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Life insurance 2022 – A bold vision

Life2017

21/ 22 June 2017

Heloise Rossouw, Colin Forrest, Gary Williams

© 2017 Willis Towers Watson. All rights reserved.


An uncertain future

2

Government

Fractional Ownership

Customer ExpectationsShareholder Expectations

Regulatory Pressures

Changes in the nature of traditional risks

Digital markets

Value Chain Compression

Super abundant capital

Virtual worldAI

Ageing population

Finite resources Growing population

Individualism

Diffusion of power

Migration

Rise of generation X and Y

© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.


Insurance 2022: three key global trends affecting the insurance industry in the next 5 years

3

1Transformation of

risk

Acceleration in

#insurtech and

technology

Demographic risk

2 3



#1 Demographic risk

4

22030

4 to 22060

1.5m2020

40%75%

2025

60%2020

2020



#2 Transformation of Risk

5

P2P


WEF Global Risk report 2017


#3 Acceleration in #insurtech and technology

6

Artificial Intelligence

Blockchain

Internet of Things

Next Gen Big Data & Analytics

The Sharing Economy

Social media and network economics


Source: Kurzweil Accelerating Intelligence - http://www.kurzweilai.net/the-law-of-accelerating-returns

Copyright (C) Raymond Kurzweil 2001


Which road will we choose?

7

Who are our

competitors?

Who are our

customers?



Are we bold enough?

8

We’ve long believed that over time

companies tend to get comfortable doing

the same thing; just making incremental

changes. But in our industry, where

revolutionary ideas drive the next big

growth areas, you need to be a bit

uncomfortable to stay relevant. Larry Page CEO, Google

“

“”© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.


21/22 June 2017

© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.9

Heloise Rossouw

Customer and product


If I’d asked people

what they wanted

they’d have said

faster horses

Henry Ford

Do we know what our customers’ needs and wants are?

10© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.


What are our customers’ hopes and dreams?

11

Do they dream about…

…Saving £100 each month?


willistowerswatson.com 12



…the perfect holiday?


willistowerswatson.com 13



…providing their child

with an education?



Biggest motivations for saving money


Holiday Retirement Short-term

emergencies

Home

improvements

55% 47% 41% 39%

50% often worry about their financial future. Just a minority (40%)

expect the long-term will look after itself

40% believe saving is a high priority for them. Despite saving being

a priority, half (50%) still like to spend their money on the things

they want. Just 10% see saving as less of a priority

Source: The savings psyche of the UK - A new approach to pensions and savings for 21st-century Britain

Willis Towers Watson and Nottingham University Business School


People prefer flexibility


To what extent would you want your pension savings to be flexible?

No flexibility - a pension contribution is exactly what I need

to save for retirement23%

Some flexibility - I want to have the choice of using my pension fund for

other means, other than my retirement 48%

Full flexibility - I would prefer to be able to access my

pension fund when I want 17%

Don’t know 12%

‘Flexers’

‘Traditionalists’

Gen Y Gen XBaby

Boomers

‘Flexers’ 73% 62% 56%




Choice overload


12%

13%

10%

31%

34%

35%

Regular savings accounts

Pension / saving forretirement

Cash ISAs

Too much choice

Too little choice



Do you think you have too much or too little choice when it comes to saving money

through the following?


The three key areas of decision-making


% Critically important / important

33%

56%

58%

66%

69%

70%

74%

79%

31%

52%

58%

60%

64%

67%

75%

76%

Non-financial incentive (e.g. free gift,railcard, etc)

A wide range of savings / investmentproducts

Financial incentive (e.g. cash boost)

Customer service / experience

Knowledge of financial provider

Reputation of financial provider

Guaranteed return on my savings

Competitive interest rate / return

Short-term

Primary

Financial return

Secondary

Financial support /

service

Tertiary

Financial incentive



To what extent are the following factors important to you when making a short-term and long-term savings

decision?


Protection

Risk

management

Influencing

Savings

vehicle

FINANCIAL

RISK PARTNER

What do our customers need help with?



How will this change over time?



What could the products of the future look like?



Product innovationTargeting and segmentation as the population changes

21

Diabetics in 2015:

4 million in United Kingdom

(6.2% of population)

0.8m in Czech Republic

(7.5% of population)

Diabetes prevalence continues to

increase – 10% of UK population

expected to be diabetic by 2034

Health profile of diabetics is completely

different from average population



Product innovationInfluencing and rewarding positive behaviour



Product innovation


Helping people save

“WORKS OUT WHAT YOU

CAN AFFORD TO SAVE”


Product innovation


Helping people save

“INVEST YOUR SPARE

CHANGE”


Product innovation


Helping people save

“START INVESTING WITHIN 10 MINUTES”


Product innovationChanging perceptions about insurance


“LIFE

INSURANCE

REDESIGNED”




“DELIVERING ON OUR CLAIMS

PROMISE IS THE BEST WAY TO DRIVE

TRUST IN BIMA AND DEMONSTRATE

THE VALUE OF INSURANCE”




“WE TREAT THE

PREMIUMS AS IF

IT’S YOUR MONEY”




“WE TREAT THE

PREMIUMS AS IF

IT’S YOUR MONEY”

“GETTING

LIFE

INSURANCE

SHOULD BE

PAINLESS”




“THINKING LIKE A

CUSTOMER ”


Product innovation

31

Savings product’s linked to customers’ goals

Source: https://www.slideshare.net/VishalNaidoo1/2inone-savings-slides-july2014



Product innovation


willistowerswatson.com 33© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

“Your customers don't care about you.

