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© Copyright Allianz SE

DIGITAL DISRUPTIONTHREAT OR OPPORTUNITY

Nigerian National Insurance Conference

Abuja, Nigeria

01 July 2019

By Siegfried Jegels

Picture courtesy CNN

© Copyright Siegfried Jegels 2019

2

INTRODUCTION

State of Disruption

Influences of Disruption

Advances of Disruption

Industry Impact

Preparation for Disruption


3

DISRUPTIVE INFLUENCES

Artificial

Intelligence

Virtual

Reality

Robotics

3D

Printing

CRISPR

Block

Chain

Bio /

Nano

MedicineIoT

On

demand

Economy

Mobility &

Autonomy


4

DIGITAL DRIVEN COMPANIES – THEIR CUSTOMERS

2.3bn 1.9bn 1.6bn 1bn

100mn 75mn330mn 303mn 300mn


5

WHAT HAPPENS IN AN INTERNET MINUTE


6

ITS ALL ABOUT CUSTOMERS

"True disruptors focus on their customers,not on their competitors or the financial markets.“

- Walter Isaacson, former CNN Chairman


7

We are part of an Era

facing

Unprecedented

Change

DISRUPTION IN INSURANCE

Accenture video link: ttps://www.youtube.com/watch?v=_FyreOdFhmo

Disruption In Insurance.mp4


8

8 KEY AREAS OF DISRUPTION FOR INSURANCE

Business Model

Distribution / Channel

OperatingModel

RiskManagement

Underwriting ClaimsProduct

DevelopmentPolicy

Administration

…which represents the Value Chain of Insurance


9

THESIS FOR DIGITAL DISRUPTION

THREAT OPPORTUNITY

a major Threat to traditional

Insurance players who are slow or

averse to adapt to and adopt

disruptive technologies

a massive Opportunity to forward-

thinking Insurers who are willing to

undergo rapid Digital

Transformation and leverage

Digital Technology and/or partner

with Insurtech entities to improve

their value proposition


10

6 QUICK STEPS TO START WITH INNOVATION

Customer

JourneysOptimization Innovation

Re-design &

Prototype Remodeling

Scale &

Scope

Understand all

key Customer

Journeys and

Pain points

Map the desired

and delightful

experience

Optimize

process and/or

product /

service

Focus on

simplicity,

convenience

and harmony

Innovate on the

desired process

or interface or

product /

service

The innovation

must be

customer

centric

Perform rapid

re-design and

prototype

Test the

prototype as

soon as

possible to

arrive at a MVP

Remodel the

business based

on the

innovation

Establish an

agile culture,

enterprise

architecture,

which can adapt

to change

Build

economies of

scale across the

organization

Identify areas to

improve the

innovation

scope

S Jegels Consulting, Digital Transformation, 2019


11

“There’s an uncalculated cost of insufficient, or even absent innovation”

- Tällt, Disruption in Insurance

“Innovation is the only Insurance against irrelevance”

- Gar Hamel, Strategos


12

INSURANCE DISRUPTION CONTEXT (1/2)

Source: https://fintech.global/investor-appetite-for-larger-deals-pushed-insurtech-investment-above-1-5bn-last-quarter/

https://fintech.global/investor-appetite-for-larger-deals-pushed-insurtech-investment-above-1-5bn-last-quarter/


13

INSURANCE DISRUPTION CONTEXT (2/2)


14

RECENT INNOVATION IN INSURANCE

LEMONADE

TROV

Visit Trov and Lemonade websites for videos

The Science Behind Lemonade.mp4

Trōv - On-Demand Insurance For Your Things.mp4


15

SOME ADDITIONAL DISRUPTIVE EXAMPLES

CUVVA

(Auto)

SURE

(Travel)

BIMA AFYA

(Micro)

KASKO

(White label)

OSCAR

(Health)

Short-term usage-based insurance Mobile on-demand insurance Mobile micro-health insurance

Online business plug-in insurance Real-time health support


16

DIGITAL DISRUPTION INSURANCE ECOSYSTEM

CustomerChannel /

Partner Insurer RegulatorProduct / Service

KnowledgeableAggregation and

InformativeAggregator Information standardsComparative options

Personal NeedsData from Lifestyle /

Business

Real-time AI based

automated UW

Automated review of

AI models

Flexible and agile

based on customer

Seamless &

SimplisticDirect Mobile / Online

offering

Straight through

Processing

Digital & Product

Guidelines

Digital and Real time

solutions

On Demand Digital and IoTIntegrated Ecosystem

player

GDPR data sharing +

UW capacity

Usage based API on

Demand



17

DISRUPTIVE INDUSTRY ECOSYSTEMS

Most valuable

insurance

brand in world

1mn

employees +

Agents

350mn online

customers


18

10 INSURTECH TRENDS

Digitize or Die

Ecosystemsrock

It’s a new game, press

Reset

Digital Risk Reduction

Data is the new oil – offer

UBI

Master AI and Machine Learning

Auto disruption -

Claims

New roles for old skills

Focus on Digital /

Customer Exp

Skill up and Digitally

Transform

1 2 3 4 5

6 7 8 9 10

Source: https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/03/insurtech-trends-executive-summary.pdf

https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/03/insurtech-trends-executive-summary.pdf


EVOLUTION OF DISRUPTION

19

Traditional DigitalHybrid Insight-driven Smart

Insurance as a PRODUCT Insurance as a SERVICE

INTUITIVEDIAGNOSTIC PREDICTIVE

▪ Distribution through

Brokers & Agents,

▪ Manual processing

▪ Customer data is paper

based.

