65
Industry Trends Insight Insurance April 2017 Internal Use Only – All Rights Reserved
Industry Trends Insight
Insurance
April 2017
Internal Use Only – All Rights Reserved
1
Strong VC hype on Insurtech during 2016
Market Overview
Source: CBInsightsInternal Use Only – All Rights Reserved
2
In 2016 Insurtech startups raised $1.7 Bln
Market Overview
Source: CBInsights, TechnavioInternal Use Only – All Rights Reserved
Global insurtech
market to grow at
a CAGR of more
than 10% during
the forecast
period 2016-2020
3
Two of three deals took place at the early stage
Market Overview
Source: CBInsightsInternal Use Only – All Rights Reserved
Early stage VC rounds only
4
US are still the leader in insurtech investments but no more so predominant
Market Overview
Source: CBInsightsInternal Use Only – All Rights Reserved
5
Most of Innovators are backed by Insurer Companies
Market Overview
Source: CBInsightsInternal Use Only – All Rights Reserved
6
INDEX
AI for Insurance
Usage based Insurance
Robo Advisor
On-Demand Insurance
Policies for Tech
IoT based Insurance
Social & P2P Insurance
Automated claim process
Internal Use Only – All Rights Reserved
7
Definition and Data
AI for Insurance
AI is becoming a key enabler to disruptive changes both on client side as well as on
background and administrative processes.
Natural Language interfaces let customers ‘talk’ to automated services in a natural
way, while decision makers and products builders can use Advanced and Predictive
Analytics to reduce operational risk and claim frauds, build new insurance models
and push offers in real time based on customers’ preferences, location and behavior.
Unlike other industries, insurers are turning to sensors to collect data directly
from individuals, using technologies like in-home monitors and wearables.
Source: NTT Data, The Guardian, Research and MarketsInternal Use Only – All Rights Reserved
8
Definition and Data
AI for Insurance
Source: NTT Data, CBInsightsInternal Use Only – All Rights Reserved
Oscar Health
Insurance went
through a $400
mln Series B
round in 2016
Robots are coming to Insurance – Infographic
Robotic Process Automation (RPA) – Video
Oscar: AI in Health Insurance – Video
9
Main Streams
AI for Insurance
There are 3 main areas where AI based applications can have the strongest impact on the
insurance industry:
Process automation and employee training.
Repetitive and time consuming tasks can be totally automated thanks to Software Robots,
while risk evaluation in complex policies can be evaluated by Machine Learning algorithms,
avoiding specific training of human staff
Fraud prevention and new risks coverage.
Predictive Analytics help in designing new forecast models and in early detection of
possible negative events, while real time data and social media analysis add fraud
detection feature to claim management process
Extended support.
Based on chatbot and Natural Language Processing, expert systems can interact with
customers providing 24/7/365 support and much faster tasks handling
Internal Use Only – All Rights Reserved
10
Repetitive Jobs Automation
AI for Insurance
Cognitive technology is totally able to replace human activity in
repetitive tasks, starting with a little training and learning by itself faster
than humans can do.
A typical example in the insurance industry is the calculation of payouts
to healthcare policyholders: it’s a long process because employees
need to analyse medical certificates and compare them with tons of
similar documents, varying hospital by hospital, and check if medical
procedures have been applied in the proper way.
Machine can do it in a much faster way, with no errors, with no bias,
cutting process times from days to minutes.
Source: The Guardian
Fukoku Mutual
Life Insurance is
replacing 34
employees with
IBM Watson AI
Internal Use Only – All Rights Reserved
11
AI makes finance and insurance competitors
AI for Insurance
Robo advisor evolution will close the gap between financial and
insurance companies in terms of long term investment products
offering.
So far human agents have to be trained to learn and manage two
different sets of products, and they have to be able to give proper
advices to the customers.
Advanced Robo Advisors will be able to analyse individual balance
sheets and income statements, comparing them with market and
personal scenarios, providing suggestion both for protection and
financial products, and directly managing customers portfolio.
Source: PWC, Statista
By 2021 in
Europe Robo
Advisors will
globally manage
assets worth
$51.3 Bln
Internal Use Only – All Rights Reserved
12
The Privacy Concern
AI for Insurance
As many other industry sectors do or are going to do, also insurers are
applying AI technologies to get insights about their customers.
