cpcu society internet of things in insurance

1© 2015 SAP SE or an SAP affiliate company. All rights reserved.

October 27, 2015

Internet of Things in Insurance

Today’s Panel

Martin J. Frappolli, CPCU, FIDM, AIC The Institutes

Pat Saporito, CPCU, FIDM SAP

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 3Public

What is “The Internet of Things?”


Agenda

Internet of Things, Machine to Machine, Big Data

IoT / Digital Use Cases

Opportunities & Threats

Insurance Opportunities


Transactions Conversations Machines

Internet of Things (IoT): Our Connected World

Today: 4.9 billion ‘connected things’

2020: 25 billion ‘connected things’


Internet of Things

Connecting Devices, Data, People & Processes

Connected Retail

Connected LogisticsResponsive

Supply Chain

Connected Building/Cities

Connected Car

Real Time

Definition: network of physical objects that contain embedded technology to

communicate and sense or interact with their internal states or the external

environment. (Source: Gartner Group)


Internet of Things Related Terms

Digital: Historically referred to internet and ecommerce; has evolved to include

social media, mobile applications and cloud computing; is moving toward a future in

which products and services themselves become digital.

Machine-to-machine (M2M): Refers to communications used for automated data

transmission and measurement between mechanical or electronic devices.

Key components field-deployed wireless devices with embedded sensors or RFID-

wireless communication networks.

Sensor: a device that responds to a physical stimulus and transmits a resulting

impulse (as for measurement or operating a control); often used to monitor normal

operations or detect aberrations and send an alert or warning.

Telematics: Refers to the use of wireless devices and “black box” technologies

to transmit data in real time back to an organization; e.g., usage based

insurance.


Responsive supply chains

Smart family

Connected car

Connected retail Smart buildings

Remote servicemanagement

Smart policing

Smart home Smart cities

Connected healthcareConnected asset management

Connected logistics

Monitoring, analyzing, and automating business and life

… in real time


Analytic Maturity

Raw

Data

Cleaned

Data

Standard

Reports

Ad Hoc

Reports &

OLAP

Agile

Visualization

Predictive

Modeling

Optimization

What happened?

Why did it happen?

What will happen?

What is

the best that

could happen?

Us

er

En

gag

em

en

t

Maturity of Analytics Capabilities

Self Service BI

Generic

Predictive Analysis

Co

lle

cti

ve

In

sig

ht


Envisioning and Powering Transformation

Visualization

External systems

Mobile users

Social and mobile

Smart devices

Monitor

Analyze

Automate

Real Time Data

Multi-structured data sources


Internet of Things, M2M, Digital Transformation

Great Vision but difficult to effect


Nine Key IoT Settings

Source: Mc Kinsey


Internet of Things (IoT) Impacts in Insurance

13

Smart Healthcare

Wellness & Disease

Mgmt.

Smart Equipment

Preventative Maintenance

Smart Trucks

Fleet Mgmt

Smart Houses & Buildings

Home & Property Ins

Smart

Vending

Design Your

Own

Insurance

Connected Cars

Usage Based Insurance

Detect and analyze

data trends by

aggregating sensor

data

Benefit from more real

time risk data enabling

tailored products,

sales, underwriting

and pricing

Increase quality of life

through intelligent

vehicles, buildings,

healthcare


Personal Lines Opportunities

Area IoT Applications Insurance

Auto Smart cars; telematics, Improved risk assessment,

reduce losses/loss severity

Home Smart house; safety & security,

flood, etc.

Improved risk management,

reduced losses/loss severity

Health Smart bodies; personal health

devices

Improved health and wellness;

reduced loss severity

Connected Cars

Usage Based InsuranceSmart Houses & Buildings

Home & Property InsSmart Health Devices


Commercial Lines Opportunities

Smart Trucks

Fleet MgmtSmart Houses & Buildings

Home & Property InsSmart Health Devices

Area IoT Applications Insurance Benefits

Vehicles Smart trucks/fleets; telematics Improved driving safety, fewer

and less severe accidents

Buildings Smart buildings; safety &

security, physical hazard

detection

Improved risk management,

loss mitigation

Workers Comp Smart workplace; health &

safety

Reduced injuries; improved

risk control

YE

ST

ER

DA

Y

Agent / Broker

INSURER Reinsurance

Property & Casualty

Consumer

Weak

customer

connection

Based on

statistical

assumptions

Life

Health

Strong

agent

connection

Investment Regulated

INSURER

Reinsurance

Increased

regulation

Configurable

understandable

Products & Services Investment

International

$

$

$

$

Blurring lines of

business & services

SecurityProviders

WealthManagers

Healthcare providers

Service & devicesuppliers…

Car Companies

Consumer

Centric

PARNTERSHIPS(or COMPETITORS?)