They don't care about your product or

service. They care about themselves,

their dreams, their goals. Now, they will

care much more if you help them reach

their goals, and to do that, you must

understand their goals, as well as their

needs and deepest desires.”

Steve Jobs 1955 - 2011


21/22 June 2017


Colin Forrest

Digital data disruption


Recognize these logos? Here are 1/3 of #insurtech players

35

P2P Healthcare UBI/Auto

Sharing Economy

Spot Insurance

Product insurance

Backend

Marketplace & online

consumer platforms

Data, Software & Analytics

Accelerators

Reinsurance

IoT

Life Insurance

Blockchain



Willis Towers Watson 2017 Digitalisation Report

36

12

18

22

30

40

0 5 10 15 20 25 30 35 40 45

Blockchain

P2P risk sharing

Internet of Things, wearables

Artificial Intelligence

Big Data/Real-time Analytics

Which of the following (digital) technologies do you expect to have the biggest impact on the

insurance sector over the next two years and the next five years?



Barriers/excuses



Data

Barriers/excuses



Barriers/excuses



Change is here…



Change is here…


Goal is to have the happiest members paying the

lowest costs for the healthiest outcomes

145K customers in 2016 with plan to reach 1Mn

customers

Making data-driven decisions based on large data

sets aggregated across providers and care data

“Make health insurance suck less”


Change is here…



What if?



21/22 June 2017


Gary Williams

Competitive landscape


The Competitive Landscape has many positives…


Customer needs are clear

and growing, and loyalty

(or inertia!) is high

Insurers possess

many difficult to

replicate building

blocks

Relatively

benign

competitive

forces...

so far


Sources of historic differentiation under

attack

So why are we not all feeling smug…


Inert customers (that we don’t really

know?)

Legacy distractions

Threat that external forces are heating up

?


Regulation

Regulation

makes entry

more difficult

Data &

analytics

Historic claims

data is private and

owned by

incumbents

Customer

vs. Risk

Analytics

Additional (external)

data sources proving

as important to

determine risk

Many start-ups have

started working

directly with regulator

to overcome

limitations

AIs/Deep machine learning

players entering the space.

System sustainability?

Cost of entry, capital

and balance sheet

requirement

are high

Exponential trend in

VC entering the

space

Cost of

Entry

Understanding

consumer behavior

is not the same as

understanding risk

Why haven’t we seen more new entrants and disruption (yet)?



So what should we be doing?


Act NOW to embrace the changes required to

remain fit to compete in 20223

Clarity around the big questions…1....but don't plant your feet - stay agile2


What do you want to be?


Will competitive forces drive to you to

change your footprint?

• To ‘advise’ or not?

• Asset Management?

• Wider Lifestyle partner?

• Increase customer focus?

Retailer Wholesaler ManufacturerOr Or

Or a combination of all three

Product Provider Service ProviderOr


How do you want to differentiate yourself?


“[Market leaders] … become champions in one of these disciplines while meeting industry standards in

the other two.” Source: Michael Treacy and Fred Wiersema, “Customer Intimacy and Other Value Disciplines,” Harvard Business Review.

X

Product

Leadership

Operational

ExcellenceCustomer

Intimacy






XOperational

ExcellenceCustomer

Intimacy






XCustomer

Intimacy






Customer

Intimacy


Which markets offer growing profit pools and/or Blue Oceans


Aging Populations e.g. Long Term Care?

The untapped masses e.g. Micro Insurance

Provision moving from government to corporate e.g. Group coverages and savings


New Competitive Innovation : Breaking through complexityMoneyfarm

“START INVESTING WITHIN 10 MINUTES”



New Competitive innovation: Overcoming inertiaChip


“WORKS OUT

WHAT YOU CAN

AFFORD TO SAVE”


New Competitive innovation : Overcoming inertiaMoneybox


“INVEST YOUR

SPARE CHANGE”


New Competitive innovation : Breaking through complexityVanguard


Hybrid customer service incorporating

robo-advisers and humans

51% of customers are 65+

35% are 50-65

14% are under 50%

Minimum monthly investment: £100

Minimum lump sum: £500

Account fee: 0.15% p.a, capped at

£375

Additional fee per fund, which would

currently average 0.14% p.a.


Be agile and adapt quickly


Ahead of market disruption we need to build the capabilities and

market positions that provide strategic degrees of freedom more

important than ever….

It is not the strongest of the species

that survives, nor the most intelligent, but

the one most responsive to change.

Charles Darwin, 1809

“

“


Act now…


We always overestimate the

change that will occur in the

next two years and

underestimate the change

that will occur in the

next ten. Don't let

yourself be lulled

into inaction.

““

Bill Gates

Many of the capabilities likely to be required

tomorrow will take time to build.

Need to act now to start the journey and many are

no regret moves, for example:

Advanced Analytics

Organisational Efficiency

Sorting or Selling the Legacy

Others less so, for example:

Need for retail brand?

Own more of the customer experience?

Levels of uncertainty require a more dynamic

approach to monitoring competitor/market

changes

life insurance 2022 a bold vision - willis towers watson · life insurance 2022 ... willis towers...

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