What’s distinctive about insurance, is that all forecasts show they are
going to use personal data collected using sensors, based on
technology like cars telematics, smart homes, connected wearables
and so on.
It’s going to be a realistic scenario, an health insurance that logs night
activities, consumed food, working hours, anxiety and other health risky
behaviour.
At present it’s only the minority of US citizens that is available to
exchange privacy issues, when driving or staying at home, with cost
savings or other benefits.
Source: Venturebeat, PewResearchCenter
In a 2015 survey
by PRC, the
majority of
Americans do
NOT accept
tracking of car
driving (45%) or
at home behavior
(55%)
Internal Use Only – All Rights Reserved
13
The Innovators
AI for Insurance
Conversica provides a
cloud-based artificial intelligence
platform that automates routine
business conversations in a
human way. The company's
flagship product is an automated
sales assistant that engages,
qualifies and follows-up with
sales leads via human-like, two-
way email conversations.
Whether it takes one day, a
week or even a few months, the
AI-powered sales assistant
never abandons a lead.
Insurify is a virtual insurance
agent for car insurance
shopping, helping drivers
compare insurance quotes by
messaging. The bot analyzes
millions of records, identifies
patterns, and builds models to
match to a customer's profile.
Based on these models, the
company provides a
personalized recommendation
about user coverage and choice
of carrier. Insurify's bot also
helps drivers with discounts and
advises on the best coverage
and companies for their needs.
RiskGenius Platform
supports the integration of
insurance-specific algorithms
and machine learning tools into
insurer’s policy automation
solution. The Platform
incorporates the latest in
Artificial Intelligence to structure,
categorize and deliver policy
data. The result is true policy
automation.
Internal Use Only – All Rights Reserved
14
INDEX
AI for Insurance
Usage based Insurance
Robo Advisor
On-Demand Insurance
Policies for Tech
IoT based Insurance
Social & P2P Insurance
Automated claim process
Internal Use Only – All Rights Reserved
15
Definition and Data
Usage based Insurance
Usage Based Insurance (UBI) bases the insurance premium
on the consumption of the monitored dimension. The most
advanced sector as of 2017 is automotive, where telematics
and connectivity in vehicles are enabling Pay As You Drive
business models.
Smartphone based software solutions, integrated with
embedded or portable OBD-II devices, will be the key driver for
a mass adoption of UBI.
Source: Frost & Sullivan, Allied Market ResearchInternal Use Only – All Rights Reserved
The global UBI
market is
expected to
garner $123 Bln
by 2022,
growing at a
CAGR of 36.4%
from 2016 to
2022
16
Definition and Data
Usage based Insurance
Source: Frost & Sullivan, Allied Market ResearchInternal Use Only – All Rights Reserved
In 2015 on European
and US market, UBI
let identify 15% of
claims as fraudulent,
while on board
telematics led to a
recovery of 68-80%
of stolen vehicles
UBI Consumer Awareness – Infographic
What is Usage Based Insurance (UBI) – Video
UBI by Vodafone Global Enterprise – Video
17
Automotive Insurance
Usage based Insurance
As of today, the most widespread and well known application of UBI is
in the automotive market.
Depending on the pricing model adopted, different shapes of car UBI
are Pay-As-You-Drive Insurance (PAYD), Pay-How-You-Drive
Insurance (PHYD) and Manage-How-You-Drive Insurance (MHYD).
The black box technology has the highest market share, due to its
accuracy in collecting data, while for the future the smartphone is seen
as a natural complement for its friendliness in user interaction.
Europe had the largest revenue share in usage-based insurance
market in 2015.
In Jan 2016 the 30 leading telematics brand had a total of 455.000 live
policies, with a 40% increase YoY on Dec 2014.
Source: British Insurance Brokers’ Association, Frost & Sullivan
The number of live
telematics-based
car policies,
including black box
policies, in the UK
increased by 40
percent by January
2016 over a year
earlier
Internal Use Only – All Rights Reserved
18
The reasons for a sure success
Usage based Insurance
Internal Use Only – All Rights Reserved
According to Frost & Sullivan, 6 are the
major benefits of UBI massive adoption:
Increased customer retention rate
Claims costs reduction
Recovery of stolen vehicles
Reduction of frauds in claims
Lower vehicle repair costs
Lower bodily injury costs
Source: Frost & Sullivan
19
The technologies behind
Usage based Insurance
Internal Use Only – All Rights ReservedSource: Frost & Sullivan
56% of UBI users
changed their
driving behavior
after installing
telematics in their
own car
20
Not only for cars
Usage based Insurance
Internal Use Only – All Rights Reserved
Smart Homes are a key enabler for adoption of UBI model at home
too.
