMs Telecom providers Airlines Wearable providers Media companies IOT Ambient location 25 Internet of Things Millions of units Other 20 15 10 5 0 2014 2015 2016 2020 Consumer Business 46
Basics Ambient location Apple Google TSPs Banks Traffic cameras Home sensors Wifi App providers OEMs Telecom providers Airlines Wearable providers Media companies IOT Web analytic providers Other 47
Basics Apple Google TSPs Banks Traffic cameras Home sensors Wifi App providers OEMs Telecom providers Airlines Wearable providers Media companies IOT Ambient location Social media companies Web analytic providers Other 48
Apple Google TSPs Banks Traffic cameras Home sensors Wifi App providers OEMs Telecom providers Airlines Wearable providers Media companies IOT Social media companies Web analytic providers Cross-holdings Retail partners Standard factors Enrichment Banking partners 49
New needs New needs and new data New data So? 50
Risk Marketing Services Assuming you can access and use the data 51
Motor telematics example Marketing Underwriting Policies Insurers / Agents / Brokers / Aggregators Potential Customers Traditional data Insurer A Insurer B Insurer C Unmonitored traditional policy OEMs Insurer D UBI Policy Telecoms Mobile OS Monitored traditional policy App 52
Motor telematics example Marketing Underwriting Policies Insurers / Agents / Brokers / Aggregators Traditional data Insurer A Insurer B Unmonitored traditional policy Potential Customers Insurer C Insurer D UBI Policy OEMs Telecoms Mobile OS Traditional + telematics data Insurer partners and/or panel Insurer B Insurer C Monitored traditional policy App Insurer E 53
Motor telematics example Marketing Underwriting Policies Insurers / Agents / Brokers / Aggregators Traditional data Insurer A Insurer B Unmonitored traditional policy Potential Customers Insurer C Insurer D UBI Policy OEMs Telecoms Mobile OS Preview Insurer partners and/or panel Insurer B Insurer C Monitored traditional policy App Insurer E 54
Distribution disruption / disintermediation risk Partnerships with data owners and tech players Tech start-ups 09/13 12/13 12/13 06/14 06/14 06/15 07/15 07/15 09/15 09/15 11/15 05/16 Smart home / security Smart home / security Digital health / wearables UBI / telematics Digital health / wearables Smart home / security Smart home / security Home sharing / travel UBI / telematics Smart home / security Smart home / security Motor repair / maintenance 55
Distribution disruption / disintermediation risk Partnerships with data owners and tech players Tech start-ups Privacy, regulation, brand Anonymisation by third parties? 56
Distribution disruption / disintermediation risk Partnerships with data owners and tech players Tech start-ups Privacy, regulation, brand Anonymisation by third parties? IT capability Cyber risk 57
Distribution disruption / disintermediation risk Partnerships with data owners and tech players Tech start-ups Privacy, regulation, brand Anonymisation by third parties? IT capability Cyber risk New skills! Big data management and related analytics 58
Distribution disruption / disintermediation risk Partnerships with data owners and tech players Tech start-ups Privacy, regulation, brand Anonymisation by third parties? IT capability Cyber risk New skills! Big data management and related analytics Culture 59
Distribution disruption / disintermediation risk Partnerships with data owners and tech players Tech start-ups Privacy, regulation, brand Anonymisation by third parties? IT capability Cyber risk New skills! Big data management and related analytics Culture Clear strategy: Partnerships Product Distribution Data strategy Operating model Culture 60
New needs New needs and new data New data So? 61