▪ Transition to online

services

▪ Gradual automation

▪ Some Tools and

systems to deliver

electronic data

▪ Digitization of org.

processes

▪ Integration of systems

▪ Cloud based

▪ Adoption of machine

learning & AI models

▪ Big data + AI analytics

▪ Digital platforms

▪ Ecosystem offering

▪ Usage Based Product

▪ Customer Insights with

AI

▪ Advanced data science

methods/robotics

▪ IoT interface

▪ Full Ecosystem player

▪ Risk avoidance solution

▪ On demand products



20

A LOOK AT THE NUMBERS

smart insurers

convert digital

customers at six

times the rate of

their peers


21

NIGERIAN MOBILE / INTERNET CONTEXT

Source: https://www.statista.com/statistics/484918/internet-user-reach-nigeria/

https://www.statista.com/statistics/484918/internet-user-reach-nigeria/


22

NIGERIAN INSURANCE ENVIRONMENT - CHALLENGES

Customer

Threat ofNew Entrants

Regulator

Threat of Substitutes

Brokers / Agents

HIGH LEVEL (OF BARGAINING POWER)

• Corporate Broker market is largest

revenue generator so large dependency

• Commissions influence relationship

• Brand carriers have strong relationships

• Consolidators / Aggregators influence

price.HIGH THREAT (OF DIVERSIFICATION)

• Bancassurance

• Direct insurance

• National health insurance

• Mobile money and short term insurance

• “Fake” insurance (eg motor)

HIGH LEVEL (OF REFORM)

• Digital based offerings are “new”

• Cybersecurity and data privacy

• Future requirements around insurtech

players / innovation needs to encourage

reform but protect competition/consumer

• Industry challenged with “trust issue”

• Modernization of regulation control,

oversight and monitoring

• Investment into Digital skills needed

MEDIUM THREAT (OF ENTRANCE)

• Non-traditional insurers - Insure / Fintechs,

Bankers and Telcos see opportunities

• Medium entry barriers for Capital owners

• New multinational players see opportunitiesHIGH THREAT (OF SWITCHING)

• Customers have limited loyalty

• Customers becoming more discerning

• Buyers have cheaper alternatives to

choose from

• Insurance becoming more accessible

• Insurance on Demand attractive


23

INSURANCE CO. THREATS & OPPORTUNITIES

THREATS OPPORTUNITIES

▪ Loss of business

▪ Loss of market share

▪ Loss of staff

▪ Disruption to distribution, product and

technical prowess

▪ Disintermediation – loss of agents / brokers

▪ Insurtech cannabilizes business

▪ Banks & Telcos offer substitute insurance

▪ Entrance of Aggregators

▪ New markets, customers

▪ Improved Risk management

▪ Growing digital distribution channel

▪ Greater Customer Acquisition

▪ Collaboration with insurtech

▪ More profitable

▪ Optimize Business by being more efficient

and effective

▪ New value creation

▪ Greater customer delight / retention

▪ Ecosystem participation


24

A FUTURE INSURANCE EXAMPLE

▪ By means of a two factor

AI process namely RPA

(robotic process

automation) and Decision

Management to handle

Claims.

▪ This aims to automate up

to 85% of the Claims

submission and adjustment

process.

▪ Virtual Customer Care

agents initiate the

submission process, by

using NLP and sentiment

analysis to administer the

call, and then use cognitive

computing and client

portfolio analysis, plus

known fraudulent patterns,

to perform an automated

first level Claim submission

▪ By means of RPA and

advanced AI algorithms to

handle initial claims

routing, and Pattern /

Speech recognition AI

algorithms

▪ Using submission of Client

data of loss event

(pictures, voice, video) plus

IoT and sensor data, first

level loss adjustment

decision made to initiate

drone review or process

claim

▪ Automated Loss

adjustment from sensors

and array of data-capture

technologies, trigger the

Claims triage and repair

services. Pattern

recognition is used

translate into loss

descriptions and estimate

amounts.

▪ By means of Robotic Sales

Agents, with cognitive and

behavioural computing

mechanisms

▪ Using sentiment analysis

and NLP to respond to new

customer interests and

queries.