A “Pay As You Drive” risk model can be applied at home insurance
providing risk coverage based on the real usage of the house, for
example during weekends or when a flat is rented on a daily base.
The “Pay How You Drive” model find its conversion in the home
environment in policies that reduce the insurance cost for owners that
regularly close doors and windows when they exit, follow a regular
maintenance program on critical appliances, switch off gas and
appliances when out of home.
Source: Frost & Sullivan
21
INDEX
AI for Insurance
Usage based Insurance
Robo Advisor
On-Demand Insurance
Policies for Tech
IoT based Insurance
Social & P2P Insurance
Automated claim process
Internal Use Only – All Rights Reserved
22
Definition and Data
Robo Advisor
Robo Advisory Services are computer generated advice
and services that, totally independent of a human
supervisor, select which investment portfolio, insurance
coverage and retirement plan are best suited for each
customer.
The driver of the choice are mainly faster and less
expensive processes, but also the awareness that
artificial intelligence algorithms are more impartial and
analytical than humans.
Source: CBInsightsInternal Use Only – All Rights Reserved
Out of 33.000
consumers in 18
countries, 74% of
them welcome a
Robo Advisor to
select the
insurance
coverage to
purchase
23
Definition and Data
Robo Advisor
Source: Accenture, CBInsightsInternal Use Only – All Rights Reserved
Robo Broker like
Clark, an European
startup, can select
the best option for
the customer
choosing among
160 different
insurance
companies
Transforming financial distribution model – Report
The Lemonade App – Video
The Robo broker Clark – Video
24
RA attractiveness for the customers
Robo Advisor
Potential or actual customers see in Robo Advisors 3 main benefits, in comparison to deal with
an insurance dealer:
Objectiveness.
AI based suggestions proposed by robo advisors are, or should be, unbiased; the perception
from the customer side is that the option proposed by RA is always the “best options for the
customer” and not for the insurance itself.
Forecast.
It’s quite simple for a machine to compare many different “what if” scenarios, built on user
specific data, to anticipate future needs and propose an action plan.
24/7/365 availability.
No more appointments at ugly hours; each customer can interact with the insurance advisor
at any time, using his/her preferred channel.
Internal Use Only – All Rights Reserved
25
Users propensity towards RA
Robo Advisor
Based on a Accenture’s 33.000 users survey in 18 countries,
consumers are open to listen Robo Advisors to identify:
Which bank account to open: 71%
Which insurance coverage to purchase: 74%
How to plan for retirement: 68%
Countries where mobile devices are used as a primary channel for
financial services show the strongest demand for Robo Advisor
services: 92% in Indonesia, 90% in Thailand, 86% in Brasil.
Anyway, also in most traditional countries, the percentage of users
demanding for RA is the majority: 56% in Canada, 59% in Germany,
61% in Australia
Source: Insurance Journal
The insurance
sector is the
most receptive
for a wide
adoption of Robo
Advisors
Internal Use Only – All Rights Reserved
26
The disruption in the Insurance sector
Robo Advisor
As of 2016, one third of users are already likely to switch to non-traditional
providers for insurance services.
Big tech players like Google, Amazon or Facebook are considered
valuable counterparts for insurance services by 29% of consumers.
57% of users are open to give access to personal data at their insurance
provider, but in exchange of more tailored services; Robo Advisors can
fully exploit these new sets of historical and real time data, whose volume
would otherwise be unmanageable by human agents.
In Western European insurers workforces, by 2025 30% of FTE employed
in operation will be consolidated or replaced by AI, while 45% is the
same figure for administrative staff.
Source: Accenture, McKinsey
Insurers have to
quickly adopt the
user interaction
model and
experiences
provided by
GAFA*
* Google Amazon Facebook Apple
Internal Use Only – All Rights Reserved
27
The Innovators
Robo Advisor
Clark allows users to assess
their insurance status through an
app (iOS and Android) or
website. Based on algorithms,
the robo-advisor provides
analysis on the customers'
insurance situation and
automatically proposes
optimization opportunities by
searching for tariffs from more
than 160 insurance companies.
