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| Date post: | 07-Jan-2017 |
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Business |
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Entrepreneur, Actuary, PhD with passion for innovation
Studies: - Master in Mathematics and Master in Statistics –
CSWU Warsaw & KULeuven - PhD in Applied Economics at VUB,
PhD in Applied Mathematics at ULB supervised by prof.Vanduffel
Career: - Actuary with 7+ years of experience in financial industry - Entrepreneur – disrupting insurance industry - Activist – Chairman of IABE Big Data WG
Insurance is the main way for businesses and individuals to reduce
the financial impact of a risk occurring.
Insurance companies sell protection against risk and cultivate risk-
averse culture that reduces incentives to take additional risks and
innovate.
What is insurance?
What is innovation?
Innovation is the development of new ideas and their economic
applications as new products or processes.
An innovation increases profits:
- on the value side (creates additional value for which customers
pay more)
- on the cost side (more efficient production)
What is innovation?
What is innovation?
Product (iPhone, pampers, credit default swaps, … )
Process (lean manufacturing, …)
Service (Mobile Vikings, Uber, ZipCar, Airbnb, …)
Business model (SaaS, Apple, …)
Value (Kinepolis megaplex model, …)
Market (Mobile Vikings, McDonald, ...)
Type of innovations
What is innovation?
The right environment
- Give people the space to think and grow. They need time to read, reflect and share
ideas with others
- Make sure that mechanisms exist which allow both organizational and peer
recognition for excellence
- Help, guide and empower people by removing any real or perceived barriers
- Take personal risks, because in large and bureaucratic organizations it is often more
productive to ask forgiveness than permission
Innovation = risk
Insurance & Innovation interplay
What is Big Data?
Internet of Things
What is Big Data?
What is Big Data?
What is innovation?
Insurance has often acted as a spur for innovation, but the industry
itself has been rather sheltered from disruptive forces.
True? Insurance has a tremendous track record of innovation,
including for instance mortality tables developed by British 18th
century mathematician dr. Richard Price.
Is insurance sector ready to innovate?
Lloyd's is the world's specialist insurance market. Unlike many other
insurance brands, Lloyd's is not a company; it's a market where
members join together to insure risks.
Lloyd’s has a tremendous track record in insurance product
innovation including the first Earthquake cover, the first cover for
cars and planes and the first satellite cover.
Lloyd’s
What is innovation?
India has 800 million people who carry a cell phone.
In Africa, there are an estimated 735 million mobile phones.
In India and Africa insurers managed to transform its business to mobile phone
based, simplify it and dramatically increase the availability of insurance.
Interestingly, in the US with widespread internet access and ubiquitous apps,
insurers are still figuring out how to best benefit from digital technology.
Digital technology
Big data is a term for data sets that are so large or complex that
traditional data processing applications are inadequate. (Wikipedia)
It can replace underwriting expertise when it comes to less complex
risks like in case of: - car insurance: 20% of the UK motor market is written online based on pre-
programmed rules. With advent of self-driving car it might dissaper
- natural catastrophe insurance: the complex wind models combined with
granular property data make the underwriter obsolete.
Big Data
What is Big Data? Big Data Eric Schmidt, CEO of Google, 2011 “There was 5 exabytes of informa4on created between the dawn of civiliza4on through 2003, but that much informa4on is now created every 2 days, and the pace is increasing.”
But not only the size ma0ers !!!
Not only size matters
Volume data at rest
Terabytes of existing
data to process
Velocity data in motion
Streaming data
mileseconds to respond
Variety data in many forms
Structured, unstructured,
different sources
Veracity data in doubt
Uncertainty due to
data incompleteness, ambiguity,
model approx., etc
Car insurance & telematics
Car insurance pricing
Car insurance pricing Rating trends
1980s Now
Profession
Engine power
Coverage
Bonus-malus
Coverage
Bonus-malus
Claims history
Traffic violation
history
Age of vehicle
Use of vehicle
Make of vehicle
Purchase price
Parking place
Occupation
No. of drivers
Age of drivers
Maritial status
Real estate
Driving license
Mileage
Registered owner
Credit rating
…
Do we need additional factors? Is telematics necessary?