▪ Using deep learning

techniques on social

behaviours, conversations

and spending patterns,

relevant sales offers can be

made

▪ By means of RPA using

both TaaS (IoT as a

service) to collect all

wearables usage and

device data, in addition to

mining social media data

▪ Using deep learning

techniques, together with

sentiment analysis,

broader demographic,

behavioural and risk data

is used to compute risk

models

▪ Relevant risk and pricing

models are proposed and

reviewed by expert to offer

differentiated pricing

▪ By means of AI algorithms

in analytics with data

science tools analyzing

consumer and customer

data

▪ Using automated Lifetime

Value Analysis, in order to

determine cross sell and

up sell potential, including

churn reduction and better

retention

▪ Narrative Science can also

be used to then issue a

more Personalised Policy

quotation

CLAIMS LOSS ADJUSTMENTNEW POLICY UNDERWRITING SALES /

DISTRIBUTION


25

HOW TO APPROACH DIGITAL DISRUPTION

STRATEGIC

PARTNERSHIPS

INVESTING IN

STARTUPS

IN-HOUSE

INNOVATION

▪ Leverage skills, services

and technologies

▪ Network effect

▪ Build experience

▪ Open up ecosystem

opportunity

▪ (Ref. Allianz / China partners

with online co. example)

▪ Direct or Venture

investment

▪ Buy into existing digital

players

▪ Learn and get exposed to

agile way of working

▪ (Ref. AIG invest in wearable

devices example)

▪ Need to build internal

innovation capacity

▪ Build dedicated labs /

digital accelerators

▪ Cross-functional teams to

deliver MVPs

▪ (Ref. AXA establishes

Singapore Lab)


26

CLOSE

Digital Disruption is a massive opportunity to improve:

• Productivity

• Topline

• Cost reduction

• Growth

• Customer

Digital Disruption requires Transformation in:

• Data Analytics & AI

• Automation

• Ecosystem thinking

• Innovation with CE

• Investment

Digital Disruption will have the biggest impact on:

• Customer Acquisition

• Claims

• Distribution

• Risk Management

• Product Development


27

CLOSING QUOTE

“Insurers should not underestimate the changes that digital will bring to their industry and the challenges they will

pose. Neither should they overlook the significant short-term profit improvements that are within their grasp if they digitize their core businesses, nor shy away from innovating

to be part of an exciting future that is unfolding for the industry. If they act decisively, they will be among its

leaders.”- Mckinsey, Digital Disruption in Insurance, Mar 2017


28

QUESTIONS – DISCUSSION

With compliments from:

Siegfried Jegels

S Jegels Consulting

“beyond advisory, to strategic partnership, collaboration and innovation”

S Jegels Consulting delivers strategic Digital, Insurance, Organizational

and Technology Transformation solutions, as well as establishing

Innovation Accelerators to develop and launch new Products and

Technologies

Email: [email protected]

Tel: +49 152 0415 7354

Tel: +27 79 8144 858

mailto:[email protected]


29

BACK-UP


INSURANCE 10 YEAR EVOLUTION

30

Traditional DigitalHybrid Insight-driven Smart

Insurance as a PRODUCT Insurance as a SERVICE / ON DEMAND

• Traditional Business Lines

• Traditional Personal Lines



• Emerging Segment

Solutions (eg Cyber, HNI

etc)



• Segment Solutions

• Third Party (auto, telco,

goods purchases)

• On Demand

• Virtual advisory

• Segment Solutions

• Third Party

• On Demand

• Plug and Play

• Virtual advisory

• Automated Risk Manager

• Expert Solutions

• Automated Insurance

• Third Party

• On Demand

• Plug and Play

• Ecosystem solutions

inception – 2017 2018 – 2020 2021 – 2023 2024 – 2027 2028 – beyond

• Brokers

• Agents

• Brokers

• Agents

• Direct – Mobile / Web

• Sleeper Agents

• Banca

• SME

• Brokers

Agents

• Direct – Mobile / Web / Pos

• Sleeper Agents

• Banca / Telco

• SME

• Human / Robot Brokers

• Human / Robot Agents


• Sleeper Agents

• Banca / Telco

• SME

• Robot Brokers

• Robot Agents


Dis

trib

uti

on

Pro

du

cts

/ S

erv

ices


31


32

Experiences

Interests

Family

Belongings

Interactions

Activities

Relationships

Transactions

Conversations

Goals /

Achievements

BUILDING TRUST IN THE ECOSYSTEM

Career Lifestyle

SJ Consulting Model


33

AUTO INSURANCE ECOSYSTEM

STAGE USE CASES MAIN IMPACT

CASE

EVALUATION

Fraud prediction Claims Cost

Total Loss prediction Handling Cost

Litigation prediction Claims Cost

Severity prediction Claims Cost

CASE

SEGMENTATION

Straight through

processing ID

Handling Cost

Case assignment to

handler

Handling Cost

CASE

MANAGEMENT

Prediction of Success

in Case

Claims Cost

Medical Treatment Claims Cost

Reserve Prediction Claims Cost

Mckinsey: Digital Disruption, Cutting through the Noise


34

THE IMPACT OF INSURTECHS

digital disruption · bio / nano medicine iot on demand economy mobility & autonomy ... revenue...

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