In addition to providing a digital
clone of the best agent or CSR
in the agency, EchoSageallows the agency to capture the
knowledge and experience of
workers preparing to retire.
EchoSage becomes a teacher
for new staff in the independent
agency with the ability to pass
this knowledge on to the next
generation of insurance
professionals.
Lemonade AI fueled chatbot
totally automates underwriting
process, it is so streamlined that
users can open a new coverage
policy in matter of minutes. No
agents, no paper, immediate
underwriting, payment and
damage coverage activation. In
the optimal case the whole
process takes no more than 90
seconds.
Internal Use Only – All Rights Reserved
28
INDEX
AI for Insurance
Usage based Insurance
Robo Advisor
On-Demand Insurance
Policies for Tech
IoT based Insurance
Social & P2P Insurance
Automated claim process
Internal Use Only – All Rights Reserved
29
Definition and Data
On-Demand Insurance
On demand insurers are the companies, mainly Insuretechs,
specialized in covering only those risks faced at a certain moment.
Thanks to the ubiquity of the smartphones, these apps let the
user to switch on/off the insurance cover for a specific item,
having the premium calculated only on the real usage time.
Sure developed a mobile app to quickly close flight insurance to
cover risks from take-off to landing.
Trov provides an app to insure the objects that need to be insured,
in a specific circumstance.
Cuvva enables to insure a car exactly from the moment it starts
driving till it reached its destination.
Source: CBInsightsInternal Use Only – All Rights Reserved
NY startup Slice
provides damage
cover for people
renting their home on
a day by day base,
using platforms like
AirBnB and
Homeaway; in 2016
the startup raised $3.9
mln Venture Capital
30
Definition and Data
On-Demand Insurance
Source: CBInsightsInternal Use Only – All Rights Reserved
Slice Startup presentation – Video
Instant Bike Insurance – Video
Trov Startup presentation – Video
31
The Future: instant insurance with IoT and the blockchain
On-Demand Insurance
The concept of a Smart Contract in a blockchain, associated with an event or an object, would
allow for on-demand risk assessment with just-in-time underwriting and automatic coverage
(de)activation and claim detection and management:
Travel insurance: The policy can be “activated” at the time of purchase of a cruise ticket,
“de-activated” when the cruise ship docks at its final destination, and trigger a claim if the
cruise ship could not depart due to a weather event.
Pay-As-You-Stay Home Insurance: The policy can be “activated” at the time the consumer
unlocks the Wi-Fi-enabled smart home lock, “de-activated” when the house is locked, and
trigger a claim if the IoT smoke detector detects an alert.
Weather Insurance: Weather data could dynamically trigger smart contracts for crop
insurance at the right thresholds and allow farmers to be compensated for weather based
losses and enable insurers to limit fraud with lower cycle times.
Internal Use Only – All Rights ReservedSource: Insurance Innovation Reporter
32
The Innovators
On-Demand Insurance
Slice defines itself as “On-
demand insurance for the on-
demand economy “. Targeting on
line platforms like AirBnB or
Homeaway, Slice provide an on-
demand instant coverage for home
renting services. The insurance
coverage can be switched on and
off when needed, with premium
payed only for really used periods
of time. In march 2017 Slice has
completed the pay per use
rideshare app with the aim to
expand its service to the huge
carsharing market.
Sure provides an instant
insurance to cover many different
kinds of risk, for the short time of a
flight or the longer absence of a
vacation. The user interaction is
app based only and it implements
the concept of Episodic Insurance:
“a new type of on-demand
insurance protection. It is delivered
to you protection just-in-time, when
you want it, and where you want it”.
The app also embeds a Robo
Broker that uses artificial
intelligence to find the best
insurance for the specific user
need.
Cuvva enables to insure a car
exactly from the moment it starts
driving till it reached its
destination. Pricing is lower
when the car is left stationary
(parked for long times); when
the owner pick up it for driving it
switches on the insurance on
Cuvva app and switch it off
when the destination is reached.
Same kind of coverage can be
extended to a borrowed car.
