INSURANCE INNOVATION EXECUTIVE BOARD INSURANCE AS A LIVING BUSINESS: EXPLOSIVE GROWTH THROUGH HYPER- RELEVANCE, INNOVATION & AGILITY Jim Bramblet Erik Sandquist March 2, 2018
Current Level of Disruption SEGMENT PERFORMANCE Segments in Insurance are all within Vulnerability Current level of disruption vs. Susceptibility to future disruption Legend & notes 1.00 VIABILITY Segment Median: 0.58 VOLATILITY #1 Segments Insurance 0.90 Related segments Other Segments 0.80 #2 Average EV of companies in sample 1 0.70 Diversified Banks $88bn $1.4bn 0.60 0.50 0.40 0.30 Segment Median: 0.50 Regional Banks Asset Management and Custody Banks Property and Casualty Insurance Investment Banking and Brokerage Life and Health Insurance Multi-line Insurance Reinsurance 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 DURABILITY Susceptibility to Future Disruption VULNERABILITY Sources: Capital IQ; Oxford Economics; OECD; IDC; Forbes; RegData; CB Insights; Fortune; S&P Index; Accenture Research Disruptability Index 1 Total sample = 3,629; sample sizes range between 210 and 5, with an average of 37 companies per industry. Copyright 2017 Accenture. All rights reserved. 2
RISK IS CHANGING AT AN ACCELERATED PACE Cyber-Security NEW EXPOSURES Sharing Economy RISK Real-Time Prevention Personalized Offers NEW WAYS TO MITIGATE & TRANSFER Driverless Cars Independent Workers NEW WAYS OF FUNDING From Products to Subscriptions Embedded Insurance Alternative capital P2P Insurance Copyright 2018 Accenture. All rights reserved. 3
THE STATUS QUO IS UNSUSTAINABLE CEOs and C-suite executives recognize the need for change 86 % 82 % 82 % 86 % of executives anticipate that the pace of technology change will increase rapidly or at an unprecedented rate in their industry over the next three years. of insurance executives agree the digital revolution is driving a new era of corporate economic structure. of business executives agree that organizations are being increasingly pressed to reinvent themselves and evolve their business before they are disrupted from the outside or by their competitors. of insurers say their organization must innovate at an increasingly rapid pace just to keep a competitive edge. Source: Accenture Technology Vision Copyright 2018 Accenture. All rights reserved. 4
WE ARE ENTERING A NEW ERA NEXT ERA 1990s 2010s EXPERIENCE CUSTOMER HYPER- RELEVANCE RENEW 1960s 1980s CHANNEL CUSTOMER LOYALTY RETAIN PRODUCT VOLUME ACQUIRE DISTRIBUTION REACH LIFETIME GROW Few Brands Feature Innovation Mass-Production Product Push Moment of Sale More Brands Channel Innovation Enterprise IT Systems Channel Push Place of Sale Many Brands Proposition Innovation Online & Internet Customer Push Linear Path to Purchase Many Unpredictable Brands Engagement Innovation Cloud, Mobile & Social Customer Pull End-to-End Journey Deep Personalization Human-Digital Interaction On Us, On GAFA Ecosystem / Platform-Based Competition Copyright 2018 2017 Accenture. All All rights rights reserved. 5
INSURERS NEED TO BECOME LIVING BUSINESSES RELENTLESSLY FOCUSED ON THE CUSTOMER Credible Intelligently Personalized Consistent HYPER-RELEVANT PURPOSEFUL PERSONALITY EMBEDDED INNOVATION Self learning Responsive Networked Resilient Engaging Generous FLUID MODEL ENABLES VITALITY & AGILITY Copyright 2018 Accenture. All rights reserved. 6
THE BENEFITS OF BECOMING A LIVING BUSINESS ARE SIGNIFICANT GLOBAL INSURANCE OPPORTUNITY, FROM 2017 TO 2022 $375B Expansion in worldwide revenue potential $177B Potential revenue from new streams and enhanced operations $198B Value of potential market share gains Copyright 2018 Accenture. All rights reserved. 7
THE OPPORTUNITIES ARE SPREAD ACROSS FIVE REVENUE GROWTH AREAS Increased Market Penetration $144B Increased penetration of market segments currently difficult to reach profitably, but which become more accessible with new channels and technologies New Risks $111B New types of emerging risk as a result of technological & other innovation New Relationships, incl. with GAFAs $80B Monetization of The New $28B Value-Added Services $12B Relationships with non-traditional intermediaries and ecosystems to engage differently with customers Monetization of insurers assets offering platforms, data, etc., to ecosystem partners and other third parties Value-added services or products, including advisory services, that help customers reduce their risk Copyright 2018 Accenture. All rights reserved. 8
FIVE KEY AREAS FOR TRANSFORMATION TO A LIVING BUSINESS Targeting Designing Building/Iterating Connecting Sustaining The desired value roadmap Living services that drive exceptional experiences Intelligent, flexible platforms for innovative services focused on outcomes Diverse ecosystems for compelling customer experiences A fluid organization that keeps customers at the center of everything Copyright 2018 Accenture. All rights reserved. 9