© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved....
Transcript of © 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved....
© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
Insurance 2020 & BeyondIIS Global Insurance Forum
www.pwc.com/insurance
June , 2015
© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
Introduction & Welcome
Stephen O’HearnPwC Global Insurance LeaderPwC
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PwC
88%
66%
71%
61%
64%
61%
69%
50%
61%
47%
Changes in industry regulation
Changes in customer behaviors
Increase in number of significant competitors
traditional and new
Changes in distribution channels
Changes in core technologies of
production or service provision
Q: How disruptive do you think the following trends will be for your industry over the next five years? Respondents stating very or somewhat disruptive
Insurance All Industries
The insurance industry is undergoing more upheaval than any other industry
Source: PwC18th Annual Global CEO Survey
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of insurance CEOs believe there are more growth opportunities than there were three years ago
59%
of insurance CEOs see more threats than they did in 2012
61%
Sources: PwC 18th Annual Global CEO Survey
Insurance executives are preparing to navigate a market filled with nearly an equal amount of opportunities and threats
4Source: PwC 18th Annual Global CEO Survey
PwC
In 2011 when we put forward our perspective on the future of insurance, we considered scenarios for 32 distinct drivers of change
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SocialCustomer Behaviors
– Social Networking– Customer Expectations– Risk Awareness– Health
Talent Drain
Stakeholder Trust
Corporate Social Responsibility
Demographic Shifts– Dynamics of the Middle
Class– New Family Structure– Dependency Ratio– Aging
EconomicUrbanization
New Growth Opportunities
Fiscal Pressure
Inflation/Deflation
Risk Sharing & Transfer
Social Security & Benefits
Distributor Shift
Partnerships
TechnologyInformation & Analytics
Devices & Sensors
Software & Applications
Medical Advances
Environmental
Climate Change & Catastrophes
Sustainability
Pollution
PoliticalRegulatory Reform
Geo-political Risk
Rise of State-Directed Capitalism
Terrorism
Tax Treatment
Sharia Compliance (Takaful)
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The implications of these trends are altering the way insurers compete
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Social The balance of power is shifting towards customers
TechnologicalAdvances in software & hardware are transforming ‘big data’ into actionable insightsEnvironmentalIncreasing severity and frequency of catastrophic events are giving rise to more sophisticated risk models & risk transfer
EconomicThe rise of economic and political power in emerging markets
PoliticalThere is harmonization, standardization and globalization of the insurance market
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4% 10% 39%
Distribution disruption where integrated multi-channel interaction is the norm
Regressive Progressive
Source: PwC Analysis; IIS Conference, Toronto, 2011
21% 24%
In 2011, when we asked how far the balance of power would shift to the customers…
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Today…
of insurance CEOs recognize the power of digital and are using it to enhance customer experience
81%
Source: PwC 18th Annual Global CEO Survey
of consumers shopped for auto insurance online in 2014
46%
of consumers shopping in 2014 obtained a quote online
71%
Sources: PwC 18th Annual Global CEO Survey; comScore 2o14 U.S. Online Auto Insurance Shopping Report
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Social DisruptionNew entrants gaining stronghold of large consumer groups
“ (…) the key to insurance is having lots of data about people’s backgrounds and habits, which is perhaps the company’s [Google] greatest strength.”New York Times, Jan 18, 2015
Source: https://www.google.com/compare/autoinsurance/form?p=home
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Social DisruptionThe eCommerce player Alibaba is transforming the Chinese market and innovating in financial services and insurance
Three companies joined together to launch…
Ping AnTencentAlibaba
...Zhong An - the first online insurance company in China
Source: https://www.zhongan.com/index.html
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Social DisruptionNew entrants in the robo-advisor space are developing new models of assisted and automated omni-channel education and advice
Sources: http://www.bloomberg.com/news/videos/2015-03-26/northwestern-mutual-acquires-learnvest; https://intelligent.schwab.com/
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In 2011, when we asked about technological advances that could transform ‘big data’ into actionable insights
10% 25%
Sophisticated information analytics and new sources of information becomes key to competitive differentiation
Regressive Progressive
49% 14%2%
Source: PwC Analysis; IIS Conference, Toronto, 2011
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Today…
Source: PwC 18th Annual Global CEO Survey; Industry Forecasts Compilation, 2020 forecast from IDC; PwC Analysis
70%more than all but one other industry, see the speed of technological change as a threat to their growth prospect 2014 2020
$3.5T
$8.9T
The Internet of Things is Exploding
IoT Global Revenue
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Pricing Risk• New data sources
(IoT, mobile, etc)• Better data
Ongoing Relationship• Empowering to
make smart lifestyle decisions
• Services to support easier lifestyle
Crowdsourcing• Cheaper option to
pool capital• Help diversify
assets
Andreesen Horowitz shares the 16 tech trends it’s most excited about
Source: http://a16z.com/2015/01/22/16-things/
Virtual Reality
Sensorifi- cation of the
Enterprise
Machine Learning + Big Data
The Full-Stack Start-up
Digital HealthOnline
MarketplacesSecurity
Cloud-Client Computing
Crowd Funding Internet of Things
‘Failure’ DevOps Insurance
Containers
Bitcoin (and Blockchain)
Online Video
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Technological DisruptionThe Climate Corporation revolutionized yield management and crop insurance using machine learning techniques
Source: http://www.climate.com/; FastCompany, October 7, 2013
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Technological DisruptionDiscovery has established a new business model using technology, information and analytics to deliver personalized underwriting and change customer behavior
Source: http://www.thevitalitygroup.com/; http://www.thevitalitygroup.com/john-hancock-enters-exclusive-partnership-with-vitality/
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7% 12% 11%
Emerging markets do not harmonize their regulations with the developed markets, but they
change the regulations to make it easier for new entrants
Regressive Progressive
39% 30%
In 2011, when we asked about the opposing forces of harmonization and regionalization/nationalization of regulations, products, and practices globally…
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of insurance CEOs see over regulation as a threat to their growth prospects, more than any other sector
91%
Today…
The challenge for insurers is how to maintain attention to other strategic challenges and minimize upheaval by
building the new requirements
Sources: PwC 18th Annual Global CEO Survey
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Manifestation of Mega Trends
Disruption in Insurance
Digitization Intelligence & Automation
Innovative Business Model
Customer Revolution
Two-Speed Growth
Regulation
What risks and opportunities do these trends and potential disruptors mean to you?
© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
Stephen O’HearnPwC Global
Insurance Leader
Jamie YoderPwC Global
Insurance Advisory Leader
Thomas SullivanAssociate DirectorFederal Reserve
Board
Sean GildayVP of Strategic Partnerships
RGA
Panelist
Panelist
Panelist
Moderator
22
Panelists
© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
Q&A
PwC
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© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
In summary, there are 5 things to remember…
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1)No one knows what the winning bets are so learn fast
2) Fail quickly, fail cheaply
3) ‘Test and refine’ is more important than ‘plan and design’
4) Do something different – you’ve not got long!
5) Focus on the customer…
© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
Thank you
PwC
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© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.
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