Internal Use Only – All Rights Reserved
33
An Italian Innovator
On-Demand Insurance
Neosurance targets innovative
insurance companies, in a B2B
business model, using an AI
system that works with the IoT
data, capable of "learning" and
suggest the right insurance at the
right time. Risk coverage is
proposed with a “push” approach:
the system keeps an eye on the
user’s daily activities and decides if
and when an insurance coverage
could be useful for him/her. The
underwriting “process” is just a tap
on the screen of the mobile device
the user has in his hands.
Internal Use Only – All Rights Reserved
34
INDEX
AI for Insurance
Usage based Insurance
Robo Advisor
On-Demand Insurance
Policies for Tech
IoT based Insurance
Social & P2P Insurance
Automated claim process
Internal Use Only – All Rights Reserved
35
Definition and Data
Policies for Tech
Technology is a strategic asset for any kind of industry. The
failure or unavailability of any kind of tech, from software
platforms to devices, puts at high risk the continuity of the
business.
To cover such risk, insurance companies are offering
specific policies targeting any cause of failure, from software
bugs to cyberattacks, from power supply failures to
autonomous vehicle mis-behaviours.
Source: dynamic CISO, KPMG, BloombergInternal Use Only – All Rights Reserved
Cyber Insurance
market is
expected to
garner $14 Bln by
2022, registering
a CAGR of 28%
during the
forecast period
2016-2022
36
Definition and Data
Policies for Tech
Source: dynamic CISO, KPMG, BloombergInternal Use Only – All Rights Reserved
In July 2015 FCA
recalled 1.4 mln
cars because of
vulnerability to
hacking: blue
ocean for
cybercoverage
policies for
manufacturers
Hiscox Technology Insurance – Company website
Data Breach Insurance – Video
AIG Drone Policies – Video
37
Cyberinsurance against cyberattacks
Policies for Tech
While financial institutions and IT companies were among the early
adopter of cyber insurance policies, firms of many other industry
sectors have more or less ignored the threat.
Industry 4.0 is pushing a strong penetration of technology in all the
production processes and the real time connection among buyers and
suppliers.
From a security point of view, this means the explosion of the number
of possible entry points for malware and the risk of a “domino effect”
spreading among different industries.
Cyber Insurance market is expected to reach $14 Bln by 2022, with
Asia-Pacific being the top target for cyber attacks due to poor
protection among Asian companies.
Source: dynamic CISO
In 2015 there
have been 520
known cyber
attacks in APAC
region, 469 in
EMEA and 146 in
rest of the world
Internal Use Only – All Rights Reserved
38
The Insurance of Things
Policies for Tech
One negative side effect of the massive adoption of
Internet of Things, starting from our homes, is the huge
amount of personal data collected and sent to the cloud; in
the case of a severe data breach, there is no insurance
cover to protect common people from the malicious usage
of their personal data.
At present no insurance companies are providing this kind
of risk coverage to consumers, all the available policies are
for corporations that use data breach or cyber liability
insurance to protect themselves from the costs associated
with breaches.
Source: TechCrunchInternal Use Only – All Rights Reserved
39
Unmanned Aircraft Vehicles
Policies for Tech
Drones among all UAV are widely spreading among
consumers, but very few people at present are worried of
consequences of a UAV’s crash with possible injuries for
things and people.
AIG, an insurance company specialized in aircraft policies
that has 70% of world’s airlines among its customers, has
been the first to provide a drone specific insurance
coverage.
Source: TechCrunchInternal Use Only – All Rights Reserved
40
Autonomous Vehicles
Policies for Tech
Autonomous cars and vehicles more in general, are going to deeply
disrupt the insurance sector.
At present, more than 90% of car accidents are caused by drivers
errors. The technology brought by autonomous cars is substantially
reducing the human factor as a cause of accident, with an estimation of
yearly accident frequency per vehicle dropping from 0,043 in 2013 to
0,009 in 2040.
On the other side, accidents caused by bugs or fault in the technology
are not properly managed with current policies contracts, as well as car
sharing and mobility on demand are asking for totally different types of
insurance.
Source: KPMG
By 2040 the loss
costs of car
insurers will drop
from $126 Bln to
less than $60
Bln, with a
corresponding
decrease in
premiums
Internal Use Only – All Rights Reserved
41
INDEX
AI for Insurance
Usage based Insurance
Robo Advisor
On-Demand Insurance
Policies for Tech
IoT based Insurance
Social & P2P Insurance
Automated claim process
Internal Use Only – All Rights Reserved
42
Definition and Data
IoT based Insurance
Internet of Things is going to be a “game changer” for
insurance sector.