Univariate
basis
Risk
modelling
Technical
premium
modelling
Scenario
testing
Price
optimisation
Extra data
sources
Telematics
data?
Car insurance pricing Rating trends
UBI is the scheme where insurance premiums are
calculated based on dynamic causal data, including
actual usage and riskier driving behavior.
Car insurance pricing Usage-Based Insurance
• New rating factors allowing flexible, dynamic and robust risk
pricing;
• Improved claims processes and claims ratio
• Better, personalized insurance offer and value added
services;
• Escape treadmill of commoditization and discount pricing.
Car insurance pricing Usage-Based Insurance benefits
Car Insurance Tesco group – UK
Motor – 1M Pet – 0.45M Travel - 0.175M Life – 0.175M Home – 0.4M
• Insurance prevention program with discounts and rewards for good
driving
• ‘Phased’ approach: • Phase 1: combine data from different sources i.e. traditional channels, online channels,
external service providers, Tesco group warehouses;
• Phase 2: Identify the right customers within Tesco network;
• Phase 3: Provide initial offer and reward drivers with initial rewards from Tesco group;
• Phase 4: Iterate and provide personalized insurance offers.
Car Insurance making insurance sexy
Car Insurance examples
Full UBI – niche market segments
Motor insurance telema;cs – mass market
Works well with niche segments: • Young drivers • People living in risky regions • Low-‐mileage drivers
Insure the Box, UK New disrup=ve model for low-‐mileage drivers with prepaid miles (similar to prepaid mobile. No punishment for bad driving. Self-‐selec=on + individualized premiums.
Progressive, US “Prince of pricing” with MyRate (pricing variable innova=on) & Snapshot (1st telema=cs-‐based insurance) offers Self selec=on & individualized insurance premiums
Intesa SanPaulo Assicura, IT Telema=cs play key posi=on – car, bike home Created viable risk-‐based pricing model with phased approach for Viaggia con me: Phase 1 (tradi=onal variables), Phase 2 (Banking parameters), Phase 3 (Purchase and use variables), Phase 4 (Behaviour variables)
Car Insurance initiatives in Belgium
P&V Go Box AXA driveXperience Ethias Young Drivers
Corona Caro app
In partnership with:
The platform 1. Analytics
SMART ANALYTICS DDP works one on one with the driver by harvesting driving style data and driving risk information, and generating private, personalized feedback.
CONTEXTUALIZED SCORING Private, driver-controlled data on daily driving habits.
It’s based on driving behavior, car use, road safety and distraction with driving dynamics patterns.
Insurance risk index takes into account driving exposure and context that is translated into a single index that reflects accident probability and can be used by insurance companies, leasing, fleets and road safety organizations.
The platform 2. Feedback
IT’S PERSONAL Private & personalized feedback to immediately improve driving.
Like a personal driving coach.
IT’S EFFICIENT It addresses any target group. Drivers get smart incentives, and world-class engagement tools to become better drivers.
IT’S FUN Game design elements including challenges, badges and points to teach, engage and motivate drivers.
A friendly competition to stimulate drivers to reach their goals, engage them in a fun way, and improve their experience.
The platform 3. Community
DDP is the best way people experience full-on engagement and collectively improve road safety …
... IN PRIVATE LIFE Connect with friends. Share personal driving experience.
Benefit from the community.
... AT WORK Young employees can work & socialize at the same time.
Encourage employees engagement through social connections.
The platform 4. Rewards
SAFE DRIVING = BENEFITS Unlock the value of the new safer driving habits.
NO MATTER WHICH BUSINESSES Receive benefits and get personalized offers from services available inside & outside the automotive ecosystem.
LOYALTY PLATFORM Receive community driven marketing campaign. Start a long-term interaction based on values and loyalty.
