IoT is a terrific opportunity for the insurance sector. But the average understanding of this opportunity in the different markets is low, and it is common to hear superficial comments by analysts in the various markets. Let's demystify some myths!

1. June 11th 2018
Insurance IoT is about Value Sharing
Matteo Carbone
Founder and Director, IoT Insurance Observatory
@mcins_

2. 2
Why have we to talk about insurance innovation?
Insurance is about protecting the way people live
Since 1347 Insurance has been a contract
where someone promises to indemnify another
against loss or damage from am uncertain event
as long as premium is paid to obtain this coverage
Insurtech can make the insurance sector stronger and therefore more
capable of achieving its strategic goal: to protect the way people live!
How can
InsurTech
help do
this?

3. 3
All the insurance players will be InsurTech
It’s unthinkable for an insurance
company today not to pose the question of
how to evolve its own model by thinking of
which modules within their value chain
should be transformed or reinvented
via technology and data usage
I believe all the players in the
insurance arena will be InsurTech,
meaning organizations where technology
will prevail as the key enabler of the
achievement of their strategic goals

4. 4
Assessing, managing and transferring risks are the core activities
of an Insurer
Insurtech is the “superpower”
for assessing, managing and transferring risks

5. 5
I love insurance
Matteo Carbone
InsurTech Investor and co-funder
• I’ve co-funded Archimede Spac (Special
Purpose Acquisition Company)
• The company has the objective to set-up of the
first Insurtech Insurance Carrier of the Italian
market
- a new independent carrier for non-life
non-motor bancassurance
- characterized by an “InsurTech inside”
strategic mode
• Listed since May 21st

6. 6
I love insurance
Matteo Carbone
InsurTech Investor and co-funder
Founder and Director of the IoT
Insurance Observatory
+11 years strategic consulting
(former Principal with Bain & co.)
Keynote speaker and writer on
insurance innovation
Global InsurTech Influencer
• This Insurance think tank has aggregated more
than 40 international insurance groups,
institutions and tech firms between Europe and
North America
• The initiative has three concrete outcomes:
‒ The most pragmatic multiclient research
specialized in the insurance IoT domain
‒ One-to-one workshops dedicated to each
member to discuss research outcomes
‒ Plenary symposiums with all the members
together around the same table
I’m helping incumbents to concretely address the IoT opportunity

7. 7
The most pragmatic
multiclient research
specialized in the
insurance IoT domain
One-to-one workshops
dedicated to each member
to discuss the research
outcomes
Plenary symposiums
with all the members
together around the
same table
I have created a think tank which provides the members access
to the most relevant insurance IoT knowledge globally

8. 8
My experience on IoT insurance
Organization
In the past 6 years,
I advised more than 90 organizations
(Insurer, Reinsurers, Brokers, Vendors, and
Investors) in more than 15 different
countries
on IoT insurance projects
90
Market share
I’ve worked directly with players accounting for
more than 80% of IoT insurance volumes
(number of policies on auto telematics, smart
home, and connected health)
+80%
6 +800
+80 Conferences
I have debated the insurance IoT
opportunity at more than 80
conferences around the word since
December 2015
Papers
I have produced 6 white papers on
Insurance IoT, which have been
co-authored with prestigious
international organizations
(3 are to be published in the
following months)
Hours
More than 800 hours discussing
concrete experiences, best
practices and pitfalls with the
executives of the organization
members of the Observatory

9. 9
Typical sentences I have heard at those conferences
IoT Insurance is all
about pricing
(usage based,
dynamic, …)
Customers don’t want
to share data with us
It’s is impossible
for an insurer to
charge fees to
customers for
services
To make insurance
IoT work insurers
need to find an
agreement with
those who have
customer relation
Converting IoT data
into actionable
insights is still a
wish… we are not
yet ready to do
smart actions
Blockchain will make a big
difference
By 2020 the insurance IoT market is
going to grow exponentially
The increased
policyholder
engagement is
enough to justifying
our IoT investments
If we reduce risks
through
prevention and
mitigation, our
top line will shirk

10. 10
Will Insurers be relevant in this kind of future? ILLUSTRATIVE
Supermarket
Relevance
Frequency
Hair dresser
Telecom operator
Traditional insurer Insurance Iot
Doctor
Dentist
Social media
Real estate agent
Notary
Search engine
Bank
Credit card provider
Irrelevancy is only a choice for an Insurer, not his inevitable destiny!
Insurance IoT is
about connecting the
insurance sector with
clients and their risks
Lower risks to
cover, invisible
insurance ancillary
to a product
purchase, …)

11. 11
IoT is an incredible opportunity for the insurance sector
IoT improves insurance profit & loss and allows insurers to
share part of this value with the customer in order to
deliver superior value propositions
It enhances proximity and interaction frequency with the
customer while creating new customer experience,
increasing retention, and expanding relationships
Value
creation
Interaction
frequency
2
1

12. 12
Each Insurer can create and sell his own insurance IoT value
proposition: insurance contract + IoT data + services
The Insurance players have a unique competitive
advantage vs any other IoT players:
• Because the same data used to deliver services allows to
improve the insurance activity (assess, manage and transfer
risks)
• This way IoT allows to create value on the insurance P&L
• This value can be shared with the client creating a valuable
bundle between insurance coverages and IoT solutions
Value sharing
Connected
insurance
pardigm
The bigger the difference between insurance premium and service
cost, the higher the potential of the insurance IoT approach

13. 13
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
SERVICES…
• …based on sensor data to deliver enlarged value propositions
for the clients orchestrating an ecosystem of partners
• …concerning information about insurance coverage and
insured risks

14. 14
Earned additional service fees
A home insurance
product with an
additional annual fee for
professional safety and
security services (and
devices rental),
REAL CASE
Safety/Security
oRemote monitoring
and emergency
services to provide
peace-of-mind
Property services
oConcierge with a
platform of certified
services providers to
manage the house:
‒Home maintenance
‒Home services
(cleaning, gardening,
ironing …)
Solar panel
Lighting
Intrusion
alarm
Heating/
cooling
Thermostat
Flower
control
Computers &
electronics
Mould detector
Camera
Refrigerator
and freezer
Fire detection
Camera
Lock
Electric meter
Vacuum
cleaner
Washing
machine
Heat
exchanger
integrated with optional
property services offered
“a la carte” by an
ecosystem of partners

15. 15
The value creation framework
Traditional
bottom line
Hardware
Services
IoT
costs
Service
fees paid
by the
customer
Contribution
of partners

16. 16
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
RISK SELECTION:
• Low-risk customer acquisition due to the storytelling
of the IoT insurance product
• Improved quality of underwriting process based on
sensors data (including constant insights on exposure)
• Increased underwriting process efficiency
SERVICES…
• …based on sensor data to deliver enlarged value propositions
for the clients orchestrating an ecosystem of partners
• …concerning information about insurance coverage and
insured risks

17. 17
Self-selected risks due to product features
An auto telematics
value proposition
focused on the
claims monitoring
has a terrific effect
on the acquisition of
low risk clients
Market
average
(20%)
Claims frequency (district average)
Black box effect
on
claims frequency
(risk adjusted)
Black box impact by district
Market
average
-20%
3.0 6.0 6.5%Market
average
4,8%
4.5
REAL CASE
Even if two customers seem to
be equal based on their
characteristics. The one who
accepts the telematics value
proposition is 20% less risky

18. 18
The value creation framework
Traditional
bottom line
Risk self
selection
Service
fees paid
by the
customer
Partners
contribution
Hardware
Services
IoT
costs

19. 19
RISK SELECTION:
• Low-risk customer acquisition due to the storytelling
of the IoT insurance product
• Improved quality of underwriting process based on
sensors data (including constant insights on exposure)
• Increased underwriting process efficiency
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
LOSS CONTROL
• Usage of the device information in order to anticipate claims
management and improve reimbursement valuation
• Initiatives acting directly in real-time on single situations to:
-mitigate risks before damages occur
-contain damages
• LAE reductions
• More accurate reserving
SERVICES…
• …based on sensor data to deliver enlarged value propositions
for the clients orchestrating an ecosystem of partners
• …concerning information about insurance coverage and
insured risks

20. 20
Enhanced the effectiveness of the claim evaluation
and the efficiency of the claim process
Crash dynamics reconstructed
through telematics data are
represented “near real time”
to the claim handlers on their
desktops
Photo credit: UnipolSai
REAL CASE

21. 21
The value creation framework
Traditional
bottom line
Risk self
selection
Claims cost
reduction
Service
fees paid
by the
customer
Partners
contribution
Hardware
Services
IoT
costs

22. 22
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
RISK SELECTION:
• Low-risk customer acquisition due to the storytelling
of the IoT insurance product
• Improved quality of underwriting process based on
sensors data (including constant insights on exposure)
• Increased underwriting process efficiency
BEHAVIORAL CHANGE
• Indirect impact on risk level through:
-positive behavior reinforcement
(including gamification)
-culture creation
• Loyalty systems based on detected
behaviors (retention of low risk clients)
LOSS CONTROL
• Usage of the device information in order to anticipate claims
management and improve reimbursement valuation
• Initiatives acting directly in real-time on single situations to:
-mitigate risks before damages occur
-contain damages
• LAE reductions
• More accurate reserving
SERVICES…
• …based on sensor data to deliver enlarged value propositions
for the clients orchestrating an ecosystem of partners
• …concerning information about insurance coverage and
insured risks

23. 23
Nudged clients to less risky behavior
Instant rewards to
life policyholders
for performed
healthy behaviors
REAL CASE

24. 24
The value creation framework
Traditional
bottom line
Risk self
selection
Claims cost
reduction
Service
fees paid
by the
customer
Change
of behavior
Partners
contribution
Hardware
Services
IoT
costs

25. 25
RISK SELECTION:
• Low-risk customer acquisition due to the storytelling
of the IoT insurance product
• Improved quality of underwriting process based on
sensors data (including constant insights on exposure)
• Increased underwriting process efficiency
RISK-BASED PRICING
• More accurate rating: based
on measured "quantity"
and "level" of risk exposure
• Value propositions more
attractive to the customers
BEHAVIORAL CHANGE
• Indirect impact on risk level through:
-positive behavior reinforcement
(including gamification)
-culture creation
• Loyalty systems based on detected
behaviors (retention of low risk clients)
LOSS CONTROL
• Usage of the device information in order to anticipate claims
management and improve reimbursement valuation
• Initiatives acting directly in real-time on single situations to:
-mitigate risks before damages occur
-contain damages
• LAE reductions
• More accurate reserving
Value
Creation
Levers
IoT data can have a extraordinary impact on the way
you assess, manage and transfer risks
SERVICES…
• …based on sensor data to deliver enlarged value propositions
for the clients orchestrating an ecosystem of partners
• …concerning information about insurance coverage and
insured risks

26. 26
Minimizing the premium leakage
12.00
24.00
20.00
6.00
A cheap telematics auto
insurance for teenagers,
eventual night hour driving
charged on top on their
credit card by km
REAL CASE

27. 27
The value creation framework
Incentives and discounts are ways of sharing with the customer part of the
value created in order to deliver superior value propositions
Traditional
bottom line
Risk self
selection
Claims cost
reduction
Service
fees paid
by the
customer
Bottom line
with IoT
Discount
and
incentives
to the
costumer
Value
sharing
Intermediary
additional
remuneration
Change
of behavior
Partners
contribution
More
accurate
pricing
Hardware
Services
IoT
costs

28. 28
IoT is an incredible opportunity for the insurance sector
IoT improves insurance profit & loss and allows insurers to
share part of this value with the customer in order in order
to deliver superior value propositions
It enhances proximity and interaction frequency with the
customer while creating new customer experience,
increasing retention, and expanding relationships
These approaches create and consolidate knowledge about
risks and the customer base which will lead to the next
generation of products, but also enable further data
monetization opportunities through the creation of ecosystems
Value
creation
Interaction
frequency
Knowledge
creation
2
1
3
Insurance IoT enables a new virtuous role for Insurers by
providing positive externalities for a more sustainable
society
Sustainability4

29. 29
Who is the most reliable player for providing a bundle of an
insurance contract and services?
You are the most reliable player for providing a bundle of
insurance coverages and services !
Source: SSI survey for the IoT Insurance Observatory, European markets (Italy, France, UK, Germany, Spain, Austria)
Auto telematics insurance
(insurance coverage + services)
IoT home insurance
(insurance coverage + services)
5%All the
customers:
Millennials: 8%
4%
7%
65% 54%
49%59%

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I believe (some) insurers will succeed in the IoT war and they
will stay relevant in the life of their clients
These insurers will create their insurance IoT proposition:
insurance contract + IoT data + services
Photo credit: Jay Byers

31. 31
I’m supporting this evolution through the Observatory
Objectives
Scouting and rationalizing
qualitative/quantitative
knowledge on Insurance IoT
Sharing a critical point of view of
key trends and spreading
innovation culture
Encouraging members to discuss
experiences and exchange ideas
about innovation
The scope
Any insurance solution based on sensors for collecting data on the state of an insured
risk and telematics for remote transmission and management of the data collected
Health
and life
Industrial risks and
workers’ comp
Auto… Home and
commercial property

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I’m extremely proud to serve these 41 Prestigious Organizations
with the North American and Europen IoT insurance Observatories
To join the Observatory feel free to write to matteo.carbone@iotinsobs.com