IoT offers unprecedented data streams that can be
exploited from insurers:
wearable tech to monitor health conditions
location based sensors measuring every dimension from
temperature to physical presence to plant variables
sensors on objects from personal vehicles to shipped
containers
GIS that control in real time environmental conditions.
APAC is the region with the fastest growing market.
Source: EY, Deloitte, MarketsandMarkets, Frost & SullivanInternal Use Only – All Rights Reserved
According to a F&S
Survey, 51% of
insurers are still in
the “watch and
learn” phase, while
only 22% of them
have “IoT embedded
in core services and
products”
43
Definition and Data
IoT based Insurance
Source: EY, Deloitte, MarketsandMarkets, Frost & SullivanInternal Use Only – All Rights Reserved
Insurance IoT Planned Usage – Infographic
Neos tech-based Home Insurance – Video
IoT in Personal Insurance – Video
44
Technology is the foundation
IoT based Insurance
IoT technology in insurance sector is the foundation for new ways to
provide insurance coverage in traditional sectors.
Through massive adoption of IoT, not only Usage Based Insurance
(UBI) can be widespread adopted out of automotive boundaries, but
also a better customer service can be provided:
Risk monitoring through home connected alarms
Home UBI based on presence sensors
Wearable devices to track if lifestyle is healthy or not
Drone based remote damages estimation for car accidents and
natural events
Dental insurance based on regular usage of smart toothbrush
Source: MarketsandMarkets, Internetofbusiness
The global IoT
insurance market
is estimated to
be worth USD
42.76 billion by
2022, growing at
a CAGR of
65.89% between
2016 and 2022
Internal Use Only – All Rights Reserved
45
Three dimensions of IoT impact on Insurance
IoT based Insurance
Mitigating Insurance Risk.
With historical and real time data collected by sensors, insurers can
have a much wider understanding of the real characteristics of the
asset for which coverage is required and when and how that asset is
used by the policyholder.
New Business Models.
Usage Based Insurance is the most well known sample of this, as well
as new claims processing based on automatic detection of loss or
damage event.
Loss Reduction with Preventive Maintenance.
Insurers can keep track of all warning signals sent by IoT devices and
suggest to the policyholder preventive actions in order to avoid a fault
or minimize the impact of an event.
Source: Pegasystems
IoT connected
leak sensors and
smoke detectors
can reduce water
and fire damage
risk by 70%
Internal Use Only – All Rights Reserved
46
The market’s situation
IoT based Insurance
Internal Use Only – All Rights ReservedSource: EY
According to a EY survey, the insurance
sector is still underestimating the impact of
IoT adoption and it is therefore behind other
companies in using customer insights to
provide new kind of services.
The situation is anyway changing, at least in
terms of declared interest in adopting IoT to
develop new products.
47
Many Insurer Companies are investing in IoT startups
IoT based Insurance
Internal Use Only – All Rights ReservedSource: CBinsights
48
The Innovators
IoT based Insurance
Metromile Pulse offers ODB2 port
to wirelessly transmit data to the smart
driving app, claims to save $500 each
year. From the app, drivers can then
access insights to personalized driving
trends and diagnostics – providing a
more informed and connected
experience. Those not ready to switch
insurance providers can access the
Metromile App in beta and receive
many of the same features that
insurance customers enjoy. In 2016
Metromile raised $50 mln in a
Corporate Minority round, for a total
funding of $205.5 mln.
Source: CBInsights
Beam Dental is pricing dental
insurance around smart toothbrush:
it provides a smart toothbrush to
every customer and monitors their
oral health, as well as using this
information to support a dental
insurance plan. It sends the
customer notices and
encouragement if their brushing
habits are falling short of the
required standard, and hopes this
will result in improved dental
hygiene and reduced premiums.
Erie Insurance has started using a
drone to assist with a property damage
claim. In 2015, for the first time, ERIE
used a drone used to inspect the roof of
a customer's home after it had been
repaired following ice dam damage last
winter. ERIE then used the drone for a
second, unrelated claim that involved a
tree falling on a neighboring house.
ERIE used the drone to capture detailed
aerial images of the roof damage and
compare it to the adjuster's original
photos after the tree had been removed.
