the early days of disruption: the online insurance industry
TRANSCRIPT
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
The Early Days of Disruption:
the Online Insurance Industry
Produced By:
Alan [email protected]
@SeriesAPartners
www.series-a.com
PRODUCED BY ALAN ALDEN – SERIES-A PARTNERS
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21 20
4633
15
12
18
10
2015 2025
100
Product Development and Sales Support
Operations
Administrative Support
IT
Insurance Industry workforce% of FTEs1 Over the next 10 years,
up to 25% of full-time positions in the
insurance industry may be consolidated or
replaced2
1Based on Western Insurers; FTE = Full-Time Equivalent/Employees2 McKinsey & Co (2015)
Tech Is Ready To Streamline Insurance
75
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Forces of Insurance Innovation
AGILE IT
DATA
Data Proprietary and Big Data Data Analytics
Collaboration Straight-Thru-Processing Connected Process Chains Connectivity with industry
and non-industry platforms Extensive APIs
Agile IT Fast and Flexible IT Interconnectivity Digital Consumer
Experience
COLLABORATION
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The Need To Modernize: Consumer Satisfaction
Insurance industry has been slow to adopt new digital technologies
Focus has been more on the agents than the clients
Younger consumers expect quick and easy access, transparency, and high quality service
15.2
11.811.1
10.0
8.98.5 8.5
8.0
5.85.0
4.3 4.2 4.1 4.0 3.8 3.5
0
4
8
12
16
Per
son
al B
anki
ng
On
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Mer
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lines
Inve
stm
ents
Ho
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erm
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Elec
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er, G
as
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Pro
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ers
INSU
RA
NC
E
Rea
l Est
ate
Telc
o /
Cab
le
Average7.3
INSU
RAN
CE
Relative satisfaction utility score
Delivering Digital Satisfaction @2013 – The Boston Consulting Group (BCG)
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The Need To Modernize: Firms Understand the Need
42%
24%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Little or No Impact
Moderate Impact
Some Impact
High Impact
Very High Impact
2015 2013 2010
IT Environment’s Impact on Achieving Desired Levels of Customer Service
As mobile empowers policyholders, IT’s impact on customers is increasing
Almost 2/3 of respondents acknowledged importance of IT modernization in achieving increased levels of customer service
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The Opportunity
$175Billion
2015
$189.2Billion
2017
Global Insurance IT Spending
4% CAGR
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Country / Region 2013 2014 2015 2016 2017
US (7.1%) (1.7%) 1.3% 1.0% 2.3%
Canada 3.0% 7.6% 2.4% 3.5% 3.8%
UK (5.9%) (10.4%) 2.2% 3.5% 3.2%
Japan 6.8% 7.1% 2.7% 3.0% 3.7%
Australia 9.8% 26.5% (5.8%) 4.1% 2.1%
France 3.6% 8.4% 4.2% 2.6% 2.5%
Germany 2.5% 2.7% 3.1% 0.9% 0.9%
Italy 20.6% 29.5% 2.8% 2.2% 2.3%
Spain (4.3%) (2.5%) (11.6%) 0.3% 0.6%
Netherlands -5.9%) (5.2%) (10.0%) 2.2% 1.7%
Advanced Markets -2.5% 4.2% 1.9% 2.4% 2.6%
World -1.5% 4.7% 3.3% 4.0% 4.2%
Emerging Markets 4.0% 7.4% 10.6% 10.7% 10.7%
With Great Growth Ahead….
Emerging Markets 4.0% 7.4% 10.6% 10.7% 10.7%
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The Insurance IT Landscape
Represents Near-Term
Socatra Opportunities
RATE QUOTE BIND ISSUEENDORSEMENTS & OTHER POLICY
SERVICESRENEWAL
Core Policy Admin System
Document Creation
Billing
GeneralLedger
Document Management & Workflow
Business Intelligence
Analytics
Reinsurance Management
Core ClaimsSystem
Disbursements
CRM
Rating Engine
UnderwriterWorkbench
Document Creation
CustomerPortal
AgentPortal
RATE QUOTE BIND ISSUEENDORSEMENTS & OTHER POLICY
SERVICESRENEWAL
Policy Admin Processes
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Insurance Industry Landscape
Insurance Landscape
Courtesy: VentureScanner
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Insurance IndustryEmerging Markets
Opportunity Overview
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Emerging Markets: Small IT Presence / Large Oppty
35.9%
28.9% 28.2%
0.9%3.4% 1.5%
0%
10%
20%
30%
40%
Europe North America Asia Middle East andCentral Asis
Latin America Africa
Current Insurance Penetration Rates
$78.5
$54.5
$31.4
$5.3 $5.3
$84.4
$56.8
$35.6
$6.7 $5.8
$-
$20
$40
$60
$80
$100
North America Europe Asia Pacific Latin America All Other (Africa, MiddleEast, CIS)
2015 2017
Courtesy: SwissRe (2012)
Global Average6.6%
Courtesy: Celent (2016)
Global IT Spending By Insurance Companies
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Why Getting to Know the Local Markets is Key
Local players in emerging markets still dominate
Multi-nationals (MNCs) struggle to increase their presence
Know Various Geographic Purchasing Priorities
95
70 7079
4
30
9
10
1
2111
0%
25%
50%
75%
100%
China India Brazil Russia
Local Joint-Venture ForeignSource: McKinsey Global
Market Share of Foreign versus Domestic Players (total business)
Priorities When Investing in Digital Transformation ProjectsRank Asia / Pacific Latin America EMEA North America
1) Mobility (Devices and Apps) Business Process Automation (STP)
Sale and Service of Products Online
Business Process Automation (STP)
2) Sale and Service of Products Online
Sale and Service of Products Online
Business Process Automation (STP)
StreamliningCommunications with Customers via Portal
3) Engaging Interface / UX Mobility (Devices and Apps) Analytics Engaging Interface / UX
4) Business Process Automation (STP)
Engaging Interface / UX Engaging Interface / UX Sale and Service of Products Online
Source: Celent Survey (2015)
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Go-to-Market Key Considerations
Most insurers are spending are spending between 1-6% of direct written premiums on IT*
Average is 3.2%
~25% is spent on external software and an additional 22% is spent on external services
More than 70% of vendors opt for vendor solutions (vs building own)
Growth and retention, process optimization (faster, leaner and smarter business processes), and meeting regulatory requirements are the top three drivers for IT investment at Asian insurers
* Source: Celent Asia Pacific Insurance CIO survey 2014
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Thank You
Contact Information:
Alan Alden
PRODUCED BY ALAN ALDEN I SERIES-A PARTNERS LLC
@SeriesAPartners
www.series-a.com
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