This presentation talks about ‘Technology Innovation Trends In Insurance’. This covers seven themes that are reshaping supply & demand of #insurance globally, premium & profit pools are migrating across the #insurance value chain. Explains how value creation opportunities are different across mature & developing markets, how #technology & digital capabilities that target value chain effectiveness (not just scale efficiencies) offer compelling #investment opportunities. Also has #InsurTech levers and start-up examples in non-life insurance and life insurance.

1. Technology Innovation Trends
in Insurance
Navdeep Arora
8 April 2020

2. 1. Growing expectations & demands from customers (value, omni-channel) and regulators (solvency)
2. Emerging risks & developing markets necessitating digital architecture and solutions
3. Downward pressure on pricing from excess underwriting capacity (alternative capital) and decreasing demand for traditional
reinsurance; shift in focus from ‘protection’ to ‘risk prevention, mitigation and diversification’
4. Improved transparency of data on the buyer & seller side, stressing current distribution & broking models, especially in
mature markets
5. External data, contextual intelligence & sensory feeds becoming more ‘predictive’ than historical loss data, and enabling
personalisation of insurance
6. Ability to manage high velocity transactions and delivering at customer moments of truth becoming source of competitive
advantage as lines of business (life, health, P&C) disappear; cross-sector partnerships, non-native capabilities and flexible
technology architecture emerging as ‘table-stakes’
7. Large scale migration of premium & profit pools across the value chain, customer segments, products & sectors
7 themes are reshaping supply & demand of insurance globally

3. Aggregators / Price
comparison
Traditional Brokers/
Agents
MGAs/ Digital MGAs
Reinsurers
Insurers
 Commoditising in mature markets as incumbents are building their own price comparison and
direct capabilities.
 Growth opportunity for nascent and developing markets
Online Brokers
 Traditional brokers are losing business, commissions, and margins, especially in mature lines of
business such as property and liability, as well as geographies
 Technology and digital capabilities are enabling MGAs to carve our new underwriting classes, go
direct, and take on more risk on their balance sheets; Growing numbers in mature markets; Not
yet a large phenomenon in developing markets but expected to grow
 Continuing downward pressure on pricing and margins in standard lines of business, while unmet
and under-met risk needs offer growth potential
 Reinsurance rates have declined for 18 consecutive quarters, as alternative capital continues to
grow, and premiums ceded fall
 Online brokers are carving out new ‘direct to consumer’ capabilities in personal as well as
commercial lines, especially SME (Insureon, Simply Business, etc)
Premium & profit pools are migrating across the insurance value chain

4. Value creation opportunities are different across mature & developing markets
Mature
markets
Developing
markets
Mature
markets
Developing
markets
0.5 to 1 %
8 to 30%
0 to 20%
60 to 70%
Premium share
(aggregated %
per $ of premium)
15 to 20 %
30 to 50 %
18 to 25 %
10 to 15 %
8 to 12 %
Profitability
Margins
TrendsTrends
Aggregators / Price
comparison
Traditional Brokers/
Agents
MGAs/ Digital MGAs
Reinsurers
Insurers
Online Brokers

5. Technology & digital capabilities that target value chain effectiveness (not
just scale efficiencies) offer compelling investment opportunities
Non Life Insurance (Medical, P&C)
P&C Valuation Cash flow to
equity
Net income
Long term grow
Cost of equity
Capital required
(Capital/NPE)
C
UW results
Investments
results
AUM (Invested/asset/NEP)
Investment Yield
Volume
(NPE)
B
Profitability
(1-COR)
A
LAE
Expense ratio
Distribution
Penetration
UW and pricing
Reinsurance &
Cap mgt
Acquisition,
retention &
servicing
5
6
7
3
4
Indemnity
Lost ratio
1
2

6. InsurTech levers and start-up examples in non-life Insurance (1/2)
→ Empowering the customer to self
manage their claims experience
→ Delivering on the claims promise, leading
to fair and accurate claims payments,
lower cost of claims & higher customer
NPS scores
→ Satellite and UAV imagery for CAT
and large loss claims
→ Automated claims settlement and
payment through distributed networks
Profitability
A
Volume
B
Capital
C
Indemity
1
LAE
2
Distribution
3
Penetration
4
→ AI/ML to review submissions & recommend
new business/cross sell prospects
→ Micro-insurance distribution and servicing
→ 360 degree sales funnel optimisation
→ Robo-broking
→ Customer acquisition and conversion
optimisation through social media data
AI
→ Customer journey analytics
→ Improving customer acquisition through
digital asset catalogues
Driver InsurTech levers Potential impact Examples
→ Claims cost
reduction by 50%
→ Claims indemnity
(leakage)
improvement by
20-50%
→ 20% improvement
in quote to bind
rates
→ 30% increase in
direct sales
→ Customer
acquisition/
conversion
increase by 25%
and retention up
50%

7. InsurTech levers and start-up examples in non-life Insurance (2/2)
→ Automated risk data capture through IOT
sensors
→ Usage based on demand risk transfer
→ AI/ML driven underwriting insights
→ Underwriting without claims history
Profitability
A
Volume
B
Capital
C
UW and
pricing
5
Reinsurance
and Cap
mgt.
6
Acquisition
& Retention
7
→ Real time risk mitigation and capital
allocation
→ Replace actuarial services with AI
→ Liquid reinsurance platforms
→ Reinsurance data analytics and integration
→ Auto claims settling based on triggers
→ Machine Learning for policy language
optimisation
→ Fraud management
→ CRM and policy automation
→ Blockchain and smart contracts
Driver InsurTech levers Potential impact Examples
→ UW cost per
policy reduction
by 50%
→ Pricing leakage
reduction by 30%
→ Cedant premiums
reduction by 20%
and reinsurance
costs by 10%
→ Cost per inforce
policy reduction
by 50%

8. Technology & digital capabilities that target value chain effectiveness (not
just scale efficiencies) offer compelling investment opportunities
Underwriting (STP, Cost,
Policy)
Pricing
(UW margins)
Policy servicing
(cost/PIF)
Retention
(lapse rate)
Penetration
(cross sale)
Claims
(% conversion)
5
6
7
2
4
Acquisition
(cost, conversion)
1
Size of book
In-force profitability
C
New business volume
B
New business
Profitability
A
Life Valuation
Embedded Value (EV)
Franchise
Value
Net Income
Duration
Capitalization
(EV/net income)
Value of new business (VNB)
Long term growth
3
Life Insurance

9. InsurTech levers and start-up examples in life Insurance (1/2)
→ Turning social media data into insurance
insights to improve conversion
→ Customer journey analytics
→ Digital asset cataloguing
→ Online direct distribution
→ Life aggregator
→ Facebook based life insurance concierge
Value of new
business
A
New business
volume
B
In-force
profitability
C
Acquisition
and
distribution
1
Underwriting
2
Policy
servicing
4
→ Predictive analytics platform for
actuarial and risk management
→ Predictive scoring and data analytics
→ Facial analytics and bio-demographic
info for UW
→ Forward looking UW using context,
sensory and genomics
→ Online direct UW for term life
→ CRM and policy automation
→ Blockchain and smart contracts
→ Automation and use of AI
→ Online platform to manage life and
disability insurance
→ 4x increase in
conversion rates
→ NPS scores up
20 points
→ Commission
ratio
improvement
→ Increase in STP
by up to a third
→ Instant
underwriting
→ Expense ratio
improvement
Pricing
2
Driver InsurTech levers Potential impact Examples

10. InsurTech levers and start-up examples in life Insurance (2/2)
→ Life in-force analytics and optimisation
→ Monitor and mine life in-force books
→ AI and data analytics based on cross
selling for disability insurance
→ Lifetime platform for optimising retention
and cross sell for in-force
→ Web based portfolio management and
placement
Value of new
business
A
New business
volume
B
In-force
profitability
C
Retention
(lapse rate)
5
Penetration
(cross sell)
6
→ Fraud management
→ Convert analogue process to digital
→ AI to drive smarter/quicker settlement
→ Increased cross
sell
→ 25-50%
improvement in
lapse rates
→ Reduction in
claims fraud
→ Settlement period
from weeks to
days
Claims (%
conversion)
7
Driver InsurTech levers Potential impact Examples