Internal Use Only – All Rights Reserved
49
The sinergy with Artificial Intelligence
IoT based Insurance
IBM is specializing Watson to provide customer insights for insurance
sector.
Merging data coming from home, car, wearables and other sources,
insurer can have an holistic approach in analyzing behaviour of each
customer, cutting the policy coverage on his/her own profile.
Using advanced analytics it’s possible to have real time monitoring of
customers, detecting in advance risky situations and therefore
sending feedback to the user in order to change his behaviour.
Internal Use Only – All Rights ReservedSource: IBM
50
INDEX
AI for Insurance
Usage based Insurance
Robo Advisor
On-Demand Insurance
Policies for Tech
IoT based Insurance
Social & P2P Insurance
Automated claim process
Internal Use Only – All Rights Reserved
51
Definition and Data
Social & P2P Insurance
Currently manned by disruptive startups, peer-to-peer insurance
leverage a shared insurance experience.
Peer groups, such as owners of autos, houses and small
businesses, team up to absorb each other’s risks, with
everyone contributing money to insure each other’s losses.
If the premiums pool has significant balance at the end of the
year, subscribers with no claims can receive refunds or discount
for the next year; in some cases the balance surplus is donated
to charity organizations.
The key driver is that all P2P insurances challenge the
conflict dynamic between policyholders and insurer, where
neither party trusts the other.
Source: CBInsights, StatistaInternal Use Only – All Rights Reserved
In 2017, 7% of US
customers (4% in
UK) already have
a P2P insurance,
while 30% (25%
in UK) would
consider it
52
Definition and Data
Social & P2P Insurance
Source: CBInsights, StatistaInternal Use Only – All Rights Reserved
In 2016 three P2P
insurance
startups got
$62.3 mln
Venture CapitalThe Tribe Chain – Video
The Friendsurance Startup – Video
P2P Insurance on Blockchain – Video
53
The Innovators
Social & P2P Insurance
Friendsurance has implemented
the concept of a online peer-to-peer
insurance, which combines social
networks with well established
insurance companies. Customers can
connect to form individual insurance-
networks, thereby lowering their
annual insurance premiums by up to
50%. It rewards small groups of users
with a cash-back bonus at the end of
each year they remain claimless. In
2013 more than 90% of those who
used Friendsurance's method
received at least a portion of their
premiums back.
Otherwise platform gathers people
with a common need for coverage in a
brand new way. Using behavioral
analysis, with the support of community
management and machine learning,
Otherwise enables members to
drastically reduce their overall cost of
insurance: the key element is to identify
another group of people, within
Otherwise’s communities, that share the
same interests. Customized groups can
be built for already existing
organizations, like a school or a club.
The quote for an annual subscription is
calculated in less than 120 seconds.
Wecover developed an
automobile insurance solution
based on a collaborative model. It
will allow good drivers to come
together according to their lifestyle
(young parents, regular carpooling,
etc.) in order to benefit from an
incentive system based on their
community.The Bonus eventually
payed to the policyholder depends
on the sinistrality of the specific
community joined by the user.
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54
The Innovators
Social & P2P Insurance
insPeer is the first insurance
dedicated to drivers of electric
vehicle. Battery rental and a total
assistance in case of a road accident
are included in the policy.Also
insPeer wants to leverage on the
community feeling among the
participants to a group. In case of no
claims, a portion of the payed
premium is returned to the
policyholder at the end of the year.
Guevara provides an online peer-to-peer platform for groups of people to
insure their cars together.
How it works:
The amount the user pays when he first join Guevara is called the Base
Price. It’s worked out using all the regular insurance criteria such as age,
car, location and experience.
The user then joins a group with other drivers. When he buys the policy,
part of the money goes towards the group’s insurance fees, the rest goes
into his group’s pool.
The pool is then used to pay for any claims throughout the year. If the
money runs out, we use the group’s insurance fees to cover anything
extra.
Any money left stays in the pool for the following year. The user just pays
to top it back up again, plus the insurance fees.
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55
A social experiment: Teambrella
Social & P2P Insurance
Teambrella strategy is to target tech savvy consumers
who will be more comfortable with the use of Bitcoin
and social media.
The concept is to form customer teams with large
numbers (not just friends and families). Teams are self-
governing user communities. A team consists of peers
(teammates) that collectively manage all insurance
functions, such as setting of policy rules, accepting new
members, making and approving claims,
reimbursements. Any person can create a team and
define its initial set of rules. Insurance is activated once
a minimal number of peers join the team (two by
default) and fund their distributed wallets.
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56
INDEX
AI for Insurance
Usage based Insurance
Robo Advisor
On-Demand Insurance
Policies for Tech
IoT based Insurance
Social & P2P Insurance
Automated claim process
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57
Definition and Data
Automated claim process
The automation of claim process is pushed by 4 main drivers:
IoT at factory/home sites and onboard of vehicles
real time social media information to get a severity level and
prevent fraud
onboard sensors for automated checkup and damage
diagnosis
drones for remote controlled video inspections.
Rule based process can handle the claim in matter of minutes
rather than days or weeks, with no intervention of a human
supervisor to get final approval for refund.
Source: Gartner, EYInternal Use Only – All Rights Reserved
85% of US
customers will
manage
relationships
with businesses
without human
interaction by
2020
58
Definition and Data
Automated claim process
Internal Use Only – All Rights Reserved
AIG Claims Automation – Video
Lemonade Claims Business Model – Video
Healthcare Claims Automation – Video
59
Volumes: Up and Down
Automated claim process
Thanks to connected and autonomous vehicles, car insurance is facing a constant
reduction in number and severity of claims
39.2% decrease in total reported road accident fatalities and casualties
between 1994 and 2014 in the UK
20% decrease in likelihood that customers aged 17-25 with telematics will have
an accident
At the same time, climate change is putting under pressure the risk models used
by natural disasters insurers, because weather-related severe events are
increasing in frequency and wide spreading
$380 Bln is the total economic damage from natural disasters in 2011
Source: EYInternal Use Only – All Rights Reserved
60
Massive penetration of Technology will change the game rules
Automated claim process
Everywhere sensors (IoT) will provide real time data to:
Prevent incidents (smart homes and connected cars) and therefore
reduce claims number and severity
Feed risk management platforms with tons of unprecedented data,
to develop new models and fine tune existing ones
Make remote diagnosis avoiding the cost and time of people
performing on site damage inspections
In case an on site inspection is still needed, massive use of drones
can provide visual information in behalf of humans
Source: EY
2.7 mln drones
will be used in
commercial
activities by
2020, up from
600k in 2016
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61
Massive penetration of Technology will change the game rules
Automated claim process
Artificial Intelligence is enabling an increasing automation of the claim
process:
Social media are analysed to prevent fraud and accurately define
the severity of mass damage events
Robo agents will manage all the interaction with the customers,
taking the decision to settle the claim based on estimated damage
amount and fraud indicators analysis
Natural Language Processing and Semantic Analysis can manage
the transitory phase in which both full automated claims and paper
based process coexist
Source: EY
20 mln tweets
sent during the
peak of
Hurricane Sandy
have been used
to track storm
trajectory and
damages
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62
Robotic Process Automation
Automated claim process
Source: Deloitte, Frost & Sullivan
Robotic Process Automation (RPA) is a turnkey solution for companies
that can not or don’t want to change existing processes, based on
heavy manual intervention for each claim.
While it is not going to change the user experience or support new
business models, RPA gives a significant contribution in terms of cost
savings and response times.
In the US alone,
$12 billion/year
could be
saved by efficient
claims
processing
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63
The Innovators
Automated claim process
Tractable builds artificial
intelligence systems for
automation, with a technological
focus on deep learning for
computer vision. It is developing
a patent-pending solution to
automate visual recognition
tasks that currently require
human expertise. In insurance
realm it evaluates a car damage
based on pictures sent by
policyholder, taking a decision
on how to solve the claim.
Shift has developed a
software-as-a-service (SaaS)
platform designed to detect
potential insurance fraud. The
company's software uses
mathematical modelling and
algorithms to detect fraudulent
behavior while analyzing on
going claims.
Lemonade is a property and
casualty insurance company that
rely on a totally new business
model based on a fixed fee.
While its female chatbot
manages the whole policy
underwriting, with its second bot,
a male, it has totally automated
the claim process, reducing it
from days to minutes, with an
almost instant payment at the
end of the claim submission.
Internal Use Only – All Rights Reserved
64
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