Local

Connected

Networked

No

connection

to object /

behavior

OMNICHANNEL

Advisor / Agent

Web / Bank / Retailer

Social

Service provider

Aggregator

Standardized

complex

products

TO

MO

RR

OW

CA

PA

BIL

ITIE

S

Operational AgilityDigital Orchestration Full analytic transparency

Data Driven

Rapid Implementation (increasingly as a service)

Digital Business Models Are Emerging


IoT Challenges

Adoption/

Training/Change

Management

Regulation

Value in New Data/

New Business Models/

Competitors/Partners

Cyber Risk

Real time

Technologies

Data Breaches/

Customer Trust

Cyber RiskThe possibility that

computer data will be

obtained by unauthorized

parties who might use the

data in a way that is

harmful to the entity

owning the data or

represented in the data.

What is Cyber Risk?

DATA.

What is at risk?

What is at risk regarding the Internet of Things?


Cyber Risk

Defined: The possibility that computer data will be obtained by unauthorized

parties who might use the data in a way that is harmful to the entity owning the

data or represented in the data.

Goal: Data Privacy & Security

Risk: Cyber attacks and data leakage

Data: Customers, Partners, Employees

Losses:

Business Interruption

Reputation

Fraud


Cyber Risk Universe

Source: Bank of America Merrill Lynch, Cyber Risk Primer - Sept 3, 2015


Be ready for

continuous

disruption

Create an

Information

driven

culture

Intelligence

and Analytics

are key

We all emit

data, lots of it!

Data is front

and center,

big or small

Analytics isn’t just for power users – it’s for everyone.

Shifting to an Enterprise Analytics Mindset

Invest in your future by improving your Analytic IQ!


Nucleus Research, Gartner, Fortune Magazine

Analytic Use Will Skyrocket: 2020 vs. 2014

Do you have the skills you need?

10%

75%

Use Analytics

Today

Need

Analytics

by 2020

Ability to manage and

consume all data is

getting harder

Not utilizing all

the information

out there

How will your job change?

What training/skills will you need?

Missing new

insights

IT is not agile enough

and the business wants

to get involved


IoT Considerations

Data Strategy/Security

How does IoT data affect our current Data Strategy/Data Security?

Business Processes/Operations

How will our business processes change?

Strategic Business Model

How will IoT affect our current business model?

Who are our partners? Competitors

What are our product/service opportunities? Threats

Risk Management

What new risks will be created? How will you manage them?

Skills & Roles

What skills and roles will be needed for IoT/Digital?

How will we address adoption, change management?

© 2015 SAP SE or an SAP affiliate company. All rights reserved.

Q&A?

Pat Saporito, CPCU

Sr. Director, BI

Global COE for Analytics

[email protected]

(201) 681-9671

Twitter: @Pat.Saporito

LinkedIn: www.linkedin/in/patriciasaporito

Blogs/Tweets:

Analytics from SAP

http://blogs.sap.com/analytics/

@sapforinsurance

mailto:[email protected]

http://www.linkedin/in/patriciasaporito

https://twitter.com/PatSaporito

https://twitter.com/PatSaporito

http://www.linkedin.com/in/patriciasaporito

http://www.linkedin.com/in/patriciasaporito

http://blogs.sap.com/analytics/


Practical Guidance

Applied Insurance Analytics

Free download of Chapter 1 (Overview)

http://www.ftpress.com/content/images/9780133760361/samplepages/9780133760361.pdf


Additional Resources

Studies:

Unlocking the potential of the Internet of Things, McKinsey. 2015.

Books:

Silent Intelligence: The Internet of Things, Daniel Kellmereit and Daniel

Obodovski. 2013.

http://www.mckinsey.com/insights/business_technology/the_internet_of_things_the_value_of_digitizing_the_physical_world

cpcu society internet of things in insurance

